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:
- The linear cookie cutter approach to project management consistently breaks down with ongoing change, as new people, new information, and new requirements are introduced.
- Specialization becomes dysfunctional when people need to share a holistic picture of success, and when interdependence is needed to get work done successfully.
- The conventional way of planning is very painful, takes too long, costs too much, and has too many moving parts. It is typically over-engineered up front and then with time gets disconnected within and across stakeholders.
- Over the course of a project, stakeholders with conflicting interests inevitably create dissension and, as a result, this creates problems for the enterprise initiatives overall 70% of the time.
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.