Dr. Tobias Endress (Editor)
Digital Project Practice
Managing Innovation and Change
© 2020 Dr. Tobias Endress
Cover Design: D. B. M. Bandaranayaka
Illustrations: Olena Shkavron (cover image and figures 2, 7, 12, 14, 18, 19, 21, 23, 28), Danushka Sandaruwan (figures 5, 8, 9, 15, 17, 20)
Editing: Dr. Tobias Endress
Translation: Dr. Tobias Endress (chapter: Implementing Change)
Proofreader: Dr. Jessy Brown, Chukwuemeka Princewill
Other Contributors: Aditya Chandak, Dr. Majid Dadgar, Ralf Dick, Elena Dinman, Günter Jeschke, Dr. Stephan Meyer, Dr. Marc Nathmann, Dr. Anton Pussep, Girish Ramachandra, Beatriz Alzate Richter, Dr. Bernd Thommes, Patric Zeier
Publisher (Verlag + Druck): tredition GmbH, Halenreie 40-44, 22359 Hamburg, Germany
ISBN |
|
Hardcover |
978-3-347-09723-0 |
Paperback |
978-3-347-09722-3 |
e-Book |
978-3-347-09724-7 |
The publication, including its parts, is protected by copyright. Any use is prohibited without the consent of the publisher and the author. This applies in particular to electronic or other reproduction, translation, distribution, and making it publicly available.
Table of Contents
Preface
Methods and Best Practice
Why Projects Fail
Manage the Perception of Project Success
DIY Agile: How to Re-think Your Own Method
Scaling Agile
Tools and Techniques
Stakeholder Management in an Enterprise
Knowledge Creation by Practitioners and Designers
Ideas and Requirements for Digital Innovations
Legal Advice on Innovative Technologies and Business Models
Time-Management
Culture, Soft Skills and Human Resources
Team and Project Management Values
Talent Challenges in the Age of Digitalisation and Globalisation
Implementing Change
Managing Massive Moments of Change
Appendix
List of Figures
Index
Final remarks from the editor
Preface
Dear Reader,
The management of digital projects is an activity that requires a high level of professionalism and knowledge of appropriate tools and techniques. Decision-makers and practitioners should be well educated and always informed about new business ideas and have the latest methods in their ‘bag of tricks.’ Still, you might think that there are already many books and courses that aim to address this need. Why read another book in this domain?
We started this book project because we felt that many books about digital innovation and project management are either very theory-heavy, outdated, or just want to sell a particular method. We wanted to prepare a book that introduces the methods, but also covers the practical aspect, critically acclaims existing approaches and practices, and shows the limitations. I.e., the book touches appropriate methods as well as human/social aspects. Actually, the human aspect is one of the running themes in this book. It also addresses issues that may not be covered by ‘classical or agile project management literature’. You can regard it as a contribution to the ongoing discussion on business practices and methods. It also aims to nourish and stimulate dialogue in the professional community.
I’m also very delighted to present to you a very international book. We have co-authors from almost all over the world, and many of them have gained experience in international environments and with heterogeneous teams distributed all around the globe.
In short, this book is about practice, experience, and opinions from experts in the field. I hope you enjoy reading it and that it can help you to reflect on the current practice in your organisation.
With best regards,
Dr. Tobias Endress
Rikitea, 30th June 2020
Methods and Best Practice
Why Projects Fail
How to decide whether a project is a failure
Dr. Stephan Meyer
StephanMeyer.com
Abstract
This chapter takes a closer look at change projects and discusses whether the rumours are true that so many of them are complete failures. In a nutshell, whether a change initiative is considered a ‘success,’ or a ‘failure,’ is mostly dependent on classical project baselines, but also the observer’s perspective and the observer’s expectation. However, these differentiations are often ignored when making blunt statements about change projects.
Beware of Numbers often Quoted but Badly Documented
Recently I discussed with a professor who told me that from her point of view, change projects are almost futile since it is a wellknown fact that 70% of all change projects fail. Is that so? I decided to play detective to find out where that mysterious percentage originated from. I did some research on the scientific papers she referred to, and this is what I found out.
