03 Mar Avoid Pipeline Overloading to Improve Resource Management
By Mark Thever
Project portfolios are often filled with projects that differ in size, priority level, and complexity. When escalations occur and business focuses shift, resource planning becomes a complicated challenge. Accurately assigning resources is crucial for efficient project execution; it is vitally important to have resources available to handle day-to-day tasks, critical milestones, and inevitable escalations. Many different problems can stretch resources thin, but the typical root cause is that of having too many projects in the pipeline. Pipeline overloading results from a combination of factors, with the most common ones being an ineffective pipeline entry filter, a zero-cancellation rate, inadequate market sensing, and slow product development cycle times.
Michael Porter stated, “The essence of strategy is choosing what not to do.” Operational effectiveness depends on the tradeoffs made by an organization. Some companies have a culture in which any project that enters the pipeline continues through all product development stages even when some of those projects should have been paused or discontinued. This problem is compounded because some companies have an unstructured process for gating projects from entering the product development process. Consequently, the pipeline overflows with projects, only some of which have true market potential.
One way to avoid this pipeline proliferation is to implement a strong, defined transition point at the beginning of the phase-gate process. This transition point occurs with a product development concept review that enables the evaluation of the market potential and the resources required for the development of the concept. If the market potential is below an acceptable threshold, or if there are inadequate resources for effective execution, the project should not proceed into the pipeline. Such a checkpoint serves to filter out low-potential projects from the pipeline.
Even with a filter in place, appropriate organizational visibility is needed to evaluate resource availability. An upfront filter may fail if senior leaders lack clear visibility to the initiatives being undertaken outside their groups. In many cases, resources are shared among groups, and if the assumption is made that resources will be available from another group without having visibility to resource allocations across all groups, there is a high risk that there will not be enough resources to execute all plans from all groups. An effective pipeline filter provides a platform for a quantitative market evaluation and resource availability analysis.
Once projects enter the pipeline, they are further evaluated and developed. Additional investigations into the product concept might sometimes reveal that the concept is not worth pursuing commercially. One trap that companies fall into is the sunk cost fallacy, which causes companies to continue with a project’s development because they do not want to waste the time and money that has already been spent on it. This behavior is a symptom of an immature product development core team that must make and stand by difficult decisions such as canceling projects. Canceling a project before the design and development phase begins is fully acceptable because significant money has yet to have been spent. A business should be prepared to cancel a small number of projects before they reach the design and development phase.
A project must not be removed under any circumstances from the pipeline after the design and development phase has commenced because significant money is usually spent on development. The decision to pursue a project into development should be validated quantitatively using demonstrated market research and a true bottom-line impact. If these elements are in place, no project should be canceled after development commences.
In some large organizations, leadership might not have a comprehensive view of all the projects that are currently “live” and that require resources, even within one’s group. Consequently, smaller, lower priority projects that use fewer resources—which should have been canceled—end up slipping through the pipeline, causing a low-level resource drain, which can have the additive effect of not having enough resources to fulfill larger, higher-priority projects. To avoid this situation, the Project Management Office should provide leadership with visibility to the entire product pipeline, showing all products currently in the product development process, ranked by priority.
Inadequate Market Sensing
Market sensing is the process of collecting information from the external market to understand potential customers’ motivations, needs, and desires. Market sensing data are used to guide new product development efforts to ensure that the product pipeline comprises projects that will enable the company to offer the right products to consumers who will buy them. The corporate functions usually responsible for sensing activities are marketing groups, such as Product Management and Strategic Marketing. Market sensing is important because it allows the organization to be proactive rather than reactive and ideally be first to market with a new product offering.
Market sensing is difficult to execute. The process requires intuition, looking in the right places, asking the right questions, and getting the timing right. Sometimes, not all of these steps come together, and the resulting market sensing efforts are not as effective as they could be. The key to successful market sensing is that the researcher must uncover the “why” behind consumer behavior and focus less on the “what”– in other words, give customers what they need and not what they ask for. The pieces of the puzzle include collecting diverse perspectives, recognizing the conditions under which customers use current products, and understanding the features used and when. Henry Ford said, “If I had asked people what they wanted, they would have said faster horses.” Ford recognized that the underlying need was an effective mode of transportation. Rather than give customers what they would have asked for, he gave them what they needed.
Market sensing affects resource management because when an organization does not fully understand market needs, more products tend to enter the pipeline in an attempt to satisfy market needs from every possible angle. Rather than focusing on the one bulls-eye product and assigning all available resources to that project, an organization hedges its bets and introduces several new products, each addressing only part of the larger customer need. Having several products in the pipeline places a much larger strain on available resources, and the entire pipeline suffers. Forward-looking companies deeply integrate consumer perspectives into their market sensing activities, which is critical toward seeing around the corner and understanding customer needs.
Slow Product Development Cycle Times
Product development is typically divided into a series of phases wherein a product concept is evaluated and agreed upon, project execution is planned, the product is designed, verified, and validated, and then, the product is released to the market. The cycle time and number of resources needed to execute these phases depend heavily on the type and complexity of the product being developed. The process is not always efficiently executed even if an organization has a solid conceptual understanding of phased product development. Effective execution can be hindered by product core teams that are too large, core team leaders who are not the right fit, and competing priorities. Slow cycle times may cause an overfilled product pipeline because projects linger after entering the pipeline. Lingering projects drain resources, making it more difficult for new projects to receive the needed labor—a very common cause of resource shortages that even Fortune 500 companies must address. To avoid these resourcing problems, best practices of product development must be implemented to move projects expeditiously through the pipeline and use resources in a targeted and intentional manner.
Although no single simple fix to resource management exists, organizations can effectively use resources to achieve their business objectives and efficiently execute projects by filtering pipeline entry, canceling projects appropriately, engaging in effective market sensing, and minimizing cycle times.
About the Author
Mark Thever has more than 10 years of experience in business optimization, commercial management, and research in the semiconductor and life science industries. Through consulting and internal management roles, his accomplishments include significant time to market improvements in product development cycles, the creation of streamlined requirements management frameworks, and the implementation of enhanced business processes for Fortune 500 clients. Mr. Thever earned his BS and MS degrees from UC San Diego, his MBA from The Rady School of Management at UC San Diego, and his credential in leadership from Harvard Business School.