Which of the following is the best way for them to proceed?

An organization has a large number of products and is unsure about how to allocate funding across the products.

Which of the following is the best way for them to proceed?
A . Let the Finance Director decide
B. Allocate funding equally across all products.
C. Allocate funding evenly based on the revenue share for each product.
D. Fund small incremental changes for each product and measure outcomes and repeat.

View Answer

Answer: D

Explanation:

Small Incremental changes and the right measures can help us decide where best to allocate funds. Funding product or service development in a series of experiments lets organizations test new ideas quickly, allowing the ideas that won’t work to be identified quickly. This lets the organization focus on the ideas that are more likely to produce better results. Betting only a small amount minimizes the amount of effort “wasted” going down the wrong path when an idea proves to be unworkable.

Also Organizations generally have more ideas than they have capacity to pursue.

When the organization tries to work on more ideas than it has capacity, they force teams to multi-task, which causes the teams to lose focus, and become less effective:

o Each initiative takes longer to deliver because teams lose effectiveness when they switch contexts between different initiatives

o Delaying value realization or feedback on value delivered deprives the organization of information it needs to make course-correcting decisions

o Delaying feedback causes organizations to waste time and money on things that later prove to be valueless once they get feedback.

Working on fewer things at a time, eliminating multi-tasking, helps organizations focus so that they finish everything faster than they would if they took on more work and also reduced the risk of losing bigger funds on failed ideas.