Few companies innovate nearly as fast as they wish they could, but there is always some degree of skepticism when I suggest that they have hidden productivity and can go much faster with their existing resources. The best way to demonstrate the kind of improvement potential most companies have is with the true story of a mid-sized OEM supplier that we’ll call HiPot Corporation.
HiPot’s typical new product development cycle time was running between 6 and 12 months—at the slow end of average for their industry. Like most companies, HiPot was working on far too many projects at the same time. As a result all of their new product programs were taking much longer than necessary.
But during an assessment, I found something very interesting that helped show HiPot their true potential. They had recently completed a critical new product program, one we’ll call Project X, in a fraction of the time normally required. Of course I asked all the questions you would expect about this accomplishment and found that Project X was pretty similar in nature to those taking 6 months. So what was different was how HiPot approached resource management for Project X.
You see, Project X was for HiPot’s largest customer who needed a prototype within 6 weeks lest they miss the deadline to participate in their customer’s new model launch. Missing that deadline would have resulted in HiPot’s customer losing out on the chance to supply for at least 3-5 years. To say the least, the stakes were high.
So what did HiPot do? Well, they did exactly the opposite of what they normally would have done and exactly the opposite of the way they normally would have run the project. They put a focused team on the project and made the deadline highly visible within the company. They stopped multitasking by making it clear that all other work was to be ignored if any Project X tasks still open. They worked like a relay race team with smooth handoffs and collaboration. And most importantly they finished Project X in 6 weeks, yes weeks—not months) and delivered a prototype in time to meet their customer’s critical deadline.
And HiPot isn’t the only place I’ve seen this pattern. I worked with a large consumer products manufacturer that had an amazingly similar experience. A strategically critical project forced that organization to focus and a 2-3 year product development cycle was collapsed to 9 months.
So what if your organization doesn’t have a critical event like HiPot’s to help them see the power of focus? How can you know what your potential is and achieve it? First, it may be useful to understand the two ways of working—simultaneous execution vs. pipelined for full speed. Let’s say you have four opportunities in front of you and:
- All four are for equally important customers
- If you put your entire team on one project they can complete it in 3 months
- Each has the same return - $1M cash flow per quarter once complete
- Each project has an influential internal sponsor pushing to start ASAP
The way most organizations address a challenge like this is to spread the resources out and have someone working on each one simultaneously. Here’s a one year snapshot of what that would look like with the work in each project represented by a different block of color and W’s indicating wait time:
Over the year, resources move back and forth between projects, with the majority of each project’s timeline spent on waiting-almost three quarters. At the end of one year, all four projects finish and deliver $4 million in cash flow—ignoring the multitasking loss.
Comparing that to focused execution with each project resourced for full speed—after 3 months, the first product launches and starts delivering cash flow of $1 million. At the end of the second quarter, another product launches and now 2 products are generating cash flow for a cumulative of $3 million. And so on…until at the end of 12 months we have four products out in the market and have delivered $10 million in cash flow.
While some projects still had to wait, none finished any later and all but one finished earlier so on average customers should be happier with this approach too.
It’s important to note that this example is not meant to suggest that your company only focus on one project at a time. The point is that every company has its own ideal development bandwidth—the amount of work that it can handle at nearly full speed. When you exceed that bandwidth, every project in your portfolio begins to slow down.
So what can you do with this knowledge? The rule of thumb I use is that left to their own devices, most companies will take on 50-100% more projects than their bandwidth allows. Take a look at the number of projects currently running in your innovation pipeline and whatever that number, set your new goal at two-thirds of what you were running and freeze the other third. Then set a rule that the next project can’t enter execution (whether new or being unfrozen) until the next project is finished. With this pipeline governance rule in place, you’ll begin to notice that you have better visibility into each project and that each project moves dramatically faster. From there, you can also explore multi-project critical chain as detailed in this previous article.
Looking to uncover hidden capacity and accelerate your new product innovation? Mike Dalton's Guided Innovation Group has helped companies double new product throughput without adding resources. Download their Growth Equation Diagnostic to see identify your best opportunities for improvement.