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Almost all organizations have benefited from doing more projects faster.
But new product development can only go so fast without increasing
the chances of failure or decreasing expected financial return.
Still, it is common to see senior managers push harder on the same
"more projects faster" approach.
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Implementation
Challenge
Effective
Portfolio and Pipeline Management (PPM) helps overcome this
difficult challenge. PPM pulls together project selection,
project mix management, and resource assignment management.
It enables the organization to emphasize a balance between
"Speed-to-market," "Strategic Impact," and "Resource-Use-Efficiency."
(Figure 1) The goal is to optimize these orientations simultaneously,
in order to realize significant economic gain. Management
wants the economic gains, not just "more projects faster."
Unfortunately, understanding what PPM is and getting an
organization to do it well are two entirely different issues. |
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Figure
1: Three benefit areas of PPM. |
Implementing PPM is a major
challenge for every organization. Many factors slow down benefit
gains and some factors even worsen the affect of others. For example,
at the start of PPM, data is seldom reliable or timely. Often, the
exact metrics needed to communicate with management are not known.
Even with good data in-hand, some managers may perceive PPM as undermining
current decision-making. These three factors (metrics, data gathering
and management support) become entwined. An inability to understand
such factors and their relationship with one another makes PPM implementations
very demanding.
How You Implement PPM Matters
Consider some of the real concerns stated by managers trying to
implement PPM. (Side box) Notice the variety. It would be impossible
to address all of these challenges with a single action. Some form
of a broad, coordinated approach must be taken.
| Managers'
Statements of Top Challenges to PPM Implementation |
· Managing
reduced resources while maintaining aggressive launch
schedule.
· Thinking and acting long term (strategically), but
managing quarter-to-quarter
· Gaining buy-in from the entire organization
· Poor analysis due to emphasis on speed and lack
of good information
· Systematically looking at strategic objectives and
the resource pool to understand how to deploy available
resources and set priorities
· Not having consistent metrics to measure key characteristics
of projects.
· Lacking commitment to spend sufficient time to manage
the portfolio.
· Transferring practices broadly across the organization.
· The time it takes to get up the curve.
· Making adjustments due to our ever-changing environment;
adjusting for resource needs and availability, along
with competitive landscape
· Having better resource planning tools
· Consistent use of the process. Consistent data assumptions
across NPD projects.
· Pulling Product Management, Marketing Management,
and Senior Management out of the daily firefighting.
· Too many new project requests (many driven by customers)
coming into an already full pipeline.
· We have a culture of wanting to do everything and
not saying no.
· Defining and getting accurate data input for metrics.
· Integrating project management and portfolio management
into a seamless system with single point of data entry.
· Articulating the strategic success measures.
· Having the right portfolio analysis and resource
management tools. |
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What, then, is the
best way to deploy PPM? What implementation practices deliver
the most benefits fastest? These questions led The Adept
Group to conduct research specific to PPM implementation.
Approximately 175 companies participated, representing a
wide distribution of company types, duration of PPM practices,
and implementation experiences.
The first step in the implementation research was to compile
and categorize the "what's" and "how's" of PPM, garnered
from multiple sources . The result was a list of twenty-six
different components that were divided into seven logical
groupings. (Table 1) |
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Components
of PPM
Two of the groups of components are primary or fundamental
to PPM:
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Mix Management, and;
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Throughput
Management.
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Combined, the components
within these two groups form the basics of PPM: identifying
which projects to work on, and determining the resources
assigned to each. The other five groups are secondary or
supportive to the primary groups. Yet, all component groups
have notable influence on benefit accrual. Another way of
looking at this relationship is that organizations want
the gains from Mix Management and Throughput Management.
To realize these gains, however, progress must also be made
with the components in the supportive groups.
Capability Maturity
A key finding in the implementation research came from the
wide distribution of both experience and benefits accrued
from PPM. Such distribution of performance is the norm in
complex organizational systems. IBM confronted this issue
with software development. What they learned was that the
quality of resulting software (the output of the system)
is dependent upon the maturity of the capabilities a group
has in developing software. More notably, they identified
maturity levels through which software groups had to progress
in order to improve their output. IBM's work led to what
is commonly known as a "Capability Maturity Model" (CMM)
for software development. The Software Engineering Institute
at Carnegie Melon Institute later put CMM into broad practice
across the software industry.
