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What are moving targets costing you?

moving product development target

Over the last few months, I’ve worked with two different companies struggling with projects significantly delayed because of a lack of clarity around project targets. That’s certainly one of the more common complaints I hear from new product development organizations.

One way to deal with that is implementing a Critical Chain Project Management approach which significantly improves predictability and reduces new product cycle time. Critical Chain has that effect because when projects get done faster, there’s less time for mid-stream changes to creep up.

But moving to Critical Chain Project Management is not a small change. What if your organization isn’t ready to make the transition? Is there anything you can do to avoid moving targets?

Simply put—yes. I believe almost any organization can improve this situation by making one small change in their planning—calculating and communicating the cost of day’s delay.

For example, one of the companies mentioned above shared their frustrations about a project that had gone on for nearly six months longer than promised. It turned out that they had a solution that met requirements for at least 85% of the market six months earlier. But the lead had continually delayed the launch trying to meet a tougher target that wasn’t part of the original requirement. Later, with only minor progress, they relaxed the requirements and launched the product. Quite understandably, the team members I spoke with were terribly frustrated because they saw six months wasted on trying to reach a perfect solution when they had a good one they could have already been selling.

The problem was that they weren’t considering what every day of delay was costing their company. Instead, they continued moving the target out further and further. Of course, when I asked them what that six months had cost them the answers were more about salary expense than lost opportunity or revenue.

When I asked why they were doing the project in the first place, they explained that a much smaller competitor had launched a new product that had already taken some market share from them. Every day the project was delayed was another day that this competitor was eating into their revenue and market-share. This new product was needed to stem the bleeding. But they were operating like the only way to succeed was to leapfrog the competition all in one go.

If this competitive issue was costing $10,000,000 per year in lost sales, at 30% gross margin, that’s $250,000 in margin for every extra month taken to polish the apple. If executive management and the project team had both known that a day of delay was costing $12,000 from the outset of the project, you can bet their behavior would have been different.

 

The More Impact Bottom Line

If you need projects to finish faster and more predictably, consider the benefits you can achieve with a Critical Chain approach. But if you’re not ready for that yet, one important step you can take is to start every project with a clear understanding of the cost of a days delay. Then as opportunities to move the target arise, you can evaluate whether it’s really worth it—or not.Then as opportunities to move the target arise, you can evaluate whether it’s really worth it—or not.

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