Get Rid of the Crappy Stuff

A consistent and fundamental problem we see in our practice is too many projects and not enough resources (people, materials, equipment, and money). Why?

Each project has revenue associated with it. This revenue is part of a portfolio of projects. The revenue is needed to justify the expenses (capex and opex). The more projects in the portfolio... the more potential revenue, so the logic goes.

Cut projects... then "the business plan does not work anymore." So the projects stay, even some that are past their market window, causing low/no ROI at best when they finally reach the market. Yet these "dogs" continue to suck valuable resources from the portfolio. Rarely do we see the project portfolio rationalized with the available resources. This is too scary for most companies.

We developed a decision modeling methodology to prioritize projects in a portfolio; in order to focus finite resources (on the "non-crappy" stuff). Then we model the impact of constraints (people, money, and risks) to identify the projects that generate the "biggest bang for the buck." It is always 80:20; 20% of the good projects generate 80% of the benefit. 80% of the projects usually fall into the "crappy" category.

In Game Theory, there are two types of games; negotiation and zero-sum. The US Congress tries to negotiate the Federal Budget every year and the result is ever expanding deficit. The alternative game is zero-sum. This means that when one loses, another gains. Most States have to budget this way, by law. This is really how to treat a project/product portfolio.