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Coping with Process Variation

| On 30, Oct 2007

Cass PursellI have talked before about Little’s Law and its role in improving the speed of the innovation process (“One critical issue that must be better understood is the cause of long innovation lead times,” from my post on August 29th.) According to Micheal George, the author of some of the best business books in my library, using Little’s Law is just the first step in controlling lead time in the innovation process. As a reminder, Little’s Law is a function of work in progress and average completion rate, and it teaches us how to release projects into the development pipeline in such a way as to help us to maximize the speed of the process. But what happens after the project is released into the development pipeline? How do we account for the reality that some work gets done more quickly than planned and other work defeats our best estimates and takes far longer than we believed it would?

I work frequently with software developers, who are purposely scheduled at very high utilization rates. On average, the higher the utilization rate of a developer, the longer any given project that depends on that developer will spend waiting for him or her to come available. In other words, if a developer is 90% utilized, an average project that requires him or her as a resource will wait in queue a lot longer than if the developer were only 50% utilized. This is true because inevitably, developers run into problems; for developers with higher utilization rates, projects will begin to pile up as those problems are worked through. This effect is known as the Law of Innovation Variation, and it can create potentially seismic impacts on lead time via its impact on average completion rate. Becoming familiar with the Law of Innovation Variation is a good first step for managers who are interested in creating visibility into how much “bunching up” of tasks will occur; it allows managers to isolate the point in the innovation process where this bunching up occurs, and helps to identify the critical resource(s) associated with the bunching up.

By using Little’s Law in conjunction with the Law of Innovation Variation, time-to-market can be compressed. Even if you’re not in a highly commoditized environment, shrinking time-to-market will likely have a positive impact on both revenue and operating margins, and that’s always a good thing.