The literature is full of blunt statements about a supposed high failure rate of change initiatives, often without much evidence to back up these statements. Someone makes up an arbitrary percentage of change failures, someone else refers to it, and suddenly the rumour of a supposed high failure rate leads a life of its own. For example, Beer and Nohria claimed “the brutal fact is that about 70% of all change initiatives fail”,1 without referring to any evidence. How the authors came up with that number remains mysterious. Other authors2 then presented this 70% failure rate as a number etched in stone and backed up their claims with reference to Beer and Nohria3. Another author4 referred to a second group of authors5, who made a reference to both Beer and Nohria6 and to a third group of authors7 who once again referred to Beer and Nohria8. In other words, while there is hardly any doubt that some projects do fail, in this case, the oftquoted statement that almost all projects fail seems to be rather based on rumours than on facts.
How to Judge Project “Success” and “Failure”
A project can be understood as a temporary initiative to establish a change in an organisation. The most fundamental question about the outcome of a change initiative is whether it is a ‘success’ or a ‘failure.’ While at first sight, this may seem to be an easy question to answer; upon closer inspection, it is just as complex as questions such as “what is radical change” or “how should change be managed.” Categorising a change initiative as either a ‘success’ or ‘failure’ depends on a set of parameters, of which the most relevant seem to be:
• Classical project baselines
• Perspective
• Expectation
Here is a suggestion on how these project parameters can be used to judge the success of a project.
Project
Figure 1: Key Factors for Project Success
The classical project baselines as they are represented in the PMBOK Guide consist of scope, time, and cost.9 ‘Scope’ refers to the question of what kind of change initiative is being evaluated. As there is a broad range of possible ‘changes,’ it may be challenging to put all of them in one basket: Small versus big ones, short-term versus long-term ones, changes performed half-heartedly by overworked line managers versus changes performed fulltime by experienced change agents, and so forth. ‘Time’ refers to the question of which time is evaluated when deciding about success or failure. In other words, this is a question of sustainability. ‘Cost’ refers to the amount of money spent and generally follows the rule, the less, the better.
‘Perspective’ refers to the question of who is to evaluate the change’s success, as different observers may come to differing conclusions. For example, the financial stakeholders of an organisation may apply entirely different success criteria from those applied by the organisation’s employees. ‘Expectation’ refers to the question of what the person judging about the change expects to achieve from it. A financial stakeholder may be happy because his expectation is fulfilled when a change initiative saved his investee organisation from bankruptcy. At the same time, a relocated employee may not find his expectation fulfilled because his local plant had to be closed down to enable the organisation’s survival. From his perspective, the change initiative may not be considered a success.
Figure 2: Judgement Depends on a Persons Perspective and Expectation
Different Perspectives cause Conflicting Success Criteria
Here is an anecdotal example of a different perspective and, thus, different expectations about a successful project. I had my own experiences with internal line managers with short-term contracts. I would like to compare for a moment the perspective of such a line manager to the perspective of the owner of a family business.
The line manager: I once had a consulting mandate at a client who hired their top management externally and gave each manager a short-term contract with a duration of two years each. In other words, every two years, the financial stakeholders decided whether the contract should be extended or not. If the stakeholders were satisfied, the contract could be extended almost indefinitely until the manager’s retirement, at least in theory. However, this procedure meant that 18 months into the contract, the negotiation between the stakeholders and the manager would start about whether the contract should be extended. The consequence of this was that every manager was geared toward short-term wins that could be presented during the negotiations. Those short-term wins were often detrimental to the organisation’s long-term success or even its long-term survival. The manager calculated that he would not be part of the organisation on a long term anyway. Such a line manager with a short-term contract had a completely different perspective from the owner of a family business.
