Discussion- Production and Operation Management

BEST PRACTICE

Why Good Projects Fail Anyway

by Nadim F. Matta and Ronald N.Ashkenas

When a promising project doesn't deliver, chances

are the problem wasn't the idea but how it was

carried out Here's a way to design projects that

guards against unnecessary failure.

Bic PROJECTS FAIL at an astonish-ing rate. Whether major tech-nology installations, postmerger integrations, or new growth strategies, these efforts consume tremendous re- sources over months or even years. Yet as study after study has shown, they frequently deliver disappointing re- turns - hy some estimates, in fact, well over half the time. And the toll they take is not just financial. These failures de- moralize employees who have labored diligently to complete their share of the work. One middle manager at a top pharmaceutical company told us, "I've been on dozens of task teams in my ca- reer, and I've never actually seen one that produced a result."

The problem is, the traditional ap- proach to project management shifts the project teams' focus away from the end result toward developing recom- mendations, new technologies, and par- tial solutions. The intent, of course, is to piece these together into a blueprint that will achieve the ultimate goal, but

when a project involves many people working over an extended period of time, it's very hard for managers plan- ning it to predict all the activities and work streams that will be needed. Un- less the end product is very well under- stood, as it is in highly technical engi- neering projects such as building an airplane, it's almost inevitable that some things will be left off the plan. And even if all the right activities have been an- ticipated, they may turn out to be diffi- cult, or even impossible, to knit together once they're completed.

Managers use project plans, time- lines, and budgets to reduce what we call "execution risk"-the risk that des- ignated activities won't be carried out properly - but they inevitably neglect these two other critical risks-the "white space risk"that some required activities won't be identified in advance, leaving gaps in the project plan, and the "inte- gration risk"thatthe disparate activities won't come together at the end. So project teams can execute their tasks

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flawlessly, on time and under budget, and yet the overall project may still fail to deliver the intended results.

We've worked with hundreds of teams over the past 20 years, and we've found that by designing complex proj- ects differently, managers can reduce the likelihood that critical activities will be left off the plan and increase the odds that all the pieces can be properly integrated at the end. The key is to inject into the overall plan a series of mini- projects - what we call rapid-results ini- tiatives - each staffed with a team re- sponsible for a version of the hoped-for overall result in miniature and each de- signed to deliver its result quickly.

Let's see what difference that would make. Say, for example, your goal is to double sales revenue over two years by implementing a customer relationship management (CRM) system for your sales force. Using a traditional project management approach, you might have one team research and install software packages, another analyze the different ways that the company interacts with customers (e-mail, telephone, and in person, for example), another develop training programs, and so forth. Many months later, however, when you start to roll out the program, you might dis- cover that the salespeople aren't sold on the benefits. So even though they may know how to enter the requisite data into the system, they refuse. This very problem has, in fact, derailed many CRM programs at major organizations.

But consider the way the process might unfold if the project included some rapid-results initiatives. A single team might take responsibility for help- ing a small number of users - say, one sales group in one region - increase their revenues by 25% within four months. Team members would proba- bly draw on all the activities described

above, but to succeed at their goal, the microcosm of the overall goal, they would be forced to find out what, if any- thing, is missing from their plans as they go forward. Along the way, they would, for example, discover the salespeople's resistance, and they would be compelled to educate the sales staff about the sys- tem's benefits. The team may also dis- cover that it needs to tackle other issues, such as how to divvy up commissions on sales resulting from cross-selling or joint-selling efforts.

When they've ironed out all the kinks on a small scale, their work would then become a model for the next teams, which would either engage in further rapid-results initiatives or roll the sys- tem out to the whole organization - but now with a higher leve! of con- fidence that the project will have the intended impact on sales revenue. The company would see an early payback on its investment and gain new insights from the team's work, and the team would have the satisfaction of delivering real value. ..-•*"

In the pages that follow, we'll take a close look at rapid-results initiatives, using casd' studies to show how these projects are selected and designed and how they are managed in conjunction with more traditional project activities.

How Rapid-Results Teams Work Let's look at an extremely complex proj- ect, a World Bank initiative begun in June 2000 that aims to improve the pro- ductivity of 120,000 small-scale farmers in Nicaragua by 30% in 16 years. A proj- ect of this magnitude entails many teams working over a long period of time, and it crosses functional and organizational boundaries.

