Why Projects are Designed to Fail and How to Make Them Succeed

By Jack Bergstrand

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Unlike reengineering, which focused on making established business models more efficient, reinvention focuses on improving the business models themselves by successfully balancing continuity, change, and organized abandonment. Reinvention involves implementing new initiatives that are successful, expanding existing capabilities that are already successful, improving areas that are struggling, and/or stopping practices and businesses that are unsuccessful.

Implementing reinvention projects is critical for companies to win in the global marketplace.

Unfortunately, project failures have consistently been a major barrier to reinvention. According to Standish Research, 70% of major projects fail to meet their objectives; 50% exceed their original cost estimates by a whopping 200%; and 20% are ultimately cancelled. Why is this? Companies and their consulting partners have been working on large enterprise projects for many decades, and yet the numbers haven’t improved.

Projects are designed to fail

After researching this for 10 years with a very experienced team and personally managing large projects for a decade prior to that, the source of the project failure has become increasingly clear: Important projects often struggle in large organizations because they are systematically designed to fail.

We manage projects the way we’ve been trained, but we were trained using methods originally designed by Frederick Taylor in the early 1900s that were developed for the industrial age. They don’t take into account the human complexities inherent in large enterprise initiatives. Traditional project management, with its emphasis on numbers, objectivity, and static pre-planning, works well when you are building a bridge or an assembly line. It fails 70% of the time when working with people.

The problem is that reinvention initiatives with significant human considerations (i.e. virtually every large enterprise project) can’t be managed the same way as industrial projects. Trying to apply traditional techniques to dynamic organizations typically results in over engineered decision making processes, mismanaged consulting resources, time delays, and cost overruns. The result is appallingly high project failure rates and disturbingly low returns on important technology and consulting investments.

Therefore, implementing reinvention initiatives using the traditional project management approach, which doesn’t effectively facilitate and mediate organizational dynamics, is literally designing them to fail. Symptoms associated with these design problems are very common. For example:

Designing projects to succeed

The solution to the 70% failure rate problem is for large organizations to reinvent their project management practices in a way that is grounded more in the social sciences and less in the physical sciences. Doing this will help project stakeholders better manage their ever-changing human dynamics, and ultimately to plan and implement key initiatives better, faster, and less expensively.

The Reinvention Problem The Reinvention Solution Manufacturing-based orientationSocial Science orientation Specialized perspectivesHolistic perspective Static orientation to planningAction orientation to planning Head-to-head conflict resolutionFacilitated / mediated conflict resolution

Moving from a manufacturing to social science orientation: Doing this requires a holistic framework and process to wisely incorporate the proper use of human subjectivity as well as systematic objectivity. It’s important to be subjectively clear about where you intend to go and why (Envision) and objectively precise with respect to what needs to happen when (Design).

You need to be objectively clear about how to best do those things (Build), and, finally, you need to be subjectively sensitive with respect to who needs to be motivated to do which tasks (Operate).

Design and Build are the foundation for the manufacturing-based orientation of conventional project management practices. Integrating it with Envision and Operate is needed to ensure that projects have a clear destination and purpose, motivated people, and a productive method for adaptation. For example, when Envision, Design, Build, and Operate are connected it is not uncommon to complete projects in half the time and at half the cost by reducing the time it takes to plan and execute, and improve the linkage between strategy and operations.

Move from fragmented specialization to a holistic perspective: Doing this requires a shared vision and game plan for success. In practice, this requires the shared approach to the Envision, Design, Build, and Operate steps noted previously, and also a shared and holistic understanding of the organization itself; including, in many cases, an appreciation for the critical interrelationships between functions, such as marketing, finance, manufacturing, and sales.

When stakeholders are able to see where their specializations fit into the bigger picture this often fosters significantly better teamwork because there is much greater visibility with respect to where individuals should work independently, where they need to work interdependently, and where they don’t need to contribute at all.

Move from static planning to action-oriented planning: Even though planning is critical, there is probably no area where there is more wasted effort in major enterprise projects than in the planning area. This occurs for several reasons:

First, in the industrial age, planning was hugely important because the plan directly drove how assets such as machines, assembly lines, and buildings were constructed. This approach to planning quite naturally extended into organizational initiatives. With reinvention projects, however, planning needs to be much more of a social process. Time consuming and precisely engineered plans put together in a laboratory-like environment invariably crumble when they come in contact with the ongoing human dynamics during execution.

The second reason over-planning occurs is because consulting firms make a lot of money planning.

In practice, the right answer is to engage in more frequent, much shorter, and more integrated planning/execution cycles with a prototyping mentality. This requires formal facilitation, mediation, and a shared and socially oriented framework and process including specific attention paid to important team insights, a rapid and integrated project planning process, accelerated execution practices, and ongoing adaptation through independently facilitated feedback mechanisms.

Move from head-to-head conflict to facilitated conflict mediation: Implementing this successfully and sustainably also requires independent and experienced facilitation. Whether project stakeholders are comfortable admitting it or not (and many aren’t), every team, function, division, and firm involved has self interests that are not or will not always be aligned with the priorities of reinvention projects overall. It is inevitable that there will be disconnects within and across the stakeholders -- board of directors, senior management, the project team, consultants, and software/hardware suppliers. The truth is that independently and systematically resolving disconnects (early and often) needs to be proactively facilitated at the enterprise level to be productively and sustainably managed.

Validating a social science-based approach

When applied in practice, the social science-oriented approach has produced remarkable results. For example, a large global professional services firm removed six months from its enterprise software implementation with an 80X return on its reinvention investment.

An international manufacturing company reinvented its enterprise-wide transformation initiative to achieve one-time benefits of $100 million, with an 18X return on investment.

An international consumer products company reinvented its IT organization, reducing operating expenses by 15% and generating a 6X return.

A Fortune 150 company reinvented its business transformation initiative, generating savings of $180 million, with a 200X return.

As part of improving the returns on reinvention systematically, it’s also clear that successful organizations need strong portfolio management capabilities that provide the essential business direction and streamline priority setting for the projects themselves. A well thought out portfolio management strategy viewed through an organizational lens can help companies productively choose the right projects in the right order so they can do the best projects first and better.

The fact is that using an industrial orientation to reinvention projects fails to deliver 70% of the time. Through the proper use of a more holistic approach, a better planning process, and the use of independent facilitation and mediation to accelerate execution, these projects can be designed to succeed. In our globally competitive world, speed is a prerequisite for quality and competitive advantage. As a result, this accelerated and socially-oriented approach is critically important.

Inspired by legendary management thinker Peter F. Drucker and more than 200 other experts, Jack Bergstrand has dedicated his life’s work to enterprise reinvention. After a 20 year career in large organizations, including the roles of CIO of The Coca-Cola Company, as well as CFO and VP of Manufacturing and Logistics at Coca-Cola Beverages, he founded Brand Velocity Brand Velocity, wrote the book Reinvent Your Enterprise, developed the Strategic Profiling team acceleration tool, and created the Action Planning change leadership process. His company, Brand Velocity, was called “the smartest company that you’ve never heard of” in BusinessWeek, and his book is the only publication of its kind endorsed by The Drucker Institute.