INPACT 1: How to avoid a failed project - Slidecast 1: Introducing the INPACT Assessment Process

Slidecast 1: Introducing the INPACT Assessment Process and the Project Complexity model The Change Equation Or how to avoid a failed change project! Peter Duschinsky Managing Director, The Imaginist Company

70% of change projects do not deliver the expected benefits Is yours one of them? What would it be worth if you could avoid that happening? AND improve your project’s return on investment by 10%?

‘ The Change Equation’ is based on three key contentions:
The success or failure of a change project is dependent on the complexity of the project being within the capability of the organisation
The management of change cannot be achieved within the lifecycle of the project – it has to start earlier and go on afterwards
Management typically:
underestimates the complexity of the project, and
Is unwilling to invest in change management early enough
The Change Equation

The Change Equation
So the objective of running an INPACT assessment is to change mindsets
In order to do this we need to provide clear and simple top-level indicators that managers can understand quickly
We use a dashboard approach, including route-maps and RED / AMBER / GREEN traffic light indicators

‘The Change Equation’ shows you how to take two models:
the Organisational Culture Evolution spiral
the Business Process Capability ladder
…and combine them to provide a baseline: the Organisational Capability Indicator
It then shows you how to assess the complexity and risks of a change project ( 3 )
By analysing and quantifying the gap between Organisational Capability and Project Complexity, you can predict the likely success or failure of a change project
We can then add other tools to enrich the gap analysis
The Change Equation 1 2 3 £

Only 32% of change projects are successful
We claimed at the start that 70% of change projects do not deliver the expected benefits – that’s not our opinion, it comes from accredited sources:
Standish Group annual survey 2009 confirms that:
Only 32% of projects deliver the full benefits, on time and within budget
68% of projects are late, over budget and deliver less than the expected benefits
24% fail completely and are abandoned before they finish!

Change projects often fail to deliver

More evidence of the same trend
The Harvard Business School tracked the impact of change efforts among the Fortune 100 and they also found that only 30% produced a positive bottom-line improvement…
A recent survey of change programmes in <400 European organisations quoted by Prof. John Oakland, Emeritus Professor, Leeds University Business School found that:
90% of change programmes faced major implementation problems
Only 30% delivered measurable business improvements

More evidence of the same trend -2
Management consultant PricewaterhouseCoopers (March 2007) claim that:
25% of IT projects succeed
25% fail and
50% are late or over budget
A CIPD survey of 800 executives found that reorganisations failed to deliver real improvement in performance in 40% of cases
Why do so many change projects fail to deliver?
25% FAIL 25% SUCCEED 50% PARTIALLY SUCCEED

Why do change projects fail to deliver?
Here are some of the reasons we all know about:
a focus on the technology instead of the business benefits
poor specification of the system and lack of due diligence on supplier capability
failure to gain senior management championship
inadequate resources
poor project management
lack of user involvement
But if we all know about the reasons, why are change projects still going wrong so often?

“The Terminal 5 debacle is a national disgrace” Daily Mail, 14 April 2008
Some examples… Terminal 5

So what went wrong?
Shortage of staff car parking spaces
Only one employee security checkpoint operating
S ome staff unable to log on to the computer system
Hand-held communication software running slow
No managers on the ground to re-allocate work
Shortage of bar-reading storage bins
Baggage handling staff late in arriving
60 staff queue to get into terminal
6am: 3 planes leave without bags
Bags pile up, unattended
By midday 20 flights cancelled
4pm: baggage conveyor belt grinds to a halt, BA suspends all baggage check-in
The result: Over 28,000 lost bags, 700 cancelled planes and more than 150,000 disrupted passengers

C-Nomis
2004: HM Prison Service commissions C-NOMIS to give prison and probation officers real-time access to offenders’ records
June 2005: the approved lifetime cost of the project is quoted as £234m
March 2007: Home Secretary John Reid: “the main C-NOMIS base release, encompassing full prison and probation functionality, will be available no later than July 2008"
July 2007: [ just 4 months later! ] £155m has been spent, C-NOMIS is two years behind schedule; estimated lifetime project costs are now £690m . T he Ministry of Justice suspends the project
How can they have let a Minister do that? Surely someone knew…?

What went wrong?
National Audit Office report:
The project board accepted assurances that the project was “all going well” and nobody knew what was being delivered for the money being spent
There were insufficient resources and structures in place to deliver such a complex project
Over time policy developed and stakeholder requirements changed, but there was no cumulative view of the impact of change requests on costs and timescales
No resources were allocated to simplifying and standardising business processes across the 139 prisons and 42 probation areas, each of which had their own ways of working
The Commons Public Accounts Committee report verdict: “a spectacular failure – in a class of its own”

More examples…
Passport Office:
In 1999 delays in processing British passport applications, following the introduction of the Passport Agency’s new system, cost £12 million
£16,000 was allegedly spent on umbrellas to shelter those queuing in the rain to collect their passports!
MOD:
In 2002 a project to replace the British Army, Royal Navy and Royal Air Force inventory systems with a single system (the Defence Stores Management Solution) was brought to a halt after £130 million had been spent
Hardware worth a little over £12 million was able to be used elsewhere but the remaining £118 million was written off as a loss.

More examples…
The London Ambulance Service Computer-Aided Dispatch System
October 26, 1992: the London Ambulance Service CAD system goes live – and fails
A total of 46 people didn’t get an ambulance in time and DIED!