They started as they had always done: A team of World Bank experts and their

Nadim R Matta is a senior partner of Robert H. Schaffer & Associates, a management consulting firm based in Stamford, Connecticut. Prior to joining RHS&A, be worked for USAID and tben beaded tbefood distribution program for Save the Children dur- ing the civil war in Lebanon. Ronald N. Ashkenas is a managing partner ofRHS&A. He has written tbree previous articles for HBR, most recently "Integration Managers: Special Leaders for Special Times" (witb Suzanne C. Francis, November-December 2000.) Tbe authors can be reached at [email protected].

clients in the country (in this case. Min- istry of Agriculture officials) spent many months in preparation - conducting surveys, analyzing data, talking to peo- ple with comparable experiences in other countries, and so on. Based on their findings, these project strategists, designers, and planners made an edu- cated guess about the major streams of

Managers expect they

can plan for all the

variables in a complex

project in advance, but

they can't Nobody is

that smart or has that

clear a crystal ball.

work that would be required to reach the goal. These work streams included reorganizing government institutions that give technical advice to farmers, encouraging the creation of a private- sector market in agricultural support services (such as helping farmers adopt new farming technologies and use im- proved seeds), strengthening the Na- tional Institute for Agricultural Tech- nology (INTA), and establishing an information management system that would help agricultural R&D institu- tions direct their efforts to the most pro- ductive areas of research. The result of all this preparation was a multiyear project plan, a document laying out the work streams in detail.

But if the World Bank had kept pro- ceeding in the traditional way on a proj- ect of this magnitude, it would have been years before managers found out if something had been leff off the plan or if the various work streams could be integrated - and thus if the project would ultimately achieve its goals. By that time, millions of dollars would have been invested and much time poten- tiaUy wasted. What"s more, even if every- thing worked according to plan, the project's beneficiaries would have been waiting for years before seeing any pay- off ffom the effort. As it happened, the

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project activities proceeded on sched- ule, but a new minister of agriculture came on board two years in and argued that he needed to see results sooner than the plan allowed. His complaint resonated with Norman Piccioni, the World Bank team leader, who was also getting impatient with the project's pace. As he said at the time,"Apart from the minister, the farmers, and me, I'm not sure anyone working on this project is losing sleep over whether fanner pro- ductivity will be improved or not"

Over the next few months, we worked with Piccioni to help him and his clients add rapid-results initiatives to the im- plementation process. They launched five teams, which included not only rep- resentatives from the existing work streams but also the beneficiaries of the project, the farmers themselves. The teams differed from traditional imple- mentation teams in three fundamental ways. Rather than being partial, hori- zontal, and long term, they were results oriented, vertical, and fast. A look at each attribute in turn shows why they were more effective.

Results Oriented. As the name sug- gests, a rapid-results initiative is inten- tionally commissioned to produce a measurable result, rather than recom- mendations, analyses, or partial solu- tions. And even though the goal is on a smaller scale than the overall objec- tive, it is nonetheless challenging. In Nicaragua, one team's goal was to in- crease Grade A milk production in the Leon municipality from 600 to 1,600 gallons per day in 120 days in 60 small and medium-size producers. Another was to increase pig weight on 30 farms by 30% in too days using enhanced com seed. A third was to secure commit- ments from private-sector experts to provide technical advice and agricul- tural support to 150 small-scale farmers in the El Sauce (the dry farming region) within 100 days.

This results orientation is important for three reasons. First, it allows project planners to test whether the activities in the overall plan will add up to the intended result and to alter the plans if need be. Second, it produces real ben-

efits in the short term. Increasing pig weight in 30 farms by 30% in just over three months is usefril to those 30 farm- ers no matter what else happens in the project. And finally, being able to de- liver results is more rewarding and en- ergizing for teams than plodding along through partial solutions.