The owner of a family business: The owner of a family business may think even in periods of several generations. He may plan, for example, to lead the company for another ten years, give or take a few. After that, the company will either be sold or be transferred to a member of the next generation in the owner’s family. In either case, the company owner will do everything to ensure that the company’s value will be as high as possible ten years from now. In contrast to the line manager with a short-term contract, the company owner will not sacrifice the company’s future for a quick win in the next 18 months.
The success of a change initiative may be judged entirely differently, depending on whether you look at it from a short-term or long-term perspective. The question of the time scale chosen is related to the concept of an organisational life-co-founder-optimal. Generally speaking, categorising a change initiative as either ‘success’ or ‘failure’ is rather preposterous without considering all of the parameters mentioned above.
Figure 3: Perspectives of Line Manager and Business Owner
Example for specific expectations: The financial stakeholder
Generally speaking, how the outcome of change is evaluated is a stakeholder perspective issue. While the average employee may have a somewhat subjective expectation about the outcome of organisational change, such as an improvement of the organisational culture, the financial stakeholder will always focus on the hard facts concerning the profitability of the organisation. He is the one to initiate the change project and thus has high expectations about the improvement of profitability. More specifically, Crone et al. suggest the following kinds of key performance indicators (KPIs) for organisational change: KPIs for rentability analysis, KPIs for working capital analysis, KPIs for liquidity analysis, KPIs for financial analysis, KPIs for crisis investors.10 Here are a few examples of these KPIs:
• KPIs for rentability analysis, e.g., return on equity, return on assets, return on capital employed
• KPIs for working capital analysis, e.g., working capital, networking capital efficiency, duration of liabilities, duration of assets
• KPIs for liquidity analysis, e.g., liquidity 1st grade to 3rd grade, cashflow I to III
• KPIs for financial analysis, e.g., equity ratio, borrowing ratio, gearing ratio
• KPIs for crisis investors, e.g., EBITDA, total net leverage, interest coverage, revenue growth
It hopefully becomes obvious that these criteria for a successful project, and thus, the expectations about the project outcome are not equally shared by everyone involved. This is why you always have to consider that different stakeholders may have different expectations.
Figure 4: Different Expectations of Project Stakeholders
Causes of Project Failure
So, after having considered the three project parameters baselines, perspective, and expectation, what are now the causes of possible project failure? Explanations for a potential failed change initiative in the scientific literature are varied, with a broad range of causes mentioned and astonishingly little overlap between them. The most consensus can be found about the following cause of project failure: The quality of leadership and thus the choice of appropriate change agents is considered essential by several authors.11
Apart from that, many authors come up with additional ideas of why projects fail. Here are a few sources and the cause they claim to be the culprit. Raelin and Cataldo attribute failure of change to a lack of empowerment of middle management.12 Grady and Grady attribute it to a loss of stability caused by an organisational change initiative.13 Acord attributes it to procrastination.14 Another explanation is a lack of alignment between the value system of the change intervention and of those members of an organisation changing.15 Also, an inappropriate organisational reward system may be the cause.16 A high level of complexity may make planning change initiatives almost impossible.17 Lack of clarity of need, clarity of problem, and clarity of outcome may lead to failure.18 According to Sisco, the two general reasons that cause IT projects to fail are poor definition of project scope and ineffective communication.19 It is important to consider that the previously identified causes of change failure are always dependent on the definition of what change failure really is. This also applies to the following ‘top of the pops list’. Please note that the quality of leadership mentioned above shows through in several of these items. Antony & Gupta present the “top ten reasons for process improvement project failures.”20 They are
1. Lack of commitment and support from top management
2. Poor communication practices
3. Incompetent team
4. Inadequate training and learning
5. Faulty selection of process improvement methodology and its associated tools/techniques
6. Inappropriate rewards and recognition system/culture
7. Scope creepiness
8. co-founderoptimal team size and composition
9. Inconsistent monitoring and control (lack of expert supervision)
10. Resistance to change (partial cooperation by employees).
How to Minimise the Probability of Failure
The previous annotations may convey the impression that the success of a project lies in the eye of the beholder, and rightfully so. Here are some brief suggestions on how to appropriately handle this challenge: In the early stage of the project, when the project charter is written, try to understand better the customer who initiated the project by researching his perspective and expectations. At a later stage, when the stakeholder analysis is written, list the different stakeholders, as well as their perspectives and possible expectations. Also, if the authors of the project management literature are right, try to raise the quality of leadership by carefully choosing the most appropriate change agents for your project.
