“29% of projects fail due to lack of resources”*
Quite a quote to start this first blog. Even more disturbing is the fact that we keep overloading our portfolios, even though there is a good chance that we have noticed the abovementioned resource issue before. Why? Let me explain:
When it comes to portfolio management, we often see a crisis management approach being the ‘normal way’ of working. A balanced portfolio is nicely planned, at least that is what we assume, and then reality kicks in; The planned portfolio appears far from feasible. Consequently, last minute high impacting decisions are taken with devastating effects on the planned portfolio, as well as on the realization of the expected benefits. Some projects are postponed half-way, others are even killed (what a waste!). New ones must be added because “this is urgent right now!” and priorities are adjusted faster than wind changes directions.
Nevertheless, it can also be done differently. One of our customers stated:
“This COVID-crisis got me positively surprised. It limited our resource availability and we forced ourselves to drastically reduce our project portfolio. Consequently, everyone expected a longer execution time for projects. But the feedback we are getting from all stakeholders is amazing! This carefully selected limited set of projects moves ahead much faster than ever before!”Threon Customer - The Netherlands
This is a nice example of Winston Churchill’s quote in practice: ‘Never let a good crisis go to waste!’ The external crisis forced this organization to take clear decisions over their portfolio (less projects but focus on the right ones) which resulted in less variation and less switches in their critical resource pool. This higher team focus consequently resulted in a faster realization of business value via (more) successful project delivery.
Sounds interesting, not? But before learning how to achieve the same results as the company in the example above, you need to understand how organizations end up in this situation in the first place.
How did we end up in this situation?
It is commonly known that all (small or large) organizations have a limited set of resources. Critical ones have specific skills that are needed for keeping the day-to-day business running, resolve key-issues and incidents and are therefore involved in multiple projects. Their business-critical domain knowledge and experience is needed for a variety of projects to make progress. Although they try their outmost, in the end everyone is waiting for them. They are even called the ‘bottle-necks’, while they actually should be treated as ‘key-enablers’, because without them organizations would never realize new opportunities.
Sounds familiar… But how do we get out of this situation?
- First, you need to have a structured process in place, called Resource Management.
If not, resource overload occurs, people are subjected to unnecessary stress, miscommunication occurs which will cause work that has to be re-done and activities will likely fall behind schedule. The purpose of Resource Management is to proactively assess the risk that you have the required resources available, when needed. But also, to guarantee that the total workload on any given resource (person or functional group) from all projects and non-project assignments, will never exceed the availability of that resource during any future period.
- Second, stop underestimating the complexity of a resource management process and recognize that balancing resource demand and supply in our fast-paced environment is far from easy and far more complex than we think. Unfortunately, there is no standard recipe, as it is unique for every organization because it is defined by many factors which interact in nonlinear ways.
- Third, Resource Management is all about people’s behavior.
Why? Everywhere we go we hear ‘lack of people’ as the main reason for the fact that projects are not progressing. Are those people unwilling? In most cases not at all! On the contrary we would say. But a lot of people are simply overstretched by the number of requests and top priorities which are communicated to them. But if everything is top priority, then there is no priority, and people will start picking their own. And that’s where the process breaks down...
When people start prioritizing themselves, their individual behaviour, as well as the collective behaviour in the organization and their temporal human behaviour get in conflict with each other due to the fact that all three have another thinking system of which their behaviour reacts to.
If you want to avoid this situation, you need to understand how people’s way of thinking affects their behaviour and for a better understanding of human behaviour, we make the link to Daniel Kahneman’s Nobel-prize winning book ‘Thinking, Fast and Slow’**, where he explains two modes of thinking and its consequential behaviour by people when confronted with decision making (= prioritizing):
- "System 1", as he calls it, is fast, instinctive and emotional and doesn’t take a lot of effort. It is like a reflex, intuitive and reinforced by repetitive behavior.