The focus on results also distinguishes rapid-resuits initiatives from pilot proj- ects, which are used in traditionally

an organization (or even, as in Nicara- gua, different organizations), and the vertical slice brings these people to- gether. This vertical orientation is key to reducing white space and integration risks in the overall effort: Only by un- covering and properly integrating any activities falling in the white space be- tween the horizontal project streams will the team be able to deliver its mini- result (For a look at the horizontal and

managed initiatives only to reduce exe- cution risk. Pilots typically are designed to test a preconceived solution, or means, such as a CRM system, and to work out implementation details before rollout. Rapid-results initiatives, by contrast, are aimed squarely at reducing white space and integration risk.

Vertical. Project plans typically un- fold as a series of activities represented on a timeline by horizontal bars. In this context, rapid-results initiatives are ver- tical. They encompass a slice of several horizontal activities, implemented in tandem in a very short time frame. By using the term "vertical," we also sug- gest a cross-functional effort, since dif- ferent horizontal work streams usually include people from different parts of

vertical work streams in the Nicaragua project, see the exhibit "The World Bank's Project Plan.")

The team working on securing com- mitments between farmers and tech- nical experts in the dry farming region, for example, had to knit together a broad set of activities. The experts needed to be trained to deliver par- ticular services that the farmers were demanding because they had heard about new ways to increase their pro- ductivity through the information man- agement system. That, in turn, was be- ing fed information coming out of I NTA's R&D efforts, which were directed to- ward addressing specific problems the fanners had articulated. So team mem- bers had to draw on a number of the

SEPTEMBER 2003 111

BEST PRACTICE • Why Good Projects Fait Anyway

broad horizontal activities laid out in the overall project plan and integrate them into their vertical effort. As they did so, they discovered that they had to add activities missing from the original horizontal work streams. Despite the team members' heroic efforts to inte- grate the ongoing activities, for instance, 80 days into their 100-day initiative, they had secured only half the commitments they were aiming for. Undeterred and spurred on by the desire to accomplish their goal, team members drove through the towns of the region announcing with loudspeakers the availability and benefits of the technical services. Over the following 20 days, the gap to the goal was closed. To close the white space in the project plan, "marketing of tech- nical services" was added as another horizontal stream.

Fast How fast is fast? Rapid-results projects generally last no longer than 100 days. But they are by no means quick fixes, which imply shoddy or short-term solutions. And while they deliver quick wins, the more important value of these initiatives is that they change the way teams approach their work. The short time frame fosters a sense of personal challenge, ensuring that team members feel a sense of ur- gency right from the start that leaves no time to squander on big studies or interorganizational bickering. In tradi- tional horizontal work streams, the gap between current status and the goal starts out far wider, and a feeling of ur- gency does not build up until a short time before the day of reckoning. Yet it is precisely at that point that committed teams kick into a high-creativity mode and begin to experiment with new ideas to get results. That kick comes right away in rapid-results initiatives.

A Shift in Accountability In most complex projects, the execu- tives shaping and assigning major work streams assume the vast majority of the responsibility for the project's success. They delegate execution risk to project teams, which are responsible for stay- ing on time and on budget, but they in- advertently leave themselves carrying

the full burden of white space and inte- gration risk. In World Bank projects, as in most complex and strategically criti- cal efforts, these risks can be huge.

When executives assign a team re- sponsibility for a result, however, the team is free - indeed, compelled - to find out what activities will be needed to produce the result and how those activities will fit together. This approach puts white space and integration risk onto the shoulders of the people doing the work. That's appropriate because, as they work, they can discover on the spot what's working and what's not. And in the end, they are rewarded not for per- forming a series of tasks but for deliver- ing real value. Their success is correlated with benefits to the organization, which will come not only from Implementing known activities but also from identify- ing and integrating new activities.

The mi!l< productivity team in Nica- ragua, for example, found out early on that the quantity of milk production was not the issue. The real problem was quality: Distributors were being forced to dump almost half the milk they had bought due to contamination, spoilage, and other problems. So the challenge was to produce milk acceptable to large distributors and manufacturers that complied with international quality standards. Based on this understanding, the team leader invited a representative of Parmalat, the biggest private com- pany in Nicaragua's dairy sector, to join the team. Collaborating with this cus- tomer allowed the team to understand Parmalat's quality standards and thus introduce proper hygiene practices to the milk producers in Leon. The collab- oration also identified the need for sim- ple equipment such as a centrifuge that could test the quality of batches quickly.

