"Applause is a receipt, not a bill." -- Pianist Artur Schnabel
The curtain lifts. A spotlight shines on center stage. A single dancer moves into the spotlight from stage left, executing a series of steps in time with music from a single violin. The rest of the orchestra begins to play as nine more dancers appear. Each performs his or her part in time with the music, in the correct sequence, and in a predefined physical space. The result is an esthetically pleasing performance that receives an ovation from the appreciative audience.
Resource allocation is a topic of perennial concern to those managing innovation and R&D investments. After all, the projects you support by providing dollars and people are the projects destined (you hope) to turn into salable products and services.
But we believe resource allocation is too narrow a term to adequately capture the myriad decisions involved in funding the design and development of products customers will value. Did the choreographer of the performance described above "allocate" resources to the dance number? If so, he or she might have sent ten dancers to the stage, but without specific direction about timing and interaction with one another and the music, the performance would have been a whirl of clashing limbs and off-tempo jumps.
In the same way, simply devoting a certain amount of money to a certain project isn't adequate. When you commit the money—and whether you consider all the support necessary to commercialize the product—has an enormous impact on the project's success. This issue of Discoveries reveals the limitations of resource allocation and introduces the broader concept of resource choreography as a method for creating winning products.
Investment Intensity as a Basis for Resource Choreography
A prerequisite for discussing resource choreography is an understanding of the concept of investment intensity. Unlike investment, investment intensity is not one-dimensional. When you analyze potential investment in a new product, you simply look at how many dollars and resources you have to put into the product. Investment intensity, by contrast, measures the level of resources a project will require for success in relation to the customer, to the strategic value the investment can create, and to other projects underway. In other words, it's multi-dimensional, which can make the task of evaluating it seem daunting. (Taking this view also assumes as a prerequisite that you will determine the customer value associated with a project.)
Planning investment intensity for a project or a portfolio involves more than simply deciding the total amount of resources—people, capital, or material—you need to develop a product and fully support its commercialization. Resource choreography takes investment intensity planning one step further, adding the dimension of time: investing the right resources at the right time, at the right level and focused in the right areas, so you can fully deliver the promised customer value for the purchasing volume you expect. Investment intensity planning includes thinking through what resources you need and when and where you will commit them. But it couples this with an ongoing assessment of what this resource investment will yield in terms of key knowledge (to guide whether to move forward) and in terms of customer and strategic value. Resource choreography then becomes the combination of planning and assessment around resources.
The definition of resources in the context of investment intensity is broad, ranging from manufacturing and infrastructure to customer support and advertising. For example, suppose a consumer products company develops a new cleaning product. The company invests heavily in research and development and the prototype tests well with consumers. However, if the company fails to allot an advertising budget sufficient to familiarize and educate consumers with the new offering, an otherwise successful product may never make it in the marketplace.
Optimum investment profile
Because you don't have unlimited resources, choreographing the application of those resources in a way that optimizes them is critical both for your chances of successful market launch and for the eventual payoff. In the consumer goods example, you may have allocated appropriate funds for marketing, but during the wrong quarter. If you dedicate too little investment (in the aggregate or in specific areas) or provide it too late, you may come up short in meeting customer requirements (see the figure). If you dedicate too much investment or invest too early, you can burden the project with more costs than it can support or slow the overall development process by diverting management attention to tasks that are not yet important. Often, a firm's most critical asset is the time and attention of its senior managers. Investing too early creates new programs and infrastructure that must be managed, potentially distracting senior managers from more crucial early stage tasks.
Making Everything Work Together
We prefer the term resource choreography to the more common expression resource allocation because the former more effectively captures the essence of the dynamic nature of investment intensity management and the dynamic way resources and capabilities must interact to win in the marketplace. A master choreographer preparing for the premier of a new ballet starts with an overall concept for the work, but in the end must get down to planning and detailing the exact placement and movement of the resources at his or her disposal—i.e., the members of the dance troupe, from prima ballerinas to the supporting cast. The choreographer then must work with the troupe to execute against this plan: training, preparing, and rehearsing while making corrections and adjustments as the concept becomes real on the rehearsal stage. The choreography involves all the activities that lead to the performance as much as the final performance itself.
A dance choreographer also must consider the dance troupe's other commitments. Perhaps it has committed to doing a benefit performance or its lead dancer will be conducting master classes on Thursday evenings. The choreographer who expects dancers to be in two places simultaneously will have a big problem!
Similarly, while you make major strategic resource choreography decisions at the portfolio or pipeline management level, you also must make decisions about the application of operational resources at the specific product operational level if a project is to move forward and stay on track. Too often, managers make a high-level commitment to a project but fail to consider the choreographic issues that affect real people doing real jobs. We often have observed engineers being assigned to a new project while still being expected to carry on a full load of existing work. This would be like the ballet director who commits to overlapping performance dates for two ballets starring the same cast of dancers. While there may be theoretical time in which someone can work on a new project, studies show that overloading with tasks can lead to a decrease in productivity as people struggle to switch mental gears among different activities. Or managers will believe that outsourcing part of a project will not add any resource overhead internally, as in the case of a medical devices company that wanted to enter the global market. Because each of the many countries identified as a target market had different regulations, the company outsourced its regulatory activities. But without a staff person managing the outsourcing internally, the process was slow and inefficient.
The resource choreographer must keep in mind three important points when initiating the effort to plan and coordinate the application of resources:
- Think through and thoughtfully design the relationship and interaction of resources and capabilities so they work together in a seamless fashion during the on-stage performance.
- Always be aware of the "score" to which the resources will be "dancing" and be sure to shift if the score changes; that is, understand the market environment and make adjustments in reaction to (or better yet, in anticipation of) changes in the environment.
- Be appropriately sensitive to the role of the supporting cast. Don’t focus so exclusively on your star resources that critical but lower profile resources and capabilities receive inadequate attention and ruin the performance.
Business Leaders as Master Choreographers
Like a master dance choreographer, business leaders must choreograph the resources and capabilities at their disposal, both for the final marketplace performance and for the resource commitment needed to prepare for that performance. Like the dance choreographer, business leadership needs to work its broad-brush business concept down to the specific placement and movement of resources, both those actually appearing on the marketplace stage and those used to prepare for the show. It's not easy to do, but even making small steps toward moving beyond resource allocation to resource choreography can dramatically improve your project success.
Find out more about resource choreography in PDC's book, Value Innovation Portfolio Management: Achieving Double-Digit Growth Through Customer Value.