In part one of this blog, I told you how tired our client was of talking about algorithms. The frustration stemmed from the fact that algorithms should perfectly predict resource needs. But difficulty pinpointing the correct factor or two, office politics, and using overly complex algorithms get in the way of accurate predictions.
Our client was much more interested in talking about how to manage the resource pools more strategically. What ensued were insights about strategically managing capacity and how they connect to the goal of bringing new products to market faster. A goal everyone can get behind.
Resource Management Insights
What was interesting to me was that reducing the data collection resulted in more robust insights. This is much like the movie “Moneyball.” A Yale economist suggests fewer and simpler statistics. This enables better decision-making about which baseball players would maximize the Oakland A’s return on investment (i.e. player salary).
Similarly, the pharma industry needs to rethink how it uses algorithms to draw a clearer line of sight to the company’s goals. I want to share one such insight which may seem a bit counterintuitive. That is the importance of carefully understanding the business impact of tightening resources. This is especially true in terms of potential timeline shifts.
Here’s why. It’s easy, intuitive, and efficient to stack up all your portfolio’s planned studies and then lay out the resource requirements. Ideally, you are able to sequence studies in a way that meets business goals without high peaks or low valleys. While some degree of variability is inevitable, ultimately most resource planners set required resource capacity at the level of highest need. They then proudly report back to executive management that they’ve optimized efficiency.
Dealing with Delays
But a plan is just a starting point which inevitably won’t match up with actual execution. In product development, there are inevitable delays. While some of these are within control, many others are not, and so even the tightest execution can result in delays.
When this happens, resources end up committed to a project for longer than anticipated. So when the next big project starts, the resource who was planned to work on it is still tied up with their prior commitment. This leads to another delay. Suddenly, all the planning for efficiency ends up creating a domino effect of timeline delays. Industry wisdom puts this at a value of one million dollars per day in lost revenue (provided the delay is on the critical path). Diligent capture of actuals has repeatedly demonstrated this impact with several of our clients.
The takeaway? Plan for the inevitable delay. Include some slack for constrained resources. This means delays do not end up cascading through the entire portfolio as project delays create resource demand overlaps.