We often think of project management, portfolio governance, and project execution as doing a list of steps or tasks. The underlining work being done is really a process, which could be clunky or really smooth. Here's my question: what happens when we do our work one way compared with when we do it the absolute best way? Here's my answer. I think the cost benefit of doing more things right increases logarithmically rather than linearly as we tend to execute our work better. The attached image show the results of my theory.
The vertical axis shows the level of cost savings. The horizontal axis displays the level of doing things from really bad to really great. As you can see the curve increases in a logarithmic fashion left to right. This means the better our process of getting things done, the faster we will save costs.
I'll explain why. Let's say we're executing and managing a process like drilling an oil well. And let's say there are 100 things that could go wrong. Doing it badly means we'll probably hit close to 100 bad things. Doing it poor means we could run into a 90% chance of bad things happening. Either way we're screwed in terms of saving costs and the gain between the two values is small.
Let's look at the other end. Assume that drilling the well with good processes will leave us with a probability of 10% of things going wrong, which produces some cost-saving value. Now let's say that we cut the probability of things going wrong down to near zero. The difference between those two states are quite high in terms of cost-savings potential. This is why I see a logarithmic curve instead of a linear line.
I don't think many executives realize the logarithmic benefit of best practices. If so, then process improvement wouldn't just be something a group does two floors down in the east wing. It would be something totally engrained in the enterprise culture and daily work. Do you know any organization at this level? There aren't too many, but the few who understand this curve theory are already getting ahead of the market with enterprise-wide sharing.
This is one of the main reasons why I created PIEmatrix to be an enterprise online project management software with a focus on best-practice processes. I wanted to build a technology platform that makes it easier to implement a way to setup, execute, and maintain best-practices processes and run them as projects.
Let me know what you think?