What are your scarce resources?

If you are a PMI certified project manager, you may have caught a quote of mine in the cover story (available in PDF form), where I laid out a simple -- but often forgotten -- principle: "every firm is short on some resource -- cash, employees, executive mindshare, etc. -- so you've got to pick the best opportunity." This idea of scarce resources is the foundation of Neoclassical economics, not to mention a very important priciple in technical design and project management, but somehow the importance of the idea is often ignored.

This will be the first in a series of blog entries about the importance of considering scarce resources. In a recent article, I gave some interview tips, so lets take hiring as the starting point.

Scarce resource: In House Talent

Consider a case in point: at a former company, we had several seasonal accounts, one of which could, at a moments notice, double or triple the resources required, then needs could drop by the same or greater amount. At another company, outsourcing might have been a good option, but several factors prevented it in this scenario: culture, contractual obligations, and the almost patented ambiguity that define technical specifications at advertising-based firms. To be successful, something had to change, but what?

Take Inventory: What do you have and what do you need?

Let's say that its May now. We know that the we've got a launch soon, so we'll probably have slightly more technical resources than we need just after the launch. We don't know what is coming in when, but a lot of it will come in with almost no time to respond.

At first glance, one might assume the scarce resource is programming talent, but more than enough talent exists in our market at prices we were willing to pay. Our scarce resource, the thing we could not afford to spend, was time of the senior people during busy season.

Thinking in terms of exactly what we need, something obvious emerges: the contractors we need are not at all like our full time employees. We need contractors who can do a narrow set of things, without a lot of direction, and do it fast -- but how do we find them reliably?

The solution: Allocate Scarce Resources Appropriately

Here we have at least a few options:

1. Begin looking for people now using the existing process: Use a lot of senior resource time now, and potentially a lot during busy season


2. Hire later using an abbreviated version of our existing interview process: Use very little senior resources up front, but potentially huge abouts during busy season if the contractors are sub-standard.


3. Hire later using a completely new specialized interview process:Use a lot of senior resources now (when we have them) to define the test, but, if done well, very little when they are most in demand.

The third option, keeping in mind which resources are scarce, is clearly the best option. Here is what we did:


We established specialized interview roles for team members that would work with the contractors, develope a practical test that simulated the working environment and tested ONLY the key skills they would need during the period. In under half a day, we were able to accurately access, compare, and make offers. Many candidates were objectively weeded out in the first half hour, minimizing our time spent evaluating unsuitable candidates, allowing more time to discern the good from the great.

Several years later, the creative work on the account has since moved on, but the technical work remains at my old firm, where they continue to use the same process successfully today.

In Summary

You obviously can't solve every problem by an analysis of scarce resources (risk is a major factor), but it is far too often removed from the decision process entirely -- especially in determining things like which projects to take on (the subject of this the May edition of PM Network) and when evaluating overall technical strategy.

Recommended Related Readings

A few books I thought about while writing this blog entry. I think you'll enjoy any and all.

Fisher, Robert. Getting to Yes: Negotiating Agreement Without Giving In (1992)
People negotiate all the time. This is the classic text on how to make lasting and successful negotations by understanding what you -- and they -- really want. If you enjoy this, I would also recommend the Harvard Program on Negotiation Newsletter.

Nalebuff, Barry and Ian Ayres. Why Not?: How to Use Everyday Ingenuity to Solve Problems Big And Small (2006)
A very entertaining look at 4 seperate methods of solving problems. This book may turn the way you solve problems -- and the way you eat bananas -- upside down.

Polya, G. How to Solve It (1945)
Intended for mathematics educators and students, this books shows how to solve virtually any problem. A new edition came out in 2004, which I have not read, but I assume it is as good as the original. Also quite different in content and approach to Why Not?, both have similar underlying messages about the way to solve problems.

Skousen, Mark. The Making of Modern Economics: The Lives and Ideas of the Great Thinkers (2001)
A brilliant and highly entertaining history of economics, the perculiar yet fascinating lives of its major contributors, and the evolution of its major schools of thought.