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Why 'Value Dials' is a game-changing concept in portfolio management

Learn how disciplined portfolio management helps organizations select and deliver the right projects to fulfill their strategic goals.

A game-changer: "Value Dials"

Since we don't have the space here to review the entire discipline applied by Intel, I am going to focus on a couple of key ideas. The concept of "Value Dials" is, in my view, a game-changer in the realm of portfolio management for a couple of reasons.

First, value dials was developed based on a comprehensive review of more than 100 historical projects, and so it avoids the academic nature of some scorecard-type metrics that have become popular in the PMO world. Rather than a one-size-fits-all scorecard, Intel has created a spectrum of value indicators ranging from the objective, such as direct revenue generated by an IT solution, to the softer, more subjective measurements, such as risk avoidance and time-to-market benefits. Project teams, including the customer, the responsible IT staff, and the project manager, can then construct an appropriate package of value indicators based on the specific project at hand. This enables project teams to vary the metrics applied according to the customer's needs, while remaining within an approved set of value dials that represent a common language, and an established method of measuring results.

Second, the set of value dials selected follow the project from initiation through implementation and then across the lifecycle of the resulting solution. By applying a consistent set of metrics across the project lifecycle, Intel ensures there are no "moving goalposts." Every experienced PM has seen projects in which the expected benefits shrunk as the feasibility of achieving the initial expectations receded, often creating the dreaded "zombie projects" that go on absorbing resources, and devastating team morale, long after their original justifications have proven unreasonable.

As noted earlier, in a company like Intel the project portfolio can include initiatives with a broad range of objectives, from the wildly innovative, such as speculating the functions of next-generation silicon chips, to the strictly repetitive, such as the building of a fabrication plant to exacting specifications developed over years of experience. Clearly a single approach to expectation setting and measurement would not be applicable in all cases. The building of a fabrication plant (or fab), for instance, might be measured based on compliance to existing specifications and previously observed costs and benefits, while the creation of Intel's next generation of chips might be measured based on innovativeness or fit for a specific customer's requirements.

Let's look at some of the specific value dials to see how they might apply. "Headcount Reduction or Avoidance" probably wouldn't have much applicability in a creative endeavor like chip design, but it might be a critical success factor in the evolution of fabrication technology. "Open New Markets" could apply in both scenarios: A new fab in Asia might open markets there geographically, while a new graphics chip could open new segments of business around the world. While many of the metrics, such as "Materials Discount" or "Scrap Reduction" might seem focused on purely operational projects, one of the key insights is that ultimately every business -- even ones that are adopting new chip technologies as Intel customers -- are trying to "move the dial" in these key business areas. Intel focuses on hard, quantitative metrics as the core elements of its Business Value discipline, but it also allows plenty of room for the discovery and incorporation of additional, project-specific metrics that are developed or discovered by the project team during execution.

The key points to be drawn from Intel's approach are:

  • Inclusion of the sponsor in the setting of objectives and metrics is key. As we've learned in the agile movement in software development, the old techniques of throwing projects over the wall to IT and saying "go build this" don't work -- the involvement of the business sponsor spells the difference between success and failure. In the portfolio context, this means that project selection and measurement must include the customer, or they become rudderless and veer off course.
  • The use of a common language and set of metrics from selection through implementation and operation ensures that all participants, from the most technical IT staffer to the project leader and business sponsor, are all thinking about and measuring success in the same way.
  • The use of defined value metrics (which can add additional data collection and analysis overhead to a project) pay off in communication, understanding, and results.
  • Most importantly, the application of a disciplined portfolio measurement approach allows organizations to turn IT from a backroom cost center to a key driver of business advantage and differentiation.

Evolving the mindset of the IT teams and their internal and external customers so that they look to IT as a participant in their business results is the central underlying objective of the achievement pyramid.

About

Rick Freedman is the author of three books on IT consulting, including "The IT Consultant." Rick is an independent consultant and trainer, working, through his company Consulting Strategies Inc., to help agile teams and organizations understand agile...

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