HISTORY OF FAILED PROJECTS
The world of executive decision-makers has changed significantly in the past several decades. Fewer executives have long histories with their organization and tend to focus more on the financial and strategic and marketing issues rather than the technology issues that deal with operations. Executives also place greater emphasis on mergers and acquisitions, building the business, and the next quarter's results: they promote the organization's image. It's common to be critical about the emphasis and importance of achieving quarterly targets, but a word of caution, achieving the annual target requires achieving quarterly targets. As engineers, we know that delays in the initial stages of a project seldom are recovered. The days when the CEO was able to be engaged in product development or manufacturing or marketing with engineers and other discipline professionals and their managers seldom exist today: allocating a half day for visiting a research laboratory, reviewing some new major process improvement or being in a position to have first-hand information are at best very difficult to arrange.
The global workload no longer provides opportunities for executives to become actively involved in the realities of operational issues. CEOs and senior executives of major organizations in academia, government, industry, and the not-for-profit sector seldom have an opportunity to gain first-hand knowledge of organizational operations and functions by interacting with the people responsible for meeting those quarterly financial targets. Knowing requires more than reviewing bottom-line results from a report that too often, although unintentionally, obscures or distorts the facts of the issues under consideration. The executive paradigm focuses on delegation, and while delegation is essential, executive decisions now depend on information that has been screened through several levels of the organization and presents a new set of executive challenges. These comments are not made as criticism of the executive community, but to understand that in making those macro decisions, executives often lack a comprehensive understanding of the idiosyncrasies of the organization's operations, they do not understand the complexities involved with the implementation or choose to disregard them.
The environment in which executives operate has changed. We no longer live in an age where a person in the mail room becomes the CEO. Business now moves rapidly and doesn't allow for 20 or 25 years of experience to reach the top. These people, who made the move from the mail room to the executive suite, not only grew up with the organization, but also became the organization: they knew the organization from top to bottom; they didn't have to read about it. Further, they knew the people they worked for and with over many years. Executives and senior managers now operate under a different paradigm. Jack Welch, General Electric CEO retires with three top contenders as his replacement: Jeffery R. Immelt, James McNerney, and Robert Nardelli. Jeffery Immelt succeeds Jack Welch as General Electric CEO; James McNerney becomes the CEO of 3M for about 4 years, then becomes CEO of Boeing; Robert Nardelli joins Home Depot as CEO and after a not so successful performance becomes CEO of Chrysler, then part of Cerberus, and then is replaced by Sergio Marchionne of Fiat in April 2009 when Chrysler filed for Chapter 11 bankruptcy. Carly Fiorina became CEO of Hewlett Packard and after approximately 6 years departed because of a Board conflict, then explored a run for Senator from California and failed. Delta Airlines and Northwest received approval to merge both organizations, but questions continued if the executive levels of both organizations thoroughly understood what it takes to not only make a successful merger financially, but also, execute the merger effectively and efficiently and with minimum negative impact on customers.
The history of failed projects and unmet expectations continues to grow exponentially. It is difficult to identify projects that have met original requirements, time schedules, and projected costs. I'm not suggesting that achieving project success is a minor task. On the contrary, it is a very difficult task when we consider the human interaction required for success; it is a very difficult task when we pause to realize the need for integrating the many facets of a major project; it is a very difficult task when managers are not educated managerially and engineers and discipline specialists focus more on their disciplines than on the impact of their discipline on business performance. Very few in the technical and marketing communities realize that the business of engineering and marketing is business performance. Discipline competence, while absolutely essential, must be directed toward the broad needs of the business and the major component of that business involves a focus on sustaining business performance.