|
| Mix
Management |
Project
Selection Criteria |
| Mix
Criteria |
| Strategic
Buckets |
| Project
Impact Dependencies |
| Mix
Optimization Analysis |
| Throughput
Management |
Project
Management Foundation |
| Project
Prioritization |
| Resources
to Project Assignments |
| Resource
Use Forecasts |
| Critical
Chain |
| Measures |
Metrics |
| Financial
Priority Listing |
| Risk
Assessment |
| Software/Data |
Data
Gathering and Handling |
| View
Creation Software |
| Enterprise
System |
| Processes |
Portfolio
Objects being Managed |
| Stage-gate
redesign |
| Front-end
concept generation |
| Product
line mapping |
| Management |
Top
Management Involvement |
| Top
Management Proficiency |
| Top
Management Focus |
| Focus |
Organizational
Challenges |
| Implementation
Team Focus |
| Table
1: PPM Componets by Group |
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Rather than seeking a single
overall best practice, CMM suggests that, in complex systems, organizations
should focus on attaining each maturity level, one at a time. All
requisite practices must be in place, in the right order, for the
system to be effective. CMM recognizes that certain practices rely
on certain other practices. For example, it is difficult to do 1)
software user interface planning without first understanding 2)
customer use requirements. It is not sufficient to establish only
a couple of the practices in the complex system of software development.
The
same is true for PPM. Consistent practices on certain PPM components
are necessary for other components to be effective. In PPM, for
instance, establishing the project mix component without establishing
a data gathering component will not yield much benefit to the organization.
Such out of sync deployment of practices may even cause harm to
the initiative. The implementation of PPM components must be coordinated.
The research analysis sought to do this. By using implementation
experience, logic, and trial and error to determine required relationships
of components, the analysis identified five critical maturity levels
for PPM implementation. (A detailed Matrix of "Component versus
Maturity Levels" is available from the author: )
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Spiral-Up
Approach
PPM implementation teams can accelerate the accrual of benefits
and leverage the knowledge of the Capability Maturity Model
simply by addressing one maturity level at a time. Implementations
can proceed to the next maturity level once teams establish
the required components for a current maturity level. This
iterative approach to components across maturity levels implies
that PPM implementation is like moving up a spiral. (Figure
2) A Spiral-Up Implementation
enables organizations to gain benefits faster and to build
steadily on investments in each PPM component. Consider
the progression of the data storage component. (Table 2) |
 |
| Figure
2: Sprial Up Implementation (Click figure for full view) |
| Maturity
Level 1: |
no data storage |
| Maturity
Level 2-3: |
data
storage in multiple MS Excel/Access sources |
| Maturity
Level 4: |
data
storage in a single database |
| Maturity
Level 5: |
central storage for a web-based
system |
|
Table
2: Progression of Data Component |
|
For most organizations,
data storage will advance from having none at all to having
a central repository, supporting a web-based system. But the
steps in between are very important. The use of tools such
as Microsoft Excel and Access in Maturity Levels 2 and 3 enable
great flexibility. These tools are easy to use and do not
require an IT department's involvement. The interim practice,
in effect, helps teams establish other components such as
specific metrics, strategic-buckets, and criteria and guidelines.
"Hard wiring" these components into a central data repository
before they are both known and accepted would be significantly
more difficult and time consuming. |
Moving Up the Spiral
"Consistency-in-use" of each component is the most important factor
driving the accrual of benefits. The research shows that the total
number of components carried out consistently by an organization
correlates strongly with the total benefits accrued to the organization.
A key factor in Spiral-Up Implementation, therefore, is getting
people across the organization to use each component consistently,
i.e., at an appropriate frequency and in a quality manner. For each
component within each maturity level, the Spiral-Up Implementation
steps should be to:
1. Iron-out the mechanics of each
component's use;
2. Learn and understand the influences on the components,
altering or adapting them as needed; and,
3. Increase the consistency with which the organization
uses each component.
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There
are some important milestones when implementing PPM. For instance,
the percentage of all projects included in an organization's PPM
process has significant bearing on the amount of benefit gained.
Organizations greatly undermine benefit accrual when they include
less than 80 percent of their projects in PPM. PPM serves little
purpose if too many projects run outside of the portfolio. Indeed,
consistency of at least an 80 percent inclusion rate is a point
of critical mass for effective PPM.
Three other critical turning points also anchor benefit accrual:
1. The consistent use of portfolio
mix criteria and guidelines,
2. The consistent use of resource and pipeline bottleneck
forecasting, and
3. The consistent use of a centralized data repository.
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These
three components, when taken together, offer an organization the
biggest steps forward in PPM. Collectively, they anchor the PPM
implementation. Yet, even though they are necessary practices, they
are not sufficient, by themselves, to sustain the initiative.
