It doesn’t really matter what it is: innovation and bringing ideas to market, buying and integrating an acquisition, IT initiatives, restructuring, new marketing programs, reinventing the supply chain, or you name it. From the get-go, large and small initiatives are almost all biased to fail and will not achieve their original objectives. And that’s a big problem.
An Example
An IT group for a very large global corporation had capital spending around $800 million. And although there were a few large initiatives, to spend $800 million meant there were also lots of smaller initiatives. Hundreds, in fact. And from the start, they each were inherently biased to fail because…
The Reason
The approach the business used to allocate capital and resources biased project leaders to make their project look better than it really was in order to compete and have a chance of getting approved. As a result, proponents of a particular initiative tended to be overly optimistic and either promise returns that were too high, costs that were too low, or timing that was too aggressive. Worse yet, project leaders learned how to game the system this way on small projects very early in their career resulting in the behaviors being deeply entrenched by the time they were experienced and handling larger, more strategic projects. To understand the root of this behavior problem required…
Pinpointing
The actual process map of the capital allocation and project approval processes were pretty clear to everyone. But a behavioral map showed the bias was built in and being positively reinforced by senior leaders on every approved project. A project manager increased the certainty of receiving immediate positive consequences by being “overly optimistic” about the project benefits. But by being realistic about objectives, a project manager increased the probability of their project being denied and receiving the corresponding negative consequences to their job and potentially, their career. So the challenge was…
The Challenge
The challenge was to figure out how to stop positively reinforcing a set of unwanted behaviors (distorting the objectives), start positively reinforcing the desired behaviors (promise what you’ll deliver, deliver what you promise), and begin actively discouraging the unwanted behaviors so there was disincentive to distort. So…
A Solution
One approach to fixing this problem –and it works in innovation, sales, and other areas as well– is to announce that as part of performance reviews, project audits are required to show actual versus originally planned results. Senior leaders are then in a position to personally recognize and reinforce good performance, especially for the younger project leaders.
Conclusion
While the track record in business for strategic initiatives is poor to say the least, progress can be made by following the StarPoints™ model, focusing on one root cause of the poor performance, and then moving on to the next. And one of the more important root causes of failure to fix is dialing in the accuracy of objective setting. Fixing this one brings more clarity to other causes of failure.