Lastly, the Cynic’s Perspective
While the information listed above may be a little too matter-offact for some readers, I would like to end this chapter with a tidbit for the cynics among us. On a more humorous note, the former West German chancellor Helmut Schmidt once explained failing projects by quoting an anonymous satirist who characterised the development of project stages in the following six steps:
a) Enthusiasm,
b) Doubt, c) Panic,
d) Search for the guilty party,
e) Punishment for the innocent and
f) Rewarding those who are not involved.21
Summary
It seems wise to be sceptical about general statements of the kind: “as everyone knows, X% of all change projects fail.” As my previous elaboration hopefully shows, there is often little substance to these claims. And even if there is any, the question of whether a change initiative is successful depends at least on parameters such as the classical project baselines, plus perspective and expectation. The perspective is always relevant to the expectation. It is advised to better understand the customer who initiated the project by researching his perspective in the project charter. Also, the stakeholder analysis should contain information about the stakeholders’ perspectives and possible expectations.
Among the projects that do fail, the scientific literature lists a broad range of possible causes. The most agreement among the authors can be found in the statement that failed projects are due to the quality of leadership and thus to the choice of appropriate change agents.
References
Acord, Terry. “Why Do Projects Fail?” FDM 71 (9). 1999. 20–23. https://doi.org/10.4324/9781351134156-7.
Antony, Jiju, and Sandeep Gupta. “Top Ten Reasons for Process Improvement Project Failures.” International Journal of Lean Six Sigma 10 (1), 2019, 367–74. https://doi.org/10.1108/IJLSS-11-2017-0130.
Avots, Ivars. “Why Does Project Management Fail?” California Management Review 12 (1), 1969, 77–82. https://doi.org/10.2307/41164208.
Balogun, Julia, Veronica Hope Hailey, and Stefanie Gustafson. Exploring Strategic Change. 4th ed. Harlow, England: Pearson, 2016.
Beer, Michael, and Nitin Nohria. “Cracking the Code of Change.” Harvard Business Review, no. May-June 2000: 11. https://doi.org/10.1163/156854074X00730.
Brown, Derek Robert, Dennis Rose, and Ray Gordon. “De-Commoditizing Change Management: A Call for the Re-Positioning of Change Management on IT Projects.” Journal of Organizational Change Management 29 (5), 2016, 793–803. https://doi.org/10.1108/JOCM-07-2015-0116.
Burnes, Bernard, and Philip Jackson. “Success and Failure in Organizational Change: An Exploration of the Role of Values.” Journal of Change Management 11 (2), 2011, 133–62. https://doi.org/10.1080/14697017.2010.524655.
Crone, Andreas, Henning Werner, Paul Abel, Arnd Allert, Frank Bisson, André Große Vorholt, Christof Hettich, et al. Modernes Sanierungsmanagement (Insolvenzverfahren, Haftungsrisiken, Arbeitsrecht, Sanierungskonzept Und Steuerliche Aspekte) [Modern reorganization management (insolvency proceedings, liability risks, labor law, reorganization concept and tax aspects)]. Vahlen, 2012.
Gal, Yoav, and Efrat Hadas. “Why Projects Fail: Knowledge Worker and the Reward Effect.” Journal of the Knowledge Economy 6 (4), 2015, 968–77. https://doi.org/10.1007/s13132-013-0168-1.
Grady, Victoria M., and James D. Grady. “The Relationship of Bowlby’s Attachment Theory to the Persistent Failure of Organizational Change Initiatives.” Journal of Change Management 13 (2), 2013, 206–22. https://doi.org/10.1080/14697017.2012.728534.
