Sally Elatta’s above quote highlights one of the biggest challenges in most organizations across the industry is the issue of balancing demand with capacity. Demand in this sense is explained as the amount of work required to be completed to deliver value to the customers and achieving the organization’s objectives. Capacity is elaborated as the availability and capability of people to deliver the demand that serves value to the customers. Regarding to the demand, there is so much that business wants to achieve and of course this could be due to market pressures and the hype of becoming competitive in this economic market. The urge to serve customers and to become a leader in the market makes everything seem to be important to do for almost every business but in fact, there is always that one thing which is more important than the other at a given point in time. Leaders that want all things to be done simultaneously without taking “Capacity” into consideration creates enormous pressure that will have detrimental impact in the longer run. Such often leads to demand that exceeds the actual capacity of the respective teams. Having an imbalanced demand and capacity could lead to several challenges in the organization that are costly and just to list a few as below.

  • Working on so many things simultaneously that are deemed equally important could lead to quality issues due to context switching. Quality issues lead to rework which is cost inefficient for the organization and as well as longer time to deliver value to the customer.
  • Employees become frustrated when work to take on is more than their capacity. This results in longer working hours which impacts team morale and affecting the culture of the organization.
  • When everything is important and there is no order of priority, nothing ever gets done and teams sit with a high rate of work in progress and resulting to work rolling over from one sprint/iteration to the other. This impacts the value of the customer in terms of speed and quality.

It is therefore important for leaders to instill the discipline of prioritizing work in alignment to their strategy. Prioritization of work taking into consideration the capacity of teams is the starting point of dealing with the issue of imbalanced demand and capacity and it alleviates a lot of pressure from the teams and beneficial for the organization to work on what matters at a given point in time to leverage from the window of opportunity in the market.

There are various ways of prioritizing work that organizations can adopt and use, but SAFe framework recommends a technique called WSJF (Weighted Shortest Job First). In my experience this is the more economically sound technique to use as it puts strong emphasis on quantifying the cost of delay for economic benefits.

Figure 1. Example of Weighted Shortest Job First prioritization technique

Perception on prioritized work

I have also observed that in most cases some leaders have a perception that all work that have been prioritized must be completed by the teams. Its not always the case. Priority just gives an order of what is important for the organization and customers and where possible the work should be completed by the teams, but the work still needs to be estimated to check if there is available capacity and capability to deliver it. This is what we refer to as the “Pull mechanism” in Agile allowing teams to commit on what they can manage to deliver from the priority based on having conversations and estimating work. When teams estimate work, it gives them data that can be used to substantiate how much can be completed at a given point in time based on the available capacity of the team and available experience. Should there be no available capacity to complete all prioritized work, then the teams have the right to push back some of the prioritized work to be considered at a later stage and only commit on what is possible. In my experience such conversations in some organizations are not yet taking place or even if they are, estimation practices are just a “tick box” exercise and not serving its purpose simply because you will find out that work has already been committed on behalf of teams by leaders and what has been prioritized must all be completed even when there are capacity constraints. In this case, leaders must play a supporting role in empowering teams to use the practices effectively and efficiently and to also create an environment that allows teams to challenge the status quo.

Using work estimation to derive metrics

Estimation of work does not only help with balancing demand with capacity but also with data to derive metrics that can be used to improve efficiency and effectiveness of team performance through flow of value. Teams can be able to create metrics such as Velocity, throughput, predictability etc. to improve team performance over time once work items are estimated. In the absence of estimating work, it becomes challenging to derive such quantitative measures that can help the teams to have data driven conversations and decision making on improving current state of the team performance.

In closing, I therefore urge and challenge leaders to evaluate the use and practice of the tools and techniques adopted in their business to understand if they serve the purpose and the intended objective. There is so much that can be leveraged from these tools only when we have the right mindset.

Published On: January 17th, 2022 / Categories: Agile, Agile Methodology /