In thinking of good examples of project failure (unfortunately, I’ve seen more than one in my time), I thought we’d discuss a failed company integration program, as it illustrated typical failure points.
A mid-market manufacturer purchased two companies – one smaller and one larger than itself. There was a vast opportunity in terms of product synergies; however, it failed to yield even meager results. What went wrong? 1) Too many chiefs and no Indians. 2) Lost critical knowledge base. 3) Forgot to ask questions.
1. Too many chiefs and no Indians – As well-intentioned as the leadership was in terms of hiring experts with knowledge in the acquired companies and with large-company experience (since, clearly, the company was going to grow dramatically in size through the process), there were not nearly enough Indians to implement the millions of project tasks requested by the chiefs. No program can be successful without considering the scope and complexity of implementation.
Projects do not fail in formulation; they fail in implementation. The same is true of strategy. Therefore, if there are too many chiefs coupled with no Indians, you can easily have the best strategy in the world. While this strategy which should yield significant synergies with huge profit potential, it can still fail miserably. Not only did the companies not integrate successfully but customers were lost and cash ran short.
2. Lost critical knowledge base – Another tempting and normal reaction to planning for the integration is to move people among jobs and change responsibilities. If handled with expertise, this is fine; however, it rarely occurs. Even if handled ok, people tend to become disheartened if they perceive the new job as a demotion and/or they have a hard time adjusting to the new situation. It’s likely their new boss has transitioned as well, and so it can be a tough situation. Sometimes, they leave. Sometimes, they end up fired. And, sometimes they just become unproductive. All are undesirable results.
For example, in the integration project, the management team hired new leaders, moved employees to different roles and sometimes even to different departments and/or locations, changed responsibilities etc. They did this in order to reorganize so that the “right people were in the right positions” to support the new organizations. All done with the best intentions in maon. However, in the end, they lost a critical knowledge base of how the processes and systems worked to support customers. As a result, although everyone worked hard, customer service levels dropped by 25-50%.
In order to make this transition successful, it is vital to think carefully about who has what knowledge, skills, and history. Think about your leaders – both formal and informal. The trick is to utilize the informal and formal leaders effectively to leverage the collective talents of the organization to achieve a successful integration. Don’t forget about the critical employees who keep things going – shipping, receiving, calling customers etc. Each person plays a valuable role. Have you defined how each person fits into the integration plan? Have you communicated this to them?
3. Forgot to ask questions – Last but not least, don’t forget to ask questions. There is no way to know everything required to integrate successfully without continually asking effective questions. Questions need to be asked of each company, department, and person as the integration proceeds.
In the integration project, there were so many tasks and issues to address that the executives and project leaders didn’t have the time to ask enough questions. Thus, they didn’t know we were shipping 50% of our typical volume. They didn’t realize customers weren’t receiving the same level of service. They didn’t realize that production was inefficient. And they didn’t know what the suppliers expected. Without this critical information, it was easy for the systems to fall apart – and the integration program to fail.
Instead, ask questions. It’s important not to just ask random, meaningless questions, as that not only wastes time but it will also not help to achieve your goal. Take the time to learn about the culture, people, processes, and systems, and then ask questions. Make sure project team members know that you care about their responses.
It is always easy to identify issues with others’ projects (and tempting to tell them all about it); however, it’s not nearly as easy to see or implement on your own projects. Spend the time upfront to think through examples of program, project and task successes and failures – both yours and others. What were the root causes of failure? Ask the project leader. Ask team members. Incorporate the lessons learned into your project, and you’ll succeed when it counts the most!
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“The fastest way to succeed is to double your failure rate.”
Thomas J. Watson Sr., Founder of IBM
While this quote is by no means dogma, nor a desirable way to obtain success, a plethora of companies have had to experience, and learn from, great failures. Finding and scrutinizing reasons for failure is a crucial part of the project management cycle. Here are three examples of the most disastrous project failures in history:
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Fail 1- Denver International Airport’s Automated Baggage System
Denver International Airport (DIA), the largest airport in the United States by total land area, and the 6th busiest by passenger traffic.