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| Figure 2:
Benefits gained across Maturity Levels (Click for full
view) |
The progression of benefits
from PPM is insightful. (Figure 3) During early maturity levels,
PPM seems to impact speed to market negatively. However, once an
organization emerges from Maturity Level 3, positive gains appear
in all benefit areas (Speed-to-Market, Strategic Impact, and Resource-Use-Efficiency).
This is an important turning point for Spiral-Up Implementation.
Here, benefits gains are significant enough for the organization
to not want to lose them. As a result, managers across the organization
will be, for the most part, very supportive of PPM.
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Figure
4 displays another way of plotting the normal path of PPM
benefits accrual. This U-shaped progression implies that implementations
tend to struggle through the first two maturity levels, before
delivering net gains. Strong management and leadership support
is necessary to get through this negative benefit period.
Benefit "break-even" should occur in the third maturity level.
Duration of Maturity
Levels
Several factors contribute to how long it takes an organization
to progress through each maturity level. (Table 3) The PPM
implementation research suggests that the larger the company
(i.e., the more people contributing to NPD) or the longer
the lifecycle of the resulting products, the more time it
takes to realize benefit gains. |
 |
| Figure 4: Normal Benefit
over implemetnaion (Click on figure for full view) |
This makes perfect sense. Gaining
"consistency-in-use" of components, a precursor to benefit gains,
will undoubtedly be more difficult and take more time in larger
organizations. For companies with long product lifecycles, the perception
of economic benefit gain will be discounted due to inherently long
lead times. While the focus should be on gaining benefits as quickly
as possible, all companies will not progress through maturity levels
at the same pace.
| Maturity
Level 1 |
Maturity Level 2 |
Maturity Level 3 |
Maturity Level 4 |
Maturity Level 5 |
| 2 to 4 months |
2 to 6 months |
2 to 9 months |
4 to 9 months |
6 to 9 months |
|
Table
3: Range of Duration for each maturity level |
Two
significant influences on the speed of benefit accrual are controllable,
though:
1. Understanding and counteracting the
hindrances to the Spiral-Up Implementation, and
2. Keeping a concerted focus on the right
component practices at each maturity level.
Both the implementation
team and top management hold responsibility to address these factors
effectively. Also, because of the significant economic value of
PPM benefits, a strong case can be made for organizations to complement
internal skills and capabilities with those of an experienced outsider
or consulting firm. Experts from outside of the organization can
help organize efforts, minimize hindrances, and speed the consistency-in-use
of components. They can offer experience, insights, and an independence
from organizational issues. These contributions can be especially
valuable to lean organizations. Managers can accelerate economic
gains simply by using outside experts to reduce the duration of
each maturity level.
The economic benefits
of PPM can be tremendous. But putting PPM process in place is not
easy. The Spiral-Up Implementation of PPM helps organizations overcome
the complexity of PPM implementations by leveraging a Capability
Maturity Model. The challenge is to understand and execute each
component during each maturity level. Organizations seeking PPM
benefits should strive to learn the nuances of doing so.
If you would like to
learn more or simply discussion PPM implementation, please give
me a call or send me an email.
-
Info on PortView
by clicking here: PortViewTM
creates outstanding views of Portfolio and Pipeline Management
metrics.
-
Info on NPD.MetricsLink:
npd.metricslink@adept-plm.com
greatly reduces the time and hassles of gathering metrics.
My Best
Regards,
Paul O'Connor
The Adept Group Limited, Inc.
Tel: 904-273-5319
Fax: 904-285-3488
www.adept-plm.com
Focused on Productivity in New Product
Development
Brief Bio on Paul O'Connor:
Paul O'Connor is an expert in the fields of New Product Development
Productivity. He has conducted assignments, implementation initiatives
and benchmarking activities with such firms as Akzo-Nobel, SBC,
Hercules, Shell Chemical, Procter & Gamble, Black & Decker,
L & F Products, DuPont, Polaroid, Kraft, Raychem, Bausch &
Lomb, Exxon, Nabisco, Ameritech, Corning, Dow, Eastman Chemical,
Pitney Bowes, Lucent Technologies, S.C. Johnson, Eaton, US West,
Calgon Carbon, Milliken, Reynolds Metals, Kodak, Mead Paper, AT&T,
Shuford Mills, General Electric, McNeil Labs, Blue Cross Blue Shield,
Uniroyal Chemical, DuPont-Dow Elastomers, Sprint, UPS, Ashland,
Johnson & Johnson, AlliedSignal, Praxair, Senco and Stanley
Tools.
Mr. O'Connor is Managing Director and principal shareholder of The
Adept Group. Paul is also Past-President of the Product Development
and Management Association, and teaches Portfolio Management for
PDMA and the Institute for International Research. More
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