How to resource projects and products–optimizing for elapsed time, motivated teams, and budget

In my last post, I explored the implication of a shift in importance and value of resources. Given increasingly shorter time frames for product life cycles, I think time is an increasingly undervalued resource. Zooming in to a sub-micro level, I think we’re also looking at a paradigm shift with resource allocation within high technology companies too.

How to determine if systemic factors slow down your teams’ velocity

Last week, I pulled out the critical thing that Steve Jobs did, upon returning to an Apple computer with a sagging stock price. He went after a major systemic factor that was holding back release dates: too many priorities. If you are really going after top performance, you need to look at all factors, including the global ones.

Local or global maximum?

Mountain tops above clouds

people per product = people/nr of products or projects

The large the number of “buckets” you need to fill, the higher the denominator. The higher the denominator, the less resources you have to succeed with each product. New or existing.

This is the true cost of lack of focus. Because if you are under-resourcing your product teams, you are effectively setting them up for failure and yourself up for disappointment as a decision-maker.

Signs of this would include:

  • Heavy reliance on traditional project management (waterfall): as there are lots of resource conflicts, you need a caste of professionals to manage this, each with their own specialty. Which adds more cost. Note that they don’t actually contribute to the work that needs to be done directly.
  • partial employee allocations: For example, allocating 5 people at 20% will mean that all 5 people will spend most of their time in status meetings and unable to actually deliver anything. But you have the slot fully allocated, right?
  • shifting team structures: If needs are constantly changing due to thrashing, then there is constant complexity around what needs to be done, who needs to do it, and by when. So you’re spending a lot of time figuring out how to achieve new goal with the limited resources you have and who you can nab from elsewhere.

2. Too many chiefs

For anyone who remembers high school physics, there was one important distinction between velocity and speed–as my friend Andy Wilkin recently pointed out. Velocity had an implied direction. One direction.

The one thing Steve Jobs did that turned around Apple

After a nasty battle with Apple shareholders, Steve Jobs, then the original founding CEO, was ousted. He went on to create NeXt computers (later acquired by Disney). In the meantime, Apple drifted as a company. It proliferated product lines. Lost focus. And the share price entered a death spiral phase. A few years later in 1997, he was recruited back to save the company from very poor public share price performance.

“Saint Steve” at Macworld 1998

When we got to the company a year ago, there were a lot of products. There were 15 product platforms and a zillion variants of each one. I couldn’t even figure this out myself. After about three weeks. I said, “how are we gonna explain this to others, when we don’t even know which products to recommend to our friends?”

In this keynote at 1998 Macworld, he announced early successes, such as a 3rd consecutive profitable quarter. In my opinion, one of the most powerful parts of his talk was the following grid:

How to derive expected velocity from strategic dates

The contrast between ideal and real is powerful. Makes you focus.

The promise
what actually happened

By not paying enough attention to the gap between the ideal and real, you may end up with a complete blowout like Fyre Festival founder McFarland. I heard of it only long after it happened by watching the Netflix documentary. Clearly I’m not the brightest in terms of social media usage.

The biggest takeaway from the Neflix documentary I had was around McFarland’s unwillingness to face the operational realities of what he was promising. Which ultimately led to his downfall. He kept pushing back on anyone who brought him bad news, telling them to “stop being negative” or just firing them. If he had taken in the feedback earlier, he and his team could have avoided the whole blowup.

I’ve found a simple tool to help straddle the vision with operational reality.

I first heard of it from a relatively older book called Lean Thinking by Womack and Jones. Basically, it should be possible to measure what the average output rate should be in order to meet customer (or executive sponsor) expectations. They call this takt time. The term originated in Germany in the 1930s, and was basically used as an output “pulse” benchmark.

The example they used was that of a bicycle factory. In short, “takt time synchronizes the rate of production to the rate of sales to customers”, according to Womack and Jones.

While initially bicycles were built in larger batches based on the orders coming in, this usually caused internal operational conflicts if multiple customers had expectations of delivery. Moreover, it usually took weeks to deliver anything. And usually the orders were late.

Bikes in Amsterdam Centraal

= 6 * 8 * 60 = 1920 minutes

So effectively to meet this level demand the factory needs to deliver 1 bike every 10 minutes. This is a pretty objective measure and one which is observed every 10 minutes, so there is a high frequency of potential observations. You’ll know pretty much in real-time whether that pace is being achieved or not, by looking at a well-placed stopwatch.

Obviously the aggregate volume of orders may increase or decrease over time, and takt time will need to be adjusted so that production is always synchronized with demand. The production slots created by the takt time calculation are clearly posted so everyone can see where production stands at every moment. This can be done with a simple whiteboard in the product team area at the final assembler, but will also involved electronic displays in the assembler firm and electronic transmission for display in the supplier and customer facilities as well. Womack and Jones in Lean Thinking

Once this number is calculated, you have a clear operational benchmark you need to hit. Most likely, you’ll need to change how you work, in order to make it possible to 100% complete one bicycle, if you are used to batching productions of approximately 200 units. But from a monitoring perspective, it becomes a powerful and objective way to know what is happening on the factory floor.

An even simpler example

Let’s say you’re running a hamburger stand for 4 hours a day.