Research by Paul C. Nutt1 shows that highly regarded managers often make bad decisions and the truth is that half of the organizational decisions fail. Nutt's research includes detailed analysis of over 400 decisions to assess the decision-making practices, to account for the special situations confronted, and to measure success or failure. The findings show that failure usually stems from decision-maker actions and not from bad luck or situational limitations. Examples include the Firestone and Ford tire debacle in 2000, Eastman Kodak's late entrance into digital photography, the demise of the dot-coms, the inability of the US automobile industry to maintain its dominant position, the continued negative financial performance of the US Post Office, and the delivery issues with two major aircraft suppliers Boeing and Airbus. A study of the management decisions by federal, state, and local jurisdictions related to hurricane Katrina, the Big Dig in Boston, the Walter Reed Medical Center negligence related to returning veterans, the Challenger incident, delays and cost overruns in the construction of the Denver International Airport, the Deepwater Horizon incident in the Gulf of Mexico, and the waste generated in academia, government and industry at all levels certainly focuses our attention on the lack of executives to make timely decisions to prevent such disastrous and long-reaching outcomes.
Research by Heike Bruch and Sumantra Ghoshal2 on the behavior of managers in well-known organizations shows some startling results based on measures of energy and focus. Their extensive research shows that 30 percent of managers were procrastinators (low energy, low focus), 20 percent were disengaged (low energy, high focus), and 40 percent were distracted (low focus, high energy), and only 10 percent were purposeful: purposeful being defined as highly energetic and highly focused. Such negative results definitely affect decision-making at all levels of the organization. You may question the results of the Bruch and Ghoshal research, but I ask you to reflect on the behavior of not only your managers, but also the executives, engineers, and the other discipline professionals.
Kathleen Eisenhardt3 studied the speed at which managers make decisions. Eisenhardt concluded that slow decision-makers rely on planning and futuristic information while fast decision-makers gather real-time information and in essence measure everything. Eisenhardt's research shows that slow decision-makers take 12–18 months to reach a major decision, the fast decision-makers 2–3 months. Further, fast decision-makers use more information than slow decision-makers, develop more alternatives, and recognize conflict management as a critical element in making decisions. Of course, terms like more information, more alternatives, and how much conflict are all relative and will vary from project to project and organization to organization. We cannot predict the future, we can speculate, but too much speculation leads to paralysis. The research also revealed that fast decision-making is linked to strong performance; central decision-making is not faster; cognitive, emotional, political processes drive rapid decision-making; and operational decisions follow strategic decisions.
Aaron Shenhar and Dov Dvir4 report the results of the Standish Group, Cooper, and their own research that includes a 15 year study of more than 600 projects. The Standish Group in 2000 found that only 28 percent of IT projects were successful and estimated that in 2003 the $382 billion spent on IT projects yielded $82 billion in total waste. One-third of all projects either failed or did not meet business requirements and had overruns of 200 and 300 percent. Cooper's studies on new product development showed that 46 percent of resources were allocated to projects that were cancelled or failed to deliver the expected returns. Over a 15-year period Shenhar and Dvir collected data on more than 600 projects in business, government, and the not-for-profit sector, in various countries, and found that about 85 percent of projects overran scheduled time by 70 percent and budget by 60 percent. A 1998 study by Bull Computer Corporation in the United Kingdom found that 75 percent of IT projects missed their deadlines, 55 percent were over budget, and 37 percent failed to meet project requirements.
In Innovation by Design, Gaynor5 included a chapter on the Innovation Prevention Department and listed the 25 obstacles to promoting innovation. Those related to decision-making included rejecting new thinking of any kind, focusing on single issues, ignoring the blind spots, being insufficiently informed, keeping decision processes confidential, disregarding potential knockouts in the early stage of innovation, preventing rule breaking, and disregarding the constructive mavericks.
These few examples demonstrate how the lack of decision-making capability affects organizational performance. Somehow over the years many organizations have lost their management discipline. As I reviewed this research and considered my past personal experiences and how engineers view their role in the business enterprise, I raise the question: are engineers missing an opportunity to expand their base of operation and influence and take a proactive approach in the management of the business enterprise?
