Unfortunately we simply cannot “do it all” and have a healthy innovation pipeline, we are constantly talking to clients who have too many initiatives in the pipeline for their available resources. To improve the quality and financial performance from your innovation pipeline, organizations must incorporate resource planning into the innovation process. Resource planning is defined as the medium to long-term, forward-looking view of resource requirements, in contrast to resource management, which is a detailed, day-to-day view of resource allocation typically performed by project managers.
You can integrate resource planning into your NPD process by following three steps: 1) collect resource requirements for each project; 2) consolidate the resource plans into a single view; 3) incorporate the resource data into your process for prioritizing and balancing your portfolio(s).
In step one, collect resource requirements for each project, the two dominant approaches to resource planning are what are known as bottom-up planning and top-down planning. As the name implies, bottom-up looks at the lower-level tasks that need to be completed and builds the resource plan “up” from there. Top-down takes a more strategic view of the total resources expected to be used in completing a project of this type and allows the project managers to work “down” from there. Bottom-up and top-down planning ultimately achieve the same outcome: a resource plan to support project execution, and the data required to provide portfolio-level project decision support.
These two approaches, however, require very different amounts of time and effort to generate these end results. With bottom-up planning, the level of detail required to schedule the projects and to track progress often exceeds the value of the information provided, so it’s typically only used in architecture, engineering and construction (AEC) firms that have schedule-performance bonuses tied to their contract or where the complexity of the project requires detailed scheduling and resource management, e.g., in the aerospace and automotive industries.
In contrast, top-down planning takes the position where “good enough” estimates based on experience or past performance with an acceptable margin of error can be used to support portfolio decision-making. This is consistent with the amount of information available at the early stages of Innovation – we do not have detailed information available to perform detailed planning. However, the decision to add an initiative to the pipeline is critical as it has a long term impact on the overall resource plan. Top-down planning estimates provide enough precision to understand the impact of portfolio decisions on the resource plan.
Step two of integrating resource planning into your Innovation processes involves consolidating your resource plans. Doing this lets you see all the resource needs for all the projects in the organization or business unit. This lets you identify bottlenecks and make adjustments.
In step 3, incorporate the resource data into your process for prioritizing and balancing your portfolio, you prioritize the resource demands based on project type, target market, expected economic rewards, investment requirements, and so forth. The greatest benefit of having chosen top-down planning is now apparent: without the overhead associated with creating detailed project plans for every project, your organization is able to collect resource requirements data, consolidate them into a single view, and prioritize the allocation of resources against capacity and business impact (e.g. financial performance or strategic alignment).
We always have more initiatives to work on than we have resources to undertake. Developing a good understanding of current resource deployment helps your organization make fact-based decisions on project scheduling and prioritization, which in turn enable you to focus on the most important projects, speed them to market and improve the ROI on Innovation investments.
Source: Integrated Resource Planning: In Support of Portfolio Excellence. Sopheon White Paper, 2012.