What went wrong?
The sequence of the collapse was:
Poorly trained staff did not update system with location and status of units
The increasingly out-of-date database meant units were being despatched non-optimally and multiple units were being sent to the same calls
A software bug generated a large number of exception messages– and un-responded exception messages generated repeat messages…
Lists scrolled off the top of the screens and were lost
The public repeated un-responded calls, adding to the chaos

What went wrong? cont…
The system grinds to a halt:
One ambulance arrived to find the patient dead and taken away by undertakers
Another ambulance answered a ’stroke’ call after 11 hours, and 5 hours after the patient had made their own way to hospital
CAD system partly disabled. Part-manual system seizes up completely
Operators now using tape recordings of calls, then reverting to a totally manual system
29 October 2002: (3 days after confidently launching the system) Chief Executive resigns
The original estimate for the work was £1.25million .
By the time the project was abandoned, £7.5million had been spent.
A total of 46 people didn’t get an ambulance in time and DIED!

Some conclusions
“ The the small software error was the straw that broke the camel's back, but the responsibility for the LAS's CAD system failure does not lie solely on the single developer who made the error or even the developing organization to which he belonged. Rather, the attitudes of key LAS members toward the project and the unreasonable restraints they placed on the project allowed the failure to occur.” National Audit Office report

Projects don’t just fail in the public sector!
MFI
2004/05: MFI’s new ERP system brought in - and crashes
Total loss of customer order data reported
2005/06: UK retail division reports a ‘substantial loss’ following the discovery of significant issues with the system which are affecting its ability to dispatch orders
MFI said they needed to spend another £30 million on it
26 Nov 2008 - MFI goes into administration with the loss of 1,500 jobs
Coincidence?

HP
In 2004, HP's project managers knew all of the things that could go wrong with their ERP centralisation programme. But they just didn't plan for so many of them to happen at once.
The project eventually cost HP $160 million in order backlogs and lost revenue—more than five times the project's estimated cost.
Gilles Bouchard, then-CIO of HP's global operations, says: "We had a series of small problems, none of which individually would have been too much to handle. But together they created the perfect storm."
There’s a clue in there, somewhere…
Projects don’t just fail in the public sector!

Complexity is EXPONENTIAL!
Conclusion?

We’re surrounded by examples of exponential growth:
For example, compound interest:
"Scientists have developed a powerful new weapon that destroys people but leaves buildings standing – it's called the 17% interest rate.” Johnny Carson, The Tonight Show, 1980
All that we had borrowed up to 1985 was around $5 billion, and we have paid about $16 billion; yet we are still being told that we owe about $28 billion. If you ask me what is the worst thing in the world, I will say it is compound interest.
President Obasanjo of Nigeria, 2000
Complexity is Exponential

The world population is growing at an exponential rate:
…and consumption of resources is following close behind - our energy usage is depleting the world’s natural resources exponentially
You are here! (6,792,142,533)

And climate change is also following an exponential runaway profile

… but we don’t really understand it
We live in a world that can change exponentially – but we have brains that are hardwired to plot things out linearly - the software in our brains compels us to think about progressions as being simple arithmetic ones
"The greatest shortcoming of the human race is our inability to understand the exponential function." Prof Albert Bartlett, emeritus Professor of Physics at the University of Colorado
So as a species, and a society, we deal poorly with uncertainty in non-linear domains.

Managing Exponential Risk
Most risk management approaches work something like this:
Make a list of risks
Give them a weighting
Add up the scores
That is supposed to tell you something useful – it might be the amount of contingency you need for the risk, or something like that
When the risks you anticipated happen, they become issues
When the risks you didn’t anticipate happen, you become a former project manager!
Source: David Christiansen

So let’s draw up a table with all the risk factors, score them and then add them all together:

There’s more…

And still more…
You think this is daunting? Have you looked at government’s Gateway Review?

But if complexity is exponential, we actually only need 3 factors to build an exponential scale: X * Y * Z
That won’t represent all the risks, but if we select the right factors, it will give us a good indicator
So what are our 3 factors?

The INPACT Exponential Complexity Tool uses the following 3 factors:
Number of people or S takeholders involved
More people = more complex = higher risk
Number of business activities or P rocesses affected
More ambitious = more complex = higher risk
Elapsed T ime to implement (in months)
Longer to implement = more complex = higher risk

The INPACT Exponential Complexity Tool
Think about a project you are familiar with. Where do you think you are?
Now do the numbers: S takeholders x P rocesses x T ime (in months)
Where are you actually?

Why else do change projects fail?
So that’s complexity – we typically underestimate it, so we under-resource it and our expectations of outcomes are too optimistic
Our next slidecast focuses on the other half of the Change Equation – the capability of the organisation to cope with the changes needed to succeed.

Thank you for listening!
Peter Duschinsky
[email_address]
‘ The Change Equation’ is now available from Amazon.co.uk

Who are we?
The Imaginist Company is a change management consultancy
We specialise in helping private and public sector clients identify and overcome barriers to change and performance improvement
Under our 'bethechange' brand, we work with non-profit organizations across the world, advising them on strategic development and transformational fundraising programmes
Working with a team of associates and partners, Imaginist undertakes projects and programmes which require:
‘ Quantum’ thinking and the creation of new approaches
Research, diagnostic assessment, analysis and evaluation
Development of clearly articulated guidelines and policy documentation
Dissemination, facilitation and mindset change
Contact us at: [email_address]

INPACT 1: How to avoid a failed project - Slidecast 1: Introducing the INPACT Assessment Process

by The Imaginist Company on Feb 12, 2010

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