Wednesday, April 09, 2008

Massive project failures are really massive leadership failures in disguise

We can now add another colossal IT failure to the list already in the heads of CIOs. ZDNet has an excellent article chronicling the Heathrow Terminal 5 project, a joint British Airways and British Airports Authority £4.3bn ($8.5 billion) effort, of which a reported £175m ($346 million) represents IT systems. Apparently Queen Elizabeth herself gave the opening speech calling it a “a 21st Century gateway to Britain.” I'm sure that in her mind she was not thinking about "canceled flights (54 short-haul in one day), lost baggage, and substantial delays". Hmmm, maybe she should have picked up The Standish Group's Chaos Report first. I doubt BA's CEO was anticipating a 3% one-day share price drop when news of the extensive problems became public. Since I started writing this post (1 1/2 weeks ago) two senior executives, a director of operations and director of customer services have been fired over the T5 problems. I'm surprised the CIO still has a job...maybe they're afraid to fire him until the problems have been fixed.

We know about Nike's runaway i2 supply-chain implementation that resulted in excess inventory imbalances triggering a 20% share price drop and a $100 million quarterly earnings shortfall. It prompted then Nike Chairman Phil Night to ask, "This is what you get for $400 million?" Nicholas Carr, famous - or infamous - for his May 2003 Harvard Business Review article, "IT Doesn't Matter", wrote another article, "Does Not Compute" in the January 22, 2005 Op-Ed section of the New York Times. In it he details a number of high-profile IT failures including the FBI's 170 million dollar virtual paperweight and Ford's supply-chain project - abandoned when it was $200 million over budget.

Here's what I find alarming. We've known the root cause of project failures for some time. A number of really solid project management methodologies, proven to work, have arisen to counter these risks. So what's the problem?

The Challenger disaster was not ultimately a technology failure but was rather caused by broken and dysfunctional lines of communication through the NASA hierarchy.

Management, and I include all involved parties from the CEO and CIO down, continues to ignore best practices time and again or simply fails in their execution. I'm not going to get into iterative development and/or integration nor will I discuss the principal behind detailed (but iterative) analysis nor architectural prototypes. I'm not going to talk about project failure rates and their correlation with total person-years or budget - I'll review these in later posts. The failure is not due lack of data or sufficient guidance in effective implementation methods. Every time you see a project failure like this your are seeing evidence of management failure in the organization. Management who does not deal with employees who aren't equipped with the 'process' tools they need to get their jobs done. Who are not dealing with breakdowns in communication across the company's departments (looks like BA's failures are at least partly due to this). Management who are not hands-on and fully engaged in the project - passing the buck down through the organization instead.

What are the solutions? Make sure departmental responsibilities are not only defined but that there is also accountability. The CEO should be fully engaged in major projects. Deal with non-performers in your organizations. Make sure the project's business case is results-oriented. Once the project is over, compare actual to planned results. In short, senior management needs to create a culture of execution throughout the company that starts with the C-level and flows on down through the departments and project teams.

If you expect people to deliver results and they know it, the one's who you'll want to keep on in your organization are the same ones who will find the right methods to get those results. They're the people who hate to fail. Within a culture of execution they are also the ones who will thrive.

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