Little’s law states that there is a connection between the number of occurrences in a system (P), the throughput of the system (T), and the average time an occurrence spends in the system (L).
Lead times are important within product development. These can be calculated by using the formula above.
Average lead time = number of current projects / throughput of projects per year
Little’s Law and Projects
If you currently have ten ongoing projects and finish five projects per year the average lead time is two years.
L = P/T = 10/5 = 2 years
If you want to cut your lead times in half then you can cut the number of current projects. In the above example, the number of projects would be cut to five.
L = P/T = 5/5 = 1 year
By putting a limit on the amount of projects it’s possible to have more control over the average lead times.
Limiting the amount of projects is possible in product development where the projects are investments in new products that will allow the company to grow. If the projects are delivery projects that are begun in order to adapt a client’s product then this degree of freedom might not always exist. In these cases it’s necessary to increase throughput by hiring consultants.
But maybe it’s possible to increase throughput by increasing the efficiency of the operation? In order to find if it’s possible you can make a rough estimation by calculating the theoretical throughput. Add the currently available resources’ man hours in a year (be sure to remove time needed for other things beside projects, such as training, illness, etc.) and divide it by the average project lead time (make sure it’s effective time and not calendar or waiting time). A large difference between the theoretical and the actual value of the throughput will show if there is room to increase efficiency. However, be careful when reaching conclusions. The allocated time for a project usually heavily diverges from the actual time it takes to complete it according to classic project planning methods.
Little’s Law and Work
Since development activities does more things than work using projects it’s necessary to find solutions so that work can be queued and begun according to Little’s Law. All incoming work must be able to be to be queued and given access to the system which has enough capacity to handle it. We differentiate between projects and tasks and have queuing systems for both types.
A lot of people who have worked with projects have experienced the same thing: downtime. You have to wait for people to get back to you, wait for results and wait for decisions to be made. On top of that other actors are waiting for you to finish your task that you can’t finish because you’re waiting for something or someone.
Forecasts are made to coordinate work in a businesses and projects. These forecasts tend to be wrong, which has led to the acquisition of more advanced, and expensive, forecasting tools, often in the form of some sort of IT solution. However, the forecasts are almost always wrong and thus we wait.
When you make detailed plans you make a future forecast. It’s just as easy or hard to forecast what will happen in four weeks within a project as it is to forecast the weather at the same time. In practice it’s impossible; the same laws that govern the weather apply to an organization.
However, there is an alternative to forecasting: visual management (also referred to as pull, lean or kanban).
Visual management was invented within production to solve the problems of wait time for materials due to errors in forecasts. When using outdated methods, if production cell A produces materials that are used by B a forecast is made of this use and A is allowed to produce according to the forecast. When there are many active production cells complex forecasts are created. In practice it’s impossible to make these kind of forecasts (see the book Chaos for an explanation as to why this is so). The forecast will lead to a lot of disruptions which forces management and workers to constantly run around, putting out fires. All this extra work is called waste.
On the other hand, visual management is based on how A can see by himself/herself how much material is used by B and produce more as needed (and not more). One example of this using boxes is when the material in one box is used, B sends the empty box to A to be refilled. Often a so-called kanban is used, so that when the material is down to a certain level B sends a kanban to A who produces the required materials.
Visual Management and Pulse
Visual management within strategy and development follows the same principles as production. A job’s current status is made visible using a whiteboard (a Pulse board) so that A and B can see the current situation. The status on the board tells A and B what they need to do in order for work to progress without wait times. The meeting where visual management is used is called a Pulse meeting. These Pulse meetings form a network and we refer to this as an agile network organization.
A good system for visual management also needs to set limits for how much work can be done concurrently. The aim of setting such limits to keep the operation from overloading in order to keep the lead times short. Appropriate workload limits can be calculated using Little’s Law.