Chapter 4. Are We Optimizing Our Capacity?
John is at dinner with Bill and Chris. It's been several weeks since their first meeting, when they explored the full extent of the issues facing Acme Retail, the $6 billion consumer retail company that John joined six months before as vice president of portfolio management. After that initial dinner, they all agreed to meet up on a regular basis to address different issues. Tonight, John couldn't stop talking about resources.
John declared, "There are never enough people to go around! And if it's not people, then a key system gets taken off-line for maintenance or crashes just when one of the technical teams wants to upgrade, or one of the project managers comes and complains that the head of facilities has taken over his team's cubicles for some other group. No matter how well I think we've planned for resources across the portfolio, project managers don't stop asking for more or someone else throws us a curve ball. What do you advise portfolio managers do to optimize resources?"
Bill and Chris couldn't help smiling at each other. How many times had they heard this refrain from portfolio managers? This wasn't the first time they'd been asked this question and they knew it certainly wasn't going to be the last.
"So, what have you been doing about this?" Bill asked. He knew he wasn't being very helpful by answering a question with a question, but he also knew John well enough that he wouldn't have sat back and done nothing about it.
"Well, one of my guys was around when I was ranting about this and said that he would love to help. He's a senior manager in the IT department and was clearly itching to impress me, so I said, fine show me what you can do. I want to be able to optimize enterprise resources across our portfolio planning horizon. So I told him to report back in two weeks and we'd review what he found. Well, less than a week later the proverbial you-know-what hits the fan!"
"Wait, don't tell me," Bill held up his hand. "Let me guess. This guy ended up sending out a template to every project manager within your portfolio requiring them to list in great detail all the resources they anticipated needing over the entire lifetime of their projects. And he wanted their response by the end of the week. . . am I right?"
"How on earth did you know that? That's exactly what he did and he nearly triggered a revolution when he claimed that was what I had told him to do. So, Bill, as you seem to be so prescient on this matter, what should I have done? What would you advise we do to get a handle on resources and optimize them?"
Bill smiled and turned to Chris and suggested that she kick off the discussion about possible solutions.
"Well, John, in my experience, it's all too easy to approach this problem believing that the solution lies in controlling the detail—that by mapping every resource requirement for every project across your portfolio you'll be able to gain mastery of the situation. That's a natural urge, but it's a recipe for failure. It'll cause death by micro-management."
"Well, I could have told you that. That's why I'm in this job. It would help to have some concrete examples of what I can actually do to prevent my project managers walking out en masse." John glared at Bill, clearly frustrated.
"Look, let me put it this way, John," Bill responded in a conciliatory tone. "I've always found that what works is to focus on aggregating the detail, to focus on the big-ticket items. A good analogy is to consider your portfolio of projects in terms of boulders, rocks, pebbles, and sand. You could spend untold effort trying to 'pot' each project into one of these categories so the trick is to keep things simple. The boulders are the really big projects—strategic transformations—with multiyear timelines and impacts across the entire enterprise, and they draw on resources from all functions and departments. These are the ones that senior leadership is counting on to deliver multimillion-dollar benefits. The rocks are those projects that are less significant, maybe only touching a few departments, but still requiring significant resources to deliver major benefits. Pebbles are those projects that may involve only one department or function. And sand will be the mass of initiatives that slip under the radar. They are usually invisible except for their ability to consume vast amounts of resources—the endless requests for bug-fixes, feature enhancements, and so on. The key here is not to spend too much time worrying about which project should fit into which category—to optimize resources you only really need to look at the boulders and maybe some of the more significant rocks. The rest will take care of themselves."
John smiled. "Hey, that does make sense! I could probably make a list of my boulders and rocks right now on this napkin. But isn't that oversimplifying things? As you say, the sand tends to consume a huge amount of resource but we're effectively ignoring it by doing this. . ."
"Exactly! That's the whole point." Bill slapped the table in his excitement. "This is about modeling reality, but only to the point that makes sense for strategic planning. All you need to know for planning purposes are those potential resource constraints that are going to be too big for your organization to cope with in the normal course of business. The boulders and rocks are mission critical and so need to be safeguarded—the sand can always be swept under the carpet and dealt with later. Doing things this way simplifies the picture so you can do your strategic planning. Chris, tell John what comes next."
Chris took a drink of water and continued. "Well, John, the resource capacity equation, as I'm sure you know, has two sides: demand and supply. Both need to be addressed to achieve resource optimization, so let's look at those now."