Why is it that even when the evidence suggests that it should be unplugged, do the projects go on and on?
Merck, for example, continued to market Vioxx in the face of evidence that the drug had harmful, sometimes fatal, side effects. The Denver baggage handling project continued for a decade after evidence mounted that the “line balance” issue was unlikely to be resolved.
Why did General Motors, as Business Week reported, continue to fund gas-guzzling projects in the face of persistent evidence that gas prices were unlikely to return to $25 or even $50 a barrel? And why did Microsoft continue to push Windows Vista when more than 33% of users were dissatisfied with the product?
What about the fatal attempt to climb Everest in 1996, when five people died on the mountain inadvertently heeding the mandated turnaround time and pulling the plug on an expedition facing deteriorating conditions?
How do these projects continue in the face of evidence that they should have pulled the plug? How can we make sense of this compulsion to continue?
Unfortunately, there is no root cause that can explain this behavior. Instead, there are many possible explanations. Let’s explore some reasons why it’s so hard to quit.
Organizational Reward Culture. Most organizations reward success. If you complete a project on budget, on time, and meet quality goals, you can enjoy the spoils of success and even earn a promotion. Bring in a project over budget, late, or deliver mediocre results, and it can take years to recover. If you miss delivery, you may find yourself looking for a new job. Under those conditions, who would want to take a project offline?
In fact, the Columbia Accident Investigation Board concluded that NASA’s “Faster, Better, Cheaper” culture was as much to blame for the disaster as the technical problems that led to the disintegration of the spacecraft on its way back to Earth. terrestrial atmosphere.
executive pressure. When executive management signs off on a project, they often envision a highly simplified AON diagram. It is a diagram with only two nodes; Start and finish. What happens in between is often of little concern to them, as long as it gets to “Finish”. Under pressure like this, pulling the plug halfway amounts to organizational suicide.
Sunk cost trap. When I worked at Hewlett Packard, one of my projects was to develop a process for winding toroidal transformers. These were doughnut-shaped components, roughly the size of a quarter through which the cable would be wound. The complete unit would then be mounted on a printed circuit board. I quickly discovered that the machines we had available were obsolete and by replacing them with automatic winders we could produce them in-house at a fraction of the cost our current suppliers would charge. With great confidence I wrote a proposal to the manufacturing manager. Given our current volume, I explained, the payback on the new machines would be less than nine months. Later that day it passed by my desk. Investing in these machines, he insisted, would not make sense because we had several machines, purchased six years ago, that were not yet fully depreciated and could be used to wind these toroids. Under no conditions would I be willing to authorize his replacement.
Most decision makers would say that the manufacturing manager did not recognize the principle of sunk costs. Once the money has been spent and the cost of the machine can no longer be recovered, the cost “sinks in” and can essentially be ignored when making future decisions.
The sunk cost principle implies that it makes no sense for a pharmaceutical company that has already spent $150 million to develop a drug to continue the project when new data clearly suggests that it works no better than other drugs already on the market and has some problems. side effects. The $150K in this case is a sunk cost.
We are not Quitters. I live near Boston, and in addition to bragging about our champion sports teams, we enjoy complaining about the cost of the Big Dig. When first conceived, this new system of bridges and tunnels promised to relieve traffic congestion in the downtown Boston area. The initial price was about 2,000 million dollars. But shortly after the project was approved, we began to experience a drop in prices. Digging under a centuries-old city with a maze of wires, cables, pipes and underground tunnels was much more complicated than expected. Even the ground under the South Station refused to cooperate and had to be frozen to prevent the excavation from collapsing. However, we persevere. Meanwhile, the price went higher and higher. But we did not give up and the construction continued. In the end, the project cost around $16 billion.
What is the lesson? We will not leave!
No Contingency Plans. No one likes to consider the possibility that things might go wrong. For this reason, and perhaps for other reasons, we are reluctant to engage in contingency planning. When the Denver airport baggage handling system was designed, for example, no one asked what would happen if the fully automated system failed. How would the luggage be delivered? No one thought of it and there we did not make accommodations in the airport plan. So when the system failed, there were no other alternatives to move luggage through the airport. There were no underground pathways to manually move luggage by tugboats.
It may be human nature to avoid contingency planning. None of us likes to write a living will, and if you look at the trend in personal savings rates over the last ten years, they’ve fallen from a positive ten percent to a negative two percent. It seems that few people are willing to plan for the possibility that they will need more than social security during their retirement years.
But here’s the problem. If you don’t have a contingency plan for a project, you may be inclined to hang on to a failed project. There is no other place to go! It happened in Denver and it happened when General Motors had few plans to produce fuel efficient cars when the price of crude oil skyrocketed.
Continuous improvement. When I was a kid, my Uncle Al would take me to see the Red Sox every Saturday at Fenway Park in Boston. I remember sitting at the Bleaches near the left field wall and never taking my eyes off Ted Williams. He was my childhood hero. But the Sox never won the World Series. However, every spring we were convinced that the team had improved and this year it would be like that. Well, I had to wait over 40 years to get a chance to see it happen and by that time Uncle Al was dead.
How many times have I heard the mantra of “continuous improvement” not only to keep the Red Sox hope alive but to keep the projects alive? How many times have project managers wanted more time to turn things around? How many times have they asked for more time to give their improvements a chance to show results!
Sometimes “continuous improvement” is too little too late, but it’s a phrase often used to buy more time and avoid getting disconnected.
I’m sure you can add to this list of “reasons”. But the main point here is to be aware of what is happening, to understand the reluctance most have to disengage, but to be brave enough to end a project that has little chance of achieving its goals.