Optimizing Capacity toward Value

Summary

In addition to balancing capacity and demand, it is essential to assure that capacity is leveraged in an optimal way so that all resources are being used effectively toward value-producing work. 

At its core, portfolio management is all about leveraging capacity to produce value. This is also the goal of any organization, with portfolio management as the primary vehicle for doing so. In order to effectively apply resources, an organization must be clear about what exactly it is that produces value.

Initiatives produce varying levels of value. Major strategic efforts are usually viewed as high value producers. Base services offer value as well, but it is generally seen as secondary value. These services may or may not be a differentiator for an organization, but if they are lacking, it will destroy value. Much like human beings have a psychological “hierarchy of needs” (as defined by Abraham Maslow), customers also have a hierarchy of needs, and some of the most fundamental needs are reliability, service, and availability. Thus, base services cannot be short-changed. Yet, should they be given the same focus as a major strategic initiative? Much depends on the comparative value for the specific organization.