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Why change?

When implementing improvement systems that impact business processes and require methodology and tools; you must first define the problem you are trying to solve. Often we see organizations start with possible solutions without first define the business problem they are trying to solve. They get enamored with technology (perpetuated by software vendors) and lose sight of the desired end-state, since the end-state was never defined. In the worst cases, the end-state is defined by software vendors as the attributes of their software solution.

The ‘end-state” can also be called the “Why Statement.” Why do you need to make the change? What is not working the way you want it to now? What is the gap between the as-is and should-be? What if you didn’t make any changes, what would be the impact? The “why?” statement is also the overall goal for making the improvements in systems and processes.

Next you must define the Improvement Objectives. These are the 3-5 specific outcomes you want/can measure with the improvement intervention. We typically prioritize these objectives using a pairwise comparison of each objective to determine which objectives are the most important. This is a metric by which the improvement program can be measured to determine if it is achieving the goal. In other words;

• What is not working and what would it look like when it was working right?

Manage pipeline as lateral system

Causing projects to finish on time, or even making them faster is the “back-end” of the new product execution system.

Deciding what projects to do, and then aligning them with business strategy and available resources is the “front-end.”

The effectiveness of the front-end of an integrated “lateral system” drives the chances of success at the back-end in terms of Fast-Time-To-Market (FTTM) performance. In other words, you can’t solve the FTTM cycle-time problem unless you also deal with the system that feeds it with new projects.

It is critical to deal with this horizontal work flow as one integrated system. Often ownership is parsed out to various functions, with no overall owner managing the portfolio of products from end to end. The classic functional silos of Marketing, R&D, and Operations point fingers when projects fail to be delivered on time.

When these systems work well, organizations have decision mechanisms to assess the impact of new projects on the capacity of the execution organization’s ability to deliver. They manage it the way one would manage a factory operations problem; by carefully balancing demand and capacity.

When capacity is not aligned, projects take longer to execute and in turn miss optimal market windows where their ASP and Margins are the highest. Growth is impacted. The chain reaction is to reduce resources across the board to lower burn rates, which exacerbates the capacity problems even further. We’ve also seen a resource and budget constraint placed at the back-end, while not simultaneously reducing the flow at the front end. Rather, the most effective new product development engines we’ve seen run it like one integrated system.

Say "no"

I recently read an interesting collection of Steve Jobs quotes assembled by Bruce Temkin. One in particular caught my attention;

• "And it comes from saying no to 1,000 things to make sure we don’t get on the wrong track or try to do too much. We’re always thinking about new markets we could enter, but it’s only by saying no that you can concentrate on the things that are really important."

The Dinner Party

Recently we created this fictional "story" to describe a composite of obersations and experiences we've had over the years concerning strategy and the resulting product portfolio. Have you ever been to a Dinner Party like this?

There once was a couple that decided to invite some friends over for a dinner party. The husband invited 4 couples and 2 singles. He said that they could all have any meal they wanted and his chef would prepare it. The chef began making preparations for a dinner for 12 guests.

The chef was not sure what they all wanted, so he bought more than he needed just in case. He bought chicken, fish, many different meats, and different kinds of vegetables. He bought spices for all sorts of different cuisines, not knowing which ones the guests would choose. He made some assumptions and hoped he would be right. Of course this uncertainty came with a cost, but he was assured by the hosts that, “Money was no object” since the event was so important Further they said, “The dinner would have to be world class and at the cutting edge of culinary art.” He was up for the challenge, what could go wrong, he was a professional?

Shortly before the evening of the party the husband’s wife, after having reviewed the household budget, decided that money tight that month and she would need to reduce the chef's food budget by 30%. She told the chef to buy less food and to "get creative."

Accelerate Failure

Economist and Financial Times Columnist Tim Harford writes that, “Business success always begins with failure.”

(See a scanned version of Mr. Harford's article as I could not find it online yet, but it will most likely be published at http://www.babusinesslife.com eventually, or you can just buy his book). 

Mr Harford’s thesis is that failure is a critical element of learning, and learning is the basis of improvement… continuous improvement generates business success. It’s a fundamental engineering principal that innovation can only be achieved through successive failures. Discovering the root cause of failure enable solutions to be found. Innovation therefore can be accelerated through the acceleration of the “failure/analysis” learning cycle. “Fail-Fast” as some have said. The faster you fail, the faster you learn.

Converting strategy to portfolio mix/priorities

It's the job description and the competency "set" for an organization's Portfolio Executive. That middle-ground between Strategy and the creation of the product portfolio is still, in my mind, a mystery. What does that "translation" - or "conversion" - process look like? Or, is it just "artfulness"/who's got the power and influence/etc.?

Focus, focus, focus... you can't do it all (Part C)

In the previous two screencasts (see links below) about the “Project Portfolio” I described the process of project portfolio prioritization using constraints. In this screencast called “Part C” I’ll introduce the time dimension to the modeling process. We still need to select the best project mix to maximize benefit in order to meet our objectives, but in this next step we’ll consider how resources are used over time. This differs from my first two screencasts in this series where we looked at resources without consideration for when projects start and how they interact over time.

Focus, focus, focus... you can't do it all (Part B)

In the previous screencast “Project Portfolio -- (Focus, focus, focus... you can't do it all -- Part A)” I described the process of project portfolio prioritization using constraints. Specifically, Cost and Risk factors to re-prioritize the portfolio. In this screencast called “Part B” I will show you the third constraint type using Resources. We’ll deal with the same problem statement, “How to prioritize projects based on a limitation of resources.” We need to select the best project mix to maximize benefit in order to meet our objectives.

Focus, focus, focus... you can't do it all (Part A)

Project Portfolio is a discussion of how to prioritize projects, when resources are finite and you need to select the best portfolio of projects to maximize benefit, or in other words, “Those projects that give you the biggest bang for the buck.” How do you prioritize projects when resources are finite?

Differentiating best practices in prioritizing project portfolios

I've recently published a series of articles (listed below) on topics that differentiate "normal" product portfolio prioritization methods from some of the best-practice techniques we have observed and used in our practice with clients. They are subtle, but important differences that separate the best from the norm--further discussed in the following articles:

• Horizontal project scoring versus vertical prioritization (the zero-sum game)
• Pairwise ranking of objectives versus simple weighting
• Use real values for ranking alternatives
• Viewing project portfolios against constraints...to determine what can be accomplished with available resources
  

Given the constraints today, organizations must find ways of prioritizing their work so the limited and finite resources are directed at the right things to get the maximum benefit. The inefficient and unproductive parts need to be quickly shed and those that remain need to be made more effective through a process of focusing the "limited" resources on the right things (i.e. that generate max-benefit).

In some instances this is not a luxury, but rather a matter of life and death for some organizations.