Made any tough decsions lately?
Project leaders make decisions in real time with limited information or information overload and ever-changing constraints. In order to make effective decisions, the project leader must understand the backdrop or the context within which she is making decisions
— What is the purpose of your project?
— Why does it exist?
— What services, products, or results does it provide?
— Where does your project fit within the value stream of the organization?
There is a context in which we make decisions. For example, every project exists within a value stream. That value stream exists within a business model. That business model is built around specific profit models. All decisions made within the project must reflect the project’s placement within this value stream.
For Porter’s model on value chain, see: http://www.quickmba.com/strategy/value-chain/. This model only applies to products though.
Every decision we make must feed into or support a business model that is built on a specific profit model. This can only be done if the decision maker understands which profit model they are adhering to and why.
Where do we get our ideas about profit?
We are bombarded with ideas and images about projects from every direction.
— Films, newspapers, TV, and books
— Personal work experience
— Watching projects in action
We must understand the concerns, goals, and needs of the stakeholders
— Increase in share price, long-term value creation, market share, minimizing waste, cost savings, etc.
It’s important to have a clear idea about what projectss should or shouldn’t do in order to make or save money.
Profit Model Payoff
A good profit model architecture gives you
— Clarity of purpose
— What your stakeholder’s goals are and are not within the value stream
— An understanding of why you must do what you do as a decision maker and what it provides for your customers and stakeholders
— An approach to decision making that is comprehensive and robust
Benefits that tend to result from the effective application of the right profit model:
— More decisions are made in line with the organization’s vision, goals, and deliverables
— Short- and long-term cost savings and profitability go up
— Brand recognition increases
— Market share increases
— Operational overhead tends to decrease in direct proportion to increased productivity
— Increase in competitive positioning
Making decisions is tough . . . know where project fits into your organization’s value stream.