The quality of milk improved steadily in the initial stage of the effort. But then the team discovered that its goal of tripling sales was in danger due to a lo- gistics problem: There wasn't adequate storage available for the additional Grade A milk now being produced. Rather than invest in refrigeration fa- cilities, the Parmalat team member (now assured of the quality of the milk)

suggested that the company conduct collection runs in the area daily rather than twice weekly.

At the end of 120 days, the milk pro- ductivity team (renamed the "clean- milldng"team) and the other four teams not only achieved their goals but also generated a new appreciation for the discovery process. As team leader Pic- cioni observed at a follow-up workshop: "I now realize how much of the overall success of the effort depends on people discovering for themselves what goals to set and what to do to achieve them."

What's more, the work is more re- warding for the people involved. It may seem paradoxical, but virtually all the teams we've encountered prefer to work on projects that have results-oriented goals, even though they involve some risk and require some discovery, rather than implement clearly predefined tasks.

The Leadership Balancing Act Despite the obvious benefits of rapid- results initiatives, few companies should use them to replace the horizontal ac- tivities altogether. Because of their economies of scale, horizontal activities are a cost-efficient way to work. And so it is the job of the leadership team to balance rapid-results initiatives with longer-term horizontal activities, help spread insights from team to team, and blend everything into an overall imple- mentation strategy.

In Nicaragua, the vertical teams drew members from the horizontal teams, but these people continued to work on the horizontal streams as well, and each team benefited from the work of the others. So, for example, when the milk productivity team discovered the need to educate farmers in clean-milking practices, the horizontal training team knew to adjust the design of its overall training programs accordingly.

The adhesive-material and office- product company Avery Dennison took a similar approach, creating a portfolio of rapid-results initiatives and horizon- tal work streams as the basis for its over- all growth acceleration strategy. Just over a year ago, the company was engaged in

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Why Good Projects Fail Anyway • BEST P R A C T I C E

The World Bank's Project Plan A project plan typically represents the planned activities

as horizontal bars plotted overtime. But in most cases,

it's very difficult to accurately assess all the activities that

will be required to complete a complicated long-term

project. We don't know what will fall into the white space

between the bars. It's also difficult to know whether these

activities can be integrated seamlessly at the end; the

teams working in isolation may develop solutions that

won't fit together. Rapid-results initiatives cut across hori-

zontal activities, focusing on a miniversion of the overall

result rather than on a set of activities.

Here is a simplified version of the Nicaragua project

described in this article. Each vertical team (depicted as

a group by the vertical bar) includes representatives from

every horizontal team, which makes the two types of initia-

tives mutually reinforcing. So, for example, the horizontal

work stream labeled "Set up private-sector market in agri-

cultural support services" includes activities like develop-

ing a system ofcoupons to subsidize farmers'purchases.

The vertical team establishing service contracts between

technical experts and farmers drew on this work, providing

the farmers with coupons they could use to buy the techni-

cal services. This, in turn, drove competition in the private

sector, calling on the work that the people on the horizontal

training teams were doing - w h i c h led to better services.

Overall Project Objective: Improve productivity of 120,000 farmers by 30% in 16 years

.Reorganize government agricultural technical-service institutions

Set up private-sector market in agricultural support services

Long-term ' Strengthen National Institute work streams for AgriculturalTechnology

Implement training programs for agricultural technical-service provider

Establish agricultural information management system

for p t t i ^ - ^ - ^ a n alternative purchase agreement^ ' '

2000 Rapid-results initiatives (drawing on the work of all long-term work streams)

^ 2 0 1 6

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BEST P R A C T I C E • Why Cood Projects Fail Anyway

various horizontal activities like new technology investments and market studies. The company was growing, but CEO Phil Neal and his leadership team were not satisfied with the pace. Al- though growth was a major corporate goal, the company had increased its rev- enues by only 8% in two years.

