Showing the route to 30% faster time to market for a major industrial company

Our client is a big industrial company providing large size industrial equipment to a major sector. They have a thriving business and is one of two major players in the space. The particular business unit in this case has a completely dominant market position in its segment. The segment is very profitable and the company enjoys a strong competitive advantage stemming from both know-how, the need for massive capital investments to catch up, and the requirement of trust in the market for these major pieces of industrial equipment. But there are issues

While the business is doing well, the personnel in parts of the project delivery functions were completely overloaded. While this caused issues and risk of burnout for personnel it also caused major issues with the project delivery in the organization. Interviews showed that the general viewpoint of management was that things moved at a rate that was a lot slower than desired.

Interviews showed that there was a general tendency in the organization to start projects. Data corroborated this picture. A simple analysis showed that the organization would normally on average finish around 27 projects per year. At the time of the engagement, the portfolio contained 93 projects. These figures combined with the simple mathematics from Little’s law implied that the average time from start to finish of a project in the portfolio was around 3 years (93/27~3). This was far slower than the company would like and hence the simple solution to improve was to do a portfolio analysis to understand which projects to freeze or close. By getting a measure of the general risk levels of the portfolio and understanding particular execution risks recommendations for which projects to keep or freeze were developed.

The analysis showed a way to reduce the number of projects by 30%. By doing so the time from start to finish would also decrease by 30% (again by Little’s law). Recommendations were also developed for a much more disciplined pipeline management. The recommendations to do so consisted of

a)      Creating a better understanding of resource utilization and availability before starting projects

b)    Implementing a better exploration process to figure out if uncertain projects really have the potential that is implied from the idea stage

 The project showed the clear implications of portfolios that grow unwieldy over time. By being disciplined and by decreasing the number of projects major gains in operating speed can be had.