Every organization needs to know how to maximize the potential of all its resources and continuously improve. From the years of working with companies, from metal foundries to software houses, it was clear that silos and functional divisions were a major handicap to maximizing potential.
If silos prevent cooperation, what can facilitate it? When you think about the essence of an organization, you realize that it is a series of recurring and non-recurring activities, from new product development to book-keeping. All of these activities are interconnected in some way and they all require competencies.
What is needed is a way to manage sets of activities that are continuously created, coordinated, cross-functional, and that evolve in time. There is a precise name for this: a project. It became clear to our team in every environment just how foundational projects are for any organization.
A project is a network of interdependencies created to achieve a precise goal in a well-defined timeframe and budget. A project is a system with a precise duration.
Optimizing resources through a network of projects
So what happens if we view the recurrent and non-recurring activities in an organization as projects?
Whether we seek to improve the speed at which we manufacture products, install new equipment, organize shipments, or file quarterly closing, we need the coordinated efforts of many different competencies. If we want to truly optimize our resources then we need to make the best use of the competencies we have available.
An organization can be managed much more effectively, then, when we see it not as a linear, functional matrix but as a pool of competencies. We can consider our engineers, accountants, scientists, and subject matter experts not as restricted to a company function but as valuable competencies that can be deployed for the goal of the whole company. All these resources, should be available for whatever project the company needs to accomplish.
When we adopt the view of the organization as a pool of competencies to be scheduled into projects, we can truly unleash the potential of all the resources available. We acquire an unprecedented level of flexibility and we can accelerate the flow of project completion. This accelerates achieving the overall goal of the organization.
Controlling a network of projects
There are various techniques for managing projects, but few achieve the level of reliability offered by the Critical Chain algorithm developed by Eliyahu Goldratt. Long adopted by aerospace and military for its effectiveness, Critical Chain schedules projects based on real availability, i.e. finite capacity.
It accelerates project completion through realistic estimates of task duration and by absorbing the variation that affects all the tasks into one mega project buffer at the end.
If projects are horizontal through the organization and not vertical within functions, how do we exercise control over them? When we operate a network of projects at finite capacity with Critical Chain, the project buffers provide protection for ongoing projects and they can be monitored using Statistical Process Control.
It would even be possible to create a kind of dashboard that would give leaders real time information on exactly what is happening in the projects that make up the work of the organization.
If an organization is, essentially, an ongoing collection of unfolding projects, then the focus of leadership (board, C-Suite, etc.) must be on how well and timely these projects are executed. Any form of meaningful control can only be exercised through managing the Buffer that is the real thermometer that measures the temperature of the organization.
By constantly monitoring the state of the buffer for each of the ongoing projects, leadership can have a real insight, not numbers from a spreadsheet, into how well the flow of events is generating units of the goal the organization is pursuing. Critical Chain becomes, then, much more than simply an algorithm to accelerate project completion; it is the vehicle to integrate, control, and deploy the resources of the organization.
Cooperation beyond silos
Once we have freed ourselves from the notion of mechanistic, siloed enterprises by adopting the idea of the enterprise as a system and operating a Network of Projects, we unleash potential in a way that has not yet been possible. We give individuals the opportunity to develop their competencies beyond the confines of functions. We create space for emergent properties to exist.
We can even go beyond the boundaries of single companies and create products and services through networks of companies, drawing on a much broader pool of competencies scheduled into finite capacity projects. We overcome the boundaries of geography and fiefdom to achieve a global goal.
In a project-based organization, we can finally make sense of the all too vague idea of teamwork. We can actually have people working in teams without resorting to excruciating and hilariously off-putting team-building sessions.
We can simply facilitate teamwork by removing the barriers that prevent it. We can do so by orchestrating people’s talents and skills in a time sensitive and continuously evolving Network of Projects bearing in mind the overall goal of the organization, whether financial or otherwise.
The guiding scheduling principle to build successful Networks of Critically Chained projects is, then, the availability of Competencies that each Resource brings to the table.
Addressing the multilayered issue of how to optimize finite resources to maximize throughput is critical if we are to generate wealth sustainably.
With this article, Domenico Lepore continues his mini-series of articles that focuses on how to build companies that are fit for the digital age. The next one will be about an upgarde in thinking skills.