Executive Coaching Part 3 - Resource Management
Last time we looked at the most common question you get when talking to senior leaders - how to control spend. This time, we'll look at probably the next most common one - how to control resources. By control resources, I don't mean how to tell people what to do. What I mean is how to keep control of resource numbers. In non-business speak, that means "how can I manage the number of people in my team and still deliver?" This is, of course another side to the "how do I control costs" discussion, and is a particular problem for IT departments.
The answer seems obvious - just stop hiring people. Set a staff limit and stick to it. The reality for IT departments is a little more complex though and it's related to the way big organisations control the flow of work. Or to be more precise, how they don't control the flow of work.
Big organisations try to control work through allocation of funding. This tends to happen in one of two ways. In the first way, funding is allocated to projects on an annual cycle and once funding is allocated, everyone is keen to start. Right now. The financial year ticks over, there are suddenly buckets of money everywhere and we have 200 projects we need to stand up and deliver ASAP.
This all hits the IT department like a tidal wave and we end up with an influx of short term contractors and bodyshop outsourcing partners to make up the shortfall. Of course later in the financial year, the money starts to dry up and those short termers disappear along with all the institutional knowledge of what we just built. A few months later, the new financial year kicks in and the cycle starts over again. The IT department cycles between feast and famine and has a very peaky resource profile.
The other way the business funds work is that everyone has a bucket of money and as they have a good idea, they spin up a project and demand that it starts right away. We need to be fast to market after all and the faster we start, the faster we finish. In this case, the IT department is constantly bombarded with requests to spin up teams (which they don't have) and we get short term contractors to plug the gap. Then let them go when the project finishes. The resource profile becomes pretty chaotic - teams constantly spinning up and spinning down. Usually there is a general trend towards constant growth as there are always more good ideas than there are people to do the work.
In some organisations you get the worst of both worlds with a discretionary project budget and yearly funding. In this sort of environment, controlling spend on resources is really, really hard. I spoke the the CTO of a major bank and this was his number one, "keeping him awake at night" problem. It's almost impossible to make sensible predictions about resource spending when you really have no insight into the number of resources you will need month to month.
So what's the solution? The problem here is that the organisation is not controlling the amount of stuff they are doing. They are not matching the work to be done with the resources available to do it. In short, they are not limiting WIP.
Limiting WIP is the biggest step an organisation can take to get its resource spend under control. If we assume that we have a fixed delivery capacity and limit the amount of stuff we do to fit into that capacity, the organisation can take control of its resource profile and hence its resource spend. If the current capability isn't enough to deliver everything the organisation needs (note - needs, not wants... there will never be enough capacity to deliver all the wants), we can have a sensible discussion about increasing capacity rather than madly ramping up and down as demand changes from week to week.
The organisation will see other benefits as well. For a start things will actually get delivered faster. If you limit WIP you improve flow. Rather than have 200 half finished projects you might have 20 complete. 200 half finished projects deliver no value. 20 complete ones do. With a WIP limited pipeline of work, completed projects will start to flow out of the pipeline and the organisation will see a steady delivery of value to its customers rather than having everything in progress and waiting on a single massive release to deliver value.
I know this is counter intuitive. Conventional wisdom says the more you start the more you finish. The reality is that the less you start, the more you finish. Don't believe me? Get in touch, we can have a chat over a beer or two. I have a great exercise we can do with beer glasses that will demonstrate the point.
Identifying and limiting WIP is the single most important change an organisation can make to the way it operates. It's not an easy change. It challenges a lot of things about the way organisations work but it's a change that is well worth making. In fact it is a change that is essential if they are serious about real agility.
Next time, I'll continue this theme with a look at another key concern of senior leaders - how do they know they are getting value for money? How do they measure ROI?