In August 2002, Neal and president Dean Scarborough tested the vertical approach in three North American di- visions, launching 15 rapid-results teams in a matter of weeks. One was charged with securing one new order for an en- hanced product, refined in collaboration with one large customer, within lOO days. Another focused on signing up three retail chains so it could use that experience to develop a methodology

Rapid-results initiatives

challenge senior leaders

to cede control.

for moving into new distribution chan- nels. A third aimed to book several hun- dred thousand dollars in sales in 100 days by providing - through a collabo- ration with three other suppliers - all the parts needed by a major customer. By December, it had become clear that the vertical growth initiatives were pro- ducing results, and the management team decided to extend the process throughout the company, supported by an extensive employee communication campaign. The horizontal activities con- tinued, but at the same time dozens of teams, involving hundreds of people, started working on rapid-results initia- tives. By the end of the first quarter of 2003, these teams yielded more than $8 million in new sales, and the com- pany was forecasting that the initiatives would realize approximately $50 mil- lion In sales by the end of the year.

The Diversified Products business of Zurich North America, a division of Zurich Financial Services, has taken a similarly strategic approach. CEO Rob Fishman and chief underwriting offi- cer Gary Kaplan commissioned and launched dozens of rapid-results initia-

tives between April 1999 and Decem- ber 2002. Their overall long-term ob- jectives were to improve their financial performance and strengthen relation- ships with core clients. And so they com- bined vertical teams focused on such goals as increasing payments from a small number of clients for value-added services with horizontal activities tar- geting staff training, internal processes, and the technology infi-astructure. The results were dramatic: In less than four years, loss ratios in the property side of the business dropped by 90%, the ex- pense ratio was cut in half, and fees for value-added services increased tenfold.

Now, when you're managing a port- folio of vertical initiatives and horizon- tal activities, one of the challenges be- comes choosing where to focus the verticals. We generally advise company executives to identify aspects of the effort that they're fairly sure will fail if they are not closely coordinated with one another. We also engage the lead- ership team in a discussion aimed at identifying other areas of potential uncertainty or risk. Based on those dis- cussions, we ask executives to think of projects that could replicate their longer- term goals on a small scale in a short time and provide the maximum oppor- tunity for learning and discovery.

For instance, at Johnson & Johnson's pharmaceutical R&D group, Thomas Kirsch, the head of global quality assur- ance, needed to integrate the QA func- tions for two traditionally autonomous clinical R&D units whose people were located around the world. Full inte- gration was a major undertaking that would unfold over many years, so in addition to launching an extensive se- ries of horizontal activities like devel- oping training standards and devising a system for standardizing currently dis- parate automated reports, Kirsch also assigned rapid-results teams to quickly put in place several standard operating procedures (SOPs) that cut across the horizontal work streams. The rapid- results teams were focused on the areas he perceived would put the company in the greatest danger of failing to comply with U.S. and European regulations and

also on areas where he saw opportuni- ties to generate knowledge that could be applied companywide. There's no sci- ence to this approach; it's an iterative process of successive approximation, not a cut-and-dried analytical exercise.

In fact, there are really no "wrong" choices when it comes to deciding which rapid-results initiatives to add to the portfolio. In the context of a large- scale, multiyeai, high-stakes effort, each lOQ-day initiative focused on a targeted result is a relatively low-risk investment. Even if it does not fully realize its goal, the rapid-results initiative will produce valuable lessons and help further illu- minate the path to the larger objective. And it will suggest other, and perhaps better-focused, targets for rapid results.

A Call for Humility Rapid-results Initiatives give some new responsibilities to frontline team mem- bers while challenging senior leaders to cede control and rethink the way they see themselves. Zurich North America's Gary Kaplan found that the process led him to reflect on his role."l had to learn to let go: Establishing challenging goals and giving others the space to figure out what it takes to achieve these...did not come naturally to me."

Attempting to achieve complex goals in fast-moving and unpredictable envi- ronments is humbling. Few leaders and few organizations have figured out how to do it consistently. We believe that a starting point for greater success is shed- ding the blueprint model that has im- plicitly driven executive behavior in the management of major efforts. Manag- ers expect they will be able to identify, plan for, and influence all the variables and players in advance, but they can't. Nobody is that smart or has that clear a crystal ball. They can, however, create an ongoing process of learning and dis- covery, challenging the people close to the action to produce results - and un- leashing the organization's collective knowledge and creativity in pursuit of discovery and achievement. ^

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