You need your employees to run the business.
And you also need your same people to change the business.
Many companies tend to separate ‘Run-the-Business’ and ‘Change-the-Business’.
This also means you have to separate upfront how much capacity goes into ‘Change-the-Business’ and how much goes into ‘Run-the-Business’.
This is often done once a year in the initial year planning and forecasting process.
From our point of view, this leads to additional planning efforts, which are already obsolete after a couple of weeks, hinders transparency and slows down decision processes.
As we have outlined in the Execution Excellence Manifesto:
The #1 reason for the gap between plan and execution is too many initiatives running at the same time.
And it doesn’t matter for your people whether being overloaded comes from Change-the-Business or Run-the-Business projects.
The effects are all the same: Too little gets done. And this will hurt short term liquidity and / or longterm profitability.
That is why we highly recommend to create an overview on resource utilization covering all initiatives and projects. That is, all Change-the-Business initiatives and all Run-the-Business projects.
Caution: Don’t get trapped in complexity. It is not necessary to plan and monitor all details being done in ‘Run-the-Business’ and ‘Change-the-Business’. That goes especially for ‘Run-the-Business’. Very often , you will know from experience that such and such effort goes into ‘Run-the-Business’. Then, just define how many person days per month will go into ‘Run-the-Business’.
Yes, that is not detailed. But very often, it is good enough.
You need to have a central database where you can visualize, analyze and – if necessary – simulate some portfolio scenarios with alternative setups:
• Overall utilization: Make sure that no planned over-utilization occurs. Analyze how much goes into ‘Run-the-Business’, and how much goes into ‘Change-the-Business’.
• The forecasted profit or benefit of your overall portfolio: how much revenue, or better, how much profit comes from ‘Run-the-Business’ and how much benefit comes from ‘Change-the-Business’?
• In which projects can we see early warning signs about deviations in time and cost emerge? What can we do about that?
• How would utilization, but also short-term liquidity and longterm profitability, be affected if we start some new internal projects and some new customer contracts?
Yes, it requires some efforts. But it is worthwile, because it will help you close the gap between strategy and execution.