Matta, Nadim F., and Ron Ashkenas. “Why Good Projects Fail Anyway.” Harvard Business Review, September 2003, 1–12.
Moyce, Cliff. “Why Do Projects Fail?” Management Services 58 (2), 2014, 40–41.
Nag, Rajiv, Kevin G Corley, and Dennis A Giola. “The Intersection of an Organisational Identity, Knowledge and Practice: Attempting Strategic Change via Knowledge Grafting.” Academy of Management Journal 50 (4), 2007, 821–47.
New Zealand Institute of Management. “NZIM: When IT Projects Fail Blame Management. Major Information Technology Projects Frequently Fail to Fly. But Why? Some New Research Says Management, Not the Technology, Is the Root Cause of the Problem.” New Zealand Management, March 2003, 18–19.
Project Management Institute (PMI). Pmbok Guide: A Guide to the Project Management Body of Knowledge. 6th ed. Newtown Square, Pennsylvania: Project Management Institute (PMI), 2017. https://doi.org/10.1002/pmj.20125.
Raelin, Jonathan D., and Christina G. Cataldo. “Whither Middle Management? Empowering Interface and the Failure of Organizational Change.” Journal of Change Management 11 (4), 2011, 481–507. https://doi.org/10.1080/14697017.2011.630509.
Schiff, Anshel. “Ready or Not…” Journal of Change Management 7 (1), 2007, 3–11. https://doi.org/10.1109/MPE.2010.939949.Schmidt, Helmut. “Why Some Projects Fail.” Journal of Accountancy 155 (3), 1983, 32.
Sisco, Mike. “Why Are My Projects Failing?” CIO; Framingham, Jun. 26 2019, 1–4.
Todnem By, Rune. “Organisational Change Management: A Critical Review.” Journal of Change Management 5 (4), 2005. 369–80. https://doi.org/10.1080/14697010500359250.
About the Author
Dr. Stephan Meyer is an expert in radical organisational change. He works as a freelance management consultant and interim manager, orchestrating successful change initiatives in the field of digital transformation. Dr. Stephan Meyer has more than 25 years of experience in managing projects with up to 300 members. His former roles include CEO, Member of the Board, Project Leader, Program Manager, Mentor, and Coach. He is a former employee of Accenture and the cofounder of a Private Equity company. His education includes a Diplom in Business Psychology (Diplom-Psychologe) at the RWTH Aachen University (Germany). In 2019, he received a PhD at the University of Gloucestershire (UK) in Business Administration with a dissertation about radical change by killing sacred cows in organisations.
1 Beer and Nohria, Cracking the Code of Change, p. 2.
2 Burnes and Jackson, Success and Failure in Organizational Change.
3 Beer and Nohria, Cracking the Code of Change.
4 Todnem By, Organisational Change Management.
5 Balogun et al., Exploring Strategic Change.
6 Beer and Nohria, Cracking the Code of Change.
7 Nag, et al., Intersection of Organizational Identity, Knowledge and Practice.
8 Beer and Nohria, Cracking the Code of Change.
9 Project Management Institute, Pmbok Guide, p. 105.
10 Crone et al., Modern reorganization management.
11 E.g. Avots; Brown, Rose, & Gordon; New Zealand Institute of Management.
12 Raelin and Cataldo, Whither Middle Management?
13 Grady and Grady, The Relationship of Bowlby’s Attachment Theory to the Persistent Failure of Organizational Change Initiatives.
14 Acord, Why Do Projects Fail?
15 Burnes and Jackson, Success and Failure in Organizational Change.
16 Gal and Hadas, Why Projects Fail.
17 Matta and Ashkenas, Why Good Projects Fail Anyway.
18 Moyce, Why Do Projects Fail?
19 Sisco, Why Are My Projects Failing?
20 Antony and Gupta, Top Ten Reasons for Process Improvement Project Failures.
21 Schmidt, Why Some Projects Fail.