This Focused Performance Weblog is a "business management blog" containing links and commentary related primarily to organizational effectiveness with a "Theory of Constraints" perspective. TOC is noted for its applications in Project Management and Multi-Project Management (Critical Chain) and Operations Management (Drum-Buffer-Rope), as well as in Marketing, Strategic Planning and Change Management (TOC Thinking Processes). If you are on an archive page, current postings are found here.
Tuesday, September 07, 2004
Multi-Project Management and Organizational Effectiveness III -- Organizational Effectiveness is Resource Effectiveness -- The old saw defining efficiency largely as doing things right and effectiveness as doing the right things definitely applies to multi-project systems. How individual tasks are defined and delivered are key to the efficient completion of individual projects. And choosing the “right projects” from the portfolio of possibilities is clearly related to the contribution of the efforts to the organization’s success. While these single-project and portfolio management concerns are beyond the scope of this chapter, strategies for managing the interaction of various active projects as they vie for the attention of the limited resources are not.
Understanding the importance of getting the right things done at the task level, and behaving accordingly are significant contributors to efficiency as well and are the basis for multi-project resource (organizational) effectiveness. Unfortunately, too many organizations overlook this and instead emphasize control of costs to the detriment of what they are trying to accomplish.
Maximizing throughput or controlling costs? In the previous section, the dichotomy of managing today’s deliveries as well as setting up for the future was discussed. Another pair of necessities for organizational effectiveness is found in the need to maximize throughput of the system and, at the same time, control costs. Many managers look upon these as conflicting requirements, as pressures to keep expenses down have the potential to threaten the ability to deliver more completed projects quickly and with quality.
This sense of conflict comes from confusing organizational effectiveness with efficiency, and even worse, with resource utilization. Assuring that everyone is fully utilized all the time may seem like a reasonable strategy for getting the most out of the individual resources, and, by extrapolation, out of the organization. On the surface, this feels like it makes sense. However, if a system wants to maximize its throughput, keeping resources fully loaded across the board actually hamper that objective for several reasons.
The first reason to avoid striving for full resource utilization is that if everyone is fully loaded, there is no slack to deal with the inevitable run-ins with Murphy’s Law. Given the uncertain nature of projects as unique endeavors, any negative deviation from planned expectations will require capacity to recover. If that protective capacity is not available, problems in a project will result in either cascading problems that will threaten the promises of other projects, or burnout of resources, or both. In either case, future throughput is threatened.
Similarly, without protective capacity set aside, there is no ability to capitalize on new opportunities that arise. Potential throughput is lost.
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