Why even when the evidence suggests that it should be disconnected, do 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 accumulated that the “balance of the line” problem was unlikely to be solved.
Why did General Motors, as reported by Business Week, continue to fund gas-guzzling projects in the face of persistent evidence that gas prices are unlikely to return to $ 25 or even $ 50 a barrel? And why did Microsoft keep pushing Windows Vista when more than 33% of users weren’t satisfied with the product?
What about the fatal attempt to climb Everest in 1996, when five people died on the mountain inadvertently paying attention to the mandatory response time and disconnecting an expedition that faced deteriorating conditions?
How do these projects continue in the face of evidence that it should have been disconnected? 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 of the reasons why quitting is so difficult.
Organizational reward culture. Most organizations reward success. If you complete a project on budget, on time, and meet quality targets, you can enjoy the spoils of success and even get a promotion. Bring a project over budget, late, or deliver mediocre results, and it can take years to recover. If you don’t fully comply, you may find yourself looking for a new job. Under these conditions, who would want to disconnect a project?
In fact, the Columbia Accident Investigation Board concluded that NASA’s “faster, better, and cheaper” culture was to blame for the disaster, as were the technical problems that led to the disintegration of the spacecraft when it returned. to the earth’s atmosphere.
Executive pressure. When executive management checks in on a project, they often visualize a very simplified AON diagram. It is a diagram with only two nodes; Start and finish. What happens in between often worries them little as long as it gets to “Finish.” Under pressure like this, pulling the plug in the middle amounts to organizational suicide.
Sunk cost trap. When I was working at Hewlett Packard, one of my projects was developing a process for winding toroidal transformers. These were donut-shaped components, about the size of a quarter through which the wire would be wound. Then the complete unit would be mounted on a printed circuit board. I quickly discovered that the machines we had available were obsolete and if we replaced them with automatic winders we could produce them in-house at a fraction of the cost that our current suppliers would charge. With great confidence I wrote a proposal to the manufacturing manager. Given our current volume, I explained, the payback for the new machines would be less than nine months. Later that day, he stopped by my desk. Investing in these machines, he insisted, would not make sense because we had several machines, bought 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 its replacement.
Most decision makers would say that the manufacturing manager did not recognize the sunk cost principle. Once the money has been spent, and the cost of the machine can no longer be recovered, the cost has “sunk” 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 developing a drug to continue with the project when new data strongly suggests that it does not perform better than other drugs already on the market. and it has some worrisome side effects. The $ 150 thousand in this case is a sunk cost.
We are not Quitters. I live near Boston and, in addition to bragging about our championship sports teams, we enjoyed complaining about the cost of the Big Dig. When first conceived, this new bridge and tunnel system promised to ease traffic congestion in downtown Boston. The starting price was around $ 2 billion. But shortly after the approval of the project, we began to experience a price hike. Digging underneath a centuries-old city with a maze of wires, cables, pipes, and underground tunnels was much more difficult than expected. Even the ground below the South Station refused to cooperate and had to be frozen to prevent the excavation from collapsing. Yet we persevere. Meanwhile, the price rose more and more. But we didn’t quit and construction continued. In the end, the project cost around $ 16 billion.
What is the lesson? We will not leave!
No contingency planning. Nobody likes to consider the possibility that things could go wrong. For this reason, and perhaps other reasons, we are reluctant to participate 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 about it and we made no adjustments to the airport plan. So when the system failed, there were no other alternatives for moving luggage through the airport. There were no underground roads on which to manually move luggage by tugboats.
It might be human nature to avoid contingency planning. None of us like to write a living will, and if you look at the trend in personal savings rates over the last ten years, they have fallen from a positive ten percent to a negative two percent. Few people seem to be 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 stick with a failed project. There is nowhere else 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 soared.
Continuous improvement When I was a kid, my Uncle Al took me to see the Red Sox every Saturday at Fenway Park in Boston. I remember sitting on the Bleaches near the left field wall and not taking my eyes off Ted Williams. He was the hero of my childhood. But the Sox never won the World Series. However, each spring we were convinced that the team had improved and this year it would be. Well, I had to wait over 40 years for a chance to see it happen and by that time Uncle Al had died.
How many times have I heard the mantra of “continuous improvement” to not only keep hope alive for the Red Sox but also to keep projects alive? How many times have project managers wanted more time to turn things around? How many times have they asked for more time for their improvements to have a chance to show results!
Sometimes “continuous improvement” is too little too late, yet it is a phrase often used to buy more time and avoid disconnecting.
I’m sure you can add to this list of “reasons”. But the main point here is to become aware of what is happening, to understand the reluctance that most have to disconnect, but to be brave enough to end a project that has little chance of meeting its objectives.