3 Strategies for Effective Demand Management
Effective demand management is the cornerstone of delivering results in a consistent manner and keeping your commitments. And the balance between demand and capacity is in its foundation.
When demand exceeds your capability, delivery times increase and, in the end, it is your clients who feel the impact, as they have to wait longer to receive what they’ve requested. From a client’s perspective, this is a complete disaster as they end up with little to no predictability and very slow service times.
You have to understand your capacity and manage realistic expectations. Taking on more work than you can handle has a tremendous impact on your performance.
You may think that by always saying yes, you’re coming across as tolerant, kind or polite. Being nice and trying to make everyone happy is in our nature. Even so, in management, that doesn’t necessarily mean this is the right way to go.
The big question here is do you have the capability to deliver on your promises?
Today, we’ll explore three potential strategies that you can use to manage your demand effectively. Using these techniques, you can establish the foundation of a predictable delivery system that enables you to meet your commitments.
Manage Realistic Expectations
Usually, business and client requests are constantly coming in. Effective demand management means that you’re in a position where it’s imperative to say ‘yes, but later’; respectfully but firmly. If your process is brimming with tasks, you ought to ask yourself whether your team is capable of handling new work at that point. That way, you are setting up realistic expectations on what your team can and can’t handle. Start negotiating and making some tough decisions – this is essential if you’re looking to reduce demand, and it usually necessitates focusing on the few valuable work items rather than catering to everyone’s demands.
Making the well-being of your team your top priority and managing realistic goals are crucial components of a successful approach to management. It protects teams from burnout, workflows from getting stuck, and tasks from unnecessary delays.
Postponing a business or customer request can be challenging, but it is also a step towards more efficient work prioritization. Being part of a fast-paced and rapidly evolving market means companies need to be able to identify the work contributing the highest value to their business.
Your capability is limited and demand will always outstrip it. So how do we know whether we have the capacity to deliver on our promises? It’s all about balance. You need to shape the demand so it matches your capacity.
It is far easier (and far more valuable long-term) to be flexible with your demand than it is to try and push the limits of your capacity. The trick here is to only commit to the options that bring value to your business and your customers. In order to achieve that goal, the first thing you need to specify is your commitment point.
Define Your Commitment Point
We usually tend to make more commitments than we can handle. We’re often emotionally attached to the idea of saying ‘yes’, especially to our customers. However, to prevent any dangers of overpromising and under-delivering, it is very important to manage demand effectively and clearly define our commitment point.
Your team commits to delivering a piece of work at the moment they pull it into the workflow . This is your commitment point.
Commitment is not just a promise, it is an engagement. It is a responsibility to deliver the work successfully that your team has taken on.
On the other side, commitments are not contracts either. There is always a chance that they won’t be met so your team should not be blamed if they don’t manage to keep their commitments every time.
Think about failures as opportunities for improvement. Every missed deadline is a chance to improve the way you manage your work and increase your performance.
Your commitment point is the border between your delivery workflow (downstream) and your backlog (upstream).
If we imagine the value stream funnel, the upstream process is above the commitment point. Having a commitment point in place provides a great level of flexibility, as it allows you to reprioritize your items up until the moment they are pulled into the system.
The downstream process is underneath the commitment point. It is the delivery bottleneck in the system. Your capacity is limited. In order to align demand and capability, you have to manage demand effectively to make sure your team only takes on as much work as they are able to handle at a time.
So you should always be mindful of what and how much work is crossing the commitment point. Your goal should always be to bring the most valuable work items to the downstream process.
Consider Your Demand as Optional
Before the commitment point, we work to generate ideas on how we can solve our customer’s problems.
The best piece of advice that we can give you is to always consider your demand as optional. And you must always think about your options objectively. This strategy for approaching demand management is a crucial part of setting realistic expectations.
For example, you may have a nice idea or sometimes even a brilliant idea. That doesn’t necessarily mean this idea will bring value to your business and your customers. You need to validate your idea and assess its feasibility in terms of the risks you’re trying to manage. That’s what aligning options to your business strategy means.
You should never commit to your customer’s requests early. Something that sounded like a good idea once might not make sense later on, particularly as it gets closer to the commitment point.
Committing to our ideas prematurely is a common cause of imbalances between demand and capability.
As you shift your options closer towards your commitment point, they go through the steps of being proven, validated, and confirming that they have a good business case. What’s more, they’re likely to be delivered in a predictable time and to a high quality.
In our Sustainable Predictability digital course, we build the foundations of a risk management framework that enables you to decide which are the options you should take on first, in order to best align with your business strategy.
And if an item on your backlog no longer makes sense, feel free to discard it. However, if it has just crossed the commitment point, you are committed to it and you should do everything in your power to keep that commitment.
You’re supposed to discard items on the upstream.
Ideally, you don’t want to abort items once they’ve been committed to. The lower your work is in the funnel, the higher the cost you’ve spent on it. Even if you need to discard an item in the downstream process, make sure you mark it and analyze it afterwards. You can then take action accordingly and prevent this from happening again.
It is crucial to sequence your backlog items using a risk management framework to ensure that the items ready for commitment have been selected using a value-driven system and that, by the time they reach the commitment point, you’ve successfully selected the best opportunities.
Your upstream process is the place to discard items. And you should purge it regularly. Use the Aging Chart to track the age of the work items on your backlog, and consistently keep it in check.
As a rule of thumb, if something has stayed in your backlog for more than 6 months, chances are it probably isn’t that important anymore.
Of course, these 6 months are just a starting point; I highly recommend setting up a purging period that works in your own context. Whatever the timescale is, the main point is to make sure you have one in place, and that you clean up your aging backlog items on a regular basis.
THE COMPLETE GUIDE TO
BALANCING DEMAND WITH CAPACITY
How To Relieve Team Overburden, Increase Productivity and Avoid Delays
By using these three strategies to demand management, you can better align your customer requests with your team’s capability. These steps will enable you to maintain a stable, predictable delivery system, which should be the top goal for everyone involved. After all, the strongest booster to customer satisfaction is building a reputation as a credible, reliable service provider who meets their commitments.
Meet the Author
Sonya Siderova is a passionate product manager and a driving force behind Nave, a Kanban analytics suite that helps teams improve their delivery speed through data-driven decision making. When she's not catering to her two little ones, you might find Sonya absorbed in a good heavyweight boxing match or behind a screen crafting a new blog post.