The hidden factor that’s limiting your ability to compete

keithmacbeath.jpgBy Keith Macbeath, senior principal consultant with HP Software Professional Services

Every enterprise has an approval system for IT projects, and as part of this system there are gates a project has to pass through. But how well are these gates functioning, and how quickly do they open and close? If yours is like many enterprises, those gates have been created in collaboration with finance, and the natural tendency of people in finance in mature organizations is to feel that delay of expenditure is no bad thing.

Of course that can be true, especially if delay means time to think through the value of a proposed investment. But it’s not true if you’re in a fast-moving marketplace where IT investments are critical to your ability to compete, which these days is true of just about anybody in retail or consumer businesses. With so much action happening in systems of engagement, if you’re not with the program, you’re out of the picture. And that can be fatal if you’re Borders, say, or Circuit City. If your decisions – yea or nay - are not being made with sufficient speed, your business could be at risk.

4 decision measurements to track
Speed of your decisions is an important factor in the speed of innovation, so you should be tracking this as a key performance indicator (KPI). If you don’t track how fast you’re making decisions, you’ll tend to make them slowly. After all, what you measure is what you get.

The first thing you need to do is start measuring decision cycles. If you’re using a demand management system like PPM, you can actually track how fast you’re making decisions from the get-go. Track for the following:

 

  • How quickly does a request get turned into a proposal?
  • How quickly does a proposal get reviewed?
  • How often do things go backward in the process, e.g., how often is a proposal reopened?
  • How often do things go into exception mode? (In most processes it is the exceptions that drive up time and cost beyond what is expected)

These are all characteristic of a basic quality mindset which says get it right first time and it will be faster and cheaper to produce. That’s as true of decision-making as it is of other processes.

Don’t limit your ability to compete
If you’re not looking at the speed and quality of your decisions, you tend to get informal demand suppression. People either give up asking because it’s too much effort to get the ‘pig through the python’, so to speak. Or a cap is put on top of the funnel for a while to allow things to move down through the neck. If you’re not measuring speed of decisions, you won’t have a good handle on your bottlenecks.

Of course, some decisions over a certain size are going to be subject to more inspection and review, and they may well go up to a more senior level of approval where bottlenecks are unavoidable. So when you set targets for how fast these things move through the decision process you may want to have a different series of KPIs based on the size of the request.

Determining where your bottlenecks are is the first step to resolving them. Maybe there are some individuals who have to look at so many things that they don’t have the bandwidth, either because it’s not really their priority activity or because there’s only one of them and that is not enough relative to the volume of decisions they are being asked to make. Those are the kind of organizational questions that often go unexamined. And yet they are critical to the ability of the organization to compete.

The big picture: accelerating innovation
Accelerating your decisions is part of accelerating innovation. That’s why in the current HP Executive Scorecard we have an out-of-the-box series of KPIs for exactly this topic. If accelerating innovation is  key to your business competitiveness, you need to break it down into things you can track and measure, and demand management is definitely one of those things.

In the race to innovate, don’t trip up on speed of decision-making.

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Labels: Innovation
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