What were they trying to achieve?
In 1991, DIA attempted to remodel and upgrade the arduous, time-consuming luggage check-in and transfer system. The idea involved bar-coded tags being fixed to each piece of luggage that went through ‘Destination Coded Vehicles’. This would fully automate all baggage transfers, integrate all three terminals, and reduce aircraft turn-around time significantly.
Why did they fail?
We know that the five key variables all project managers have to deal with are scope, time, cost, quality, and risk. If each of these had a check box next to them, DIA would have a big, fat, red cross in every single one.
When DIA contracted BAE Systems to develop the automated baggage handling system, they completely ignored BAE’s projected timelines, instead stubbornly sticking to their unrealistic 2-year schedule. The project was underscoped, and management took on unnecessary amounts of risk. Perhaps the most detrimental decision was to not include the airlines in the planning discussions. By omitting these key stakeholders, features catering to oversized luggage, sport/ski equipment racks, and separate maintenance tracks were not designed appropriately or at all.
Large portions of ‘completed’ works had to be redone, the airport opening was delayed by 16 months, and losses of approximately $2 billion were incurred. The entire project was scrapped in 2005.
Fail 2- The NHS’ Civilian IT Project
The National Health Service (NHS), England’s publicly funded healthcare system, the largest and oldest in the world.
What were they trying to achieve?
The project aimed to revolutionise the way technology is used in the health sector by paving the way for electronic records, digital scanning and integrated IT systems across hospitals and community care. It would have been the largest civilian computer system in the world.
Why did they fail?
If you were to pinpoint the project’s major downfall, you would need a lot of pins. Contractual wrangling plagued the NHS from the outset, with changing specifications, supplier disputes and technical problems pervasive throughout the project’s doomed existence.
Unrealistic expectations of both timelines and costs were not helped by inadequate preliminary research, failure to conduct progress reviews, and a clear lack of leadership. The project has been referred to as the ‘biggest IT failure ever seen’ and ‘a scandalous waste of taxpayers money’. Estimates of the damage inflicted upon British citizens fluctuate, currently hovering precariously around the £10billion mark.
While the benefit of hindsight elucidates how the politically motivated nature of the top-down project was never going to suit the localized needs of the NHS divisions, it is yet to be seen whether the ambitious project will ever be re-attempted.
Fail 3- IBM’s Stretch Project
International Business Machines Corporation (IBM), the multinational technology and consulting corporation that consistently lies in the upper echelons of global brand ranking lists.
What were they trying to achieve?
In the late 1950s IBM set out to design and build the world’s fastest and most technically advanced computer, the IBM 7030 Stretch supercomputer. The computer would be 100 to 200 times the speed and performance level of its nearest competitor, thus ‘stretching’ the existing limits of computer design. This ambitious and impressive target resulted in its price being set at $13.5 million.
Why did they fail?
The project leader, Stephen W. Dunwell, later recalled that what made the project so complicated was that “many more things than ever before had to go on simultaneously in one computer.” Engineers faced a conglomerate of challenges in designing and manufacturing many elements of the ground-breaking system; a load-sharing switch which would allow the use of transistors to drive the ferrite-core memory was amongst these problems.
The overly optimistic forecasts meant that project timelines and costs were severely overrun. Additionally, when the first working version of the Stretch was tested in the early 1960s, it was only 30 times faster than its predecessor. This was seen as a dismal failure, and the price of the systems that had already been ordered were cut to $7.78 million, below cost price.
There was a silver lining, however. The manufacturing, packaging, and architectural innovations Stretch had fostered were the cornerstone to many of IBM’s future developments, and helped catapult them to the forefront of the industry. If such lofty expectations had not been set at the time, perhaps the project could have been a success. Alas, Stretch is resigned to the history books as being part of ‘project management failure’ lists such as this.
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