- "System 2" is slower, more deliberative, and more logical. Getting into “System 2” mode already takes a conscious effort, and it is only done when you really put yourself to it and remain focused on that.
Based on many experiments he highlights the differences between these two thought systems. But most important is the conclusion: With the same inputs, we arrive at different conclusions when using our different thinking systems. And also: what our quick response, our intuition (= system 1) tells us (= as “Which is the right thing to do now?”), will likely appear to be just the wrong thing to do, when we would have given it deliberate and rational thought (= system 2). Please note: We don’t say that System 1 is better or worse than System 2; both thinking modes just are effective for different purposes and situations.
When this way of thinking about people’s decision-making processes is implemented into organizations, there are two aspects that we noticed:
- Fast & Slow are relative concepts
What is fast for one organization is far too slow for the other one. So, you should consider and acknowledge the healthy ‘heartbeat’ for a given portfolio or project life cycle. In one of our customer’s environment we noticed them running two businesses within one organization, each having the need for its own heartbeat. One part of the business operated in a very agile environment (telecom services and customer products), with average project delivery time lines of one to two months, and the other part operated in setting up IT and telecom infrastructure, where just getting the permit to do something already took more than half a year. You can imagine the internal struggles when trying to run all projects in one and the same portfolio (and with the same resources)! With the wrong heartbeat a portfolio is doomed…
- Proper alignment between both thinking approaches needs to be ensured
Daniel Kahneman underlines that we have two personas: our Long-Term thinking self, which can reflect and plan, and our Short-Term thinking self, which just responds to what is happening. These personas act on different levels and can be rather disconnected. So, also in the structured Resource Management model I talked about before, it is important to ensure that both personas meet. That is exactly why we have inserted the organizational Mid-Term thinking in our Threon Resource Management model. This is where a planned 'hand-shake' needs to happen, to ensure Long-Term Capacity Planning and Short-Term Resource Management are not living their own lives, but are consciously integrated.
Another reason for adding the Mid-Term resource management is to enable an ‘inverter’ function. But also, because the gap between Long-Term strategic planning (= Capacity planning) and Short-Term operational management is simply too big. And the third reason: an increasingly turbulent environment requires an increasingly proactive organization. An organization = ‘people with own ideas on how to prioritize, working together’. This requires a more ‘middle-up’ approach in strategy planning and development. This way the whole organization understands and supports the ‘slow thinking’ decisions to realize the organizational goals and its purposes, instead of just taking short term, dis-aligned decisions, like a dog chasing its tail. It is the continuous forward and feedback loop, from strategic decisions to operational decisions and back again.
Based on the insights abovementioned, it becomes clear that Resource Management (both, Long-, Mid- as Short-Term) really should be embedded throughout the whole organization. And both future oriented strategy planning, with ‘System 2’ driven decision making, as well as today’s actions, driven by ‘System 1’ thinking should be incorporated in it. It will allow companies to really act as one ‘organization’!
What are the first lessons we can draw from this?
- You need to have an end-to-end Capacity & Resource Management model that structures your planning of resources if you want to avoid overloaded portfolios and capacity issues;
- This Resource Management model needs to be divided into a Long-Term Capacity Management approach, a Short-Term Resource Management approach and a Mid-Term Resource Management plan that aligns the first two;
- Capacity and Resource issues, when not proactively managed, will manifest themselves for sure at the Short term, when we can no longer deny them. Trying to resolve structural capacity issues (for which System 2 thinking is the best approach) in Short-term planning, (where System 1 thinking is in charge) becomes a bit like the Whack-A-Mole game: the resolution of one issue triggers the next one.
We take a closer look at why Mid-Term Resource Management is so important and how to handle it.
Do you have a Resource Management question yourself? Please ask it for free by sending your question to firstname.lastname@example.org. Our #GladYouAsked-team will be happy to help you out!
*2013 - EIU and PMI ® Why good strategies fail: Lessons for the C-suite
** 2011 – Daniel Kahneman Thinking, Fast and Slow