- Taylor Tomasini
- Sugar Land, TX
- United States
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Why are corporate projects fragile?
A corporate project goes something like this: someone realizes the organization can save money if it improves a process or becomes more electronic or changes the way it does something. Once the realization is made a project team is formed, consultants are hired, and an ROI is computed. The group gets to work.
They plan, they create dependencies, simplify the complexity and create a waterfall deployment strategy. But why? That seems fragile. Dependencies are inevitably understated, complexities were inevitably too simplified, and things begin to break down. Timelines are missed and ROIs turned out to be ambitious.
Why? Why is this the norm? Why do we even plan? Our bodies don’t plan, the ecology around us doesn’t plan? And yet they survive. Our companies plan and seek efficiency and take projects as means toward improvement, but they fail. They don’t survive. Is there something we can learn from biology that can inform the way we improve our organizations?
Robert Winner 50+
Nature and good managers analyze their resources, adjust, adapt, and overcome. Executives make demands .... to hell with consequences and damn the torpedeos.
I have returned several times as a consultant and always have a problem explaining this to top management.
I am sure that you are alread aware of this disconnect and the comparison to nature is a red herring.
Although I agree we can learn from all sources.
I wish you well. Bob.
Taylor Tomasini
Gail . 50+
Take a human and feed feed it the right amount of food to survive, grow, prosper, decline, and then die.
Take a corporation and allow it to live a natural lifespan. It grows in accordance with demand, and dies when the demand is gone because of new inventions.
Now take a corporation and invent money into existence to keep it growing, eating, consuming, surviving, growing, prospering, and legally protecting it from a natural death.
Then take a human population and feed it enough to keep it growing, eating, consuming, surviving, prospering, and protecting it from death.
what do you now have? You have a population boom to the point where the earth's resources can no longer sustain our population of well over 7 billion. You have obesity epidemics in one place while starvation grows in another. You have people becoming complacent and intellectually lazy. They become dependent on the political systems that are supposed to protect them from death (an impossibility). They stop making good decisions. They become extinct.Their corporations die with them because, contrary to current political belief, they are not human. They are legally protected ideas.
What we can learn from biology is that everything in the physical world dies. There is no escaping it.
Krisztián Pintér 200+
there is a reason why corporations have the size they have. inside a corporation, there is top-down coordination, protocols and hierarchy. there is limited feedback on individual processes. costs are hard to allocate to divisions and activities. on the other hand, many processes are optimized for speed and low cost. you don't have to constantly look for services on the market that the corporation itself internally provides, and the associated risk is lower.
outside the corporation, there is the market. the market is characterized by being non-hierarchic, lack of intelligent agent control, diversity. the major selective force on the market is trial and error, profit and loss. this is a very effective, dynamic, immediate feedback mechanism. on the other hand, intercorporation transactions are volatile and costly.
the extreme on the corporation side would be socialism with a central planning board making economy-wide decisions. in such a world, everything can be decided, and massive rearrangement of production methods would be possible as a conscious decision. but the system would be highly bureaucratic, rigid and lacking in feedback mechanisms to the level of economic disaster and collapse.
the extreme on the market side would be one-person "corporations" doing everything on per-case contract base, constantly looking for alternatives to the current cooperative partners. such a "corporation" would be very "aerodynamic", but the cost of cooperation is preventively high.
the current state of technology results in a middle ground between the two extremes. corporations getting too large becoming efficient at what they do, but slow to change. corporations too small getting buried under heaps of extra cost and volatility of the market.
as of now, due to many circumstances, relatively huge and rigid corporations survive best.
Taylor Tomasini
Krisztián Pintér 200+
Taylor Tomasini
Barry Palmer 50+
Most projects are acts of invention, but we act as though we can plan for creative thinking, as though creativity is just another service, like hiring a plumber.
It is important for us to keep a positive outlook, while simultaneously avoiding overconfidence. This is a delicate balancing act. Realism is very difficult.
Failure is the norm because projects are very difficult and humans are not as competent as we think we are.
And yet, some projects result in fabulous success. That is the reason we keep trying.
Your biological analogy does not hold up to close scrutiny. In nature, failure is the norm even more than in human projects. Consider all the millions of newborn organisms that are eaten before they are even one day old. When a predator eats an egg, the project never gets started.
Taylor Tomasini
In contrast, planning -- which is our means of dealing with future volatility -- seems rather narrow and inadequate. What if we didn't need to see every risk coming down the road? What if we organized our projects in a way where are resilient to risks?
Gordon Barker 10+
The first 747 that was built missed all of its targets, but the 50th one built was spot on.
It is a rare board of directors who understands the concept of risk correctly and that a project can be 1x, 2x, 3x or 4x (that is spot on to 4 times the estimated cost).
Even worse is the abiltiy of middle management to plan in detail (to see hidden complexity), make realistic estimates of the amount of completed work they can get done in a time period (not overestimate their amazing ability to accomplish stuff) and not embellish the returns the fabulous project will provide for the company.
Taylor Tomasini
Gordon Barker 10+
In my experience, all others are non starters.
For example, I was once consulting at an engineering firm and the IT department wanted to do some project, the end result of which was that their jobs were much easier.
The response from the president of the company was that it was not his job to make their jobs easier.
I would be interested in hearing any other reasons you have come across for companies starting projects not based on these two reasons.
Taylor Tomasini
Just recently I started reading John Mackey's book Conscious Capitalism and he very clearly suggests that profit maximization for our equity holders (which is the reason we want efficiency and competitive advantage) isn't the reason our companies should exist. He believes, instead, in maximizing value for employees, customers, debt holders, equity holders, suppliers, etc.
With that in mind the focus isn't necessarily on profit maximization. He sees it more as a constraint -- a company must make money to survive. But the guiding principle is value for all stakeholders. So this might mean a desire to care for the environment since a stakeholder is the society in which the company is located, or the desire might be to provide whole foods because it's socially responsible, or to compassionately raise cattle because it's socially responsible.
The point: He argues that our purpose should be a human one, and profit simply a constraint. From this perspective companies have a whole new range of options for what they choose to maximize.
Taylor Tomasini
He argues that the first kind of company is operating according to and industrial model that requires that they make a standard product ever cheaper with ever higher quality. This necessitates efficiency.
The second kind of company provides human connection and caring. It's focused on the finite resource of human attention; whereas the first kind of company is focused on the finite resource of the physical.
The first company is in a race to zero (maximum efficiency with maximum quality); whereas, the second kind of company is in a race to make meaning.
Examples? There are many of the first -- maybe, car manufacturers. There are fewer examples of the second -- maybe, Apple. I chose Apple because their products obviously drive a premium over the value of the thing being created. There's something else there.
Just a thought.
Gordon Barker 10+
I live in Canada so I can only comment on Canadian law but the Supreme court has recently defined the fiduciary duty of a company’s directors or owners to be to the corporation and not to any particular creditor group.
The court also defers to business judgements that the directors make at the time and does not demand perfection.
This means that profit is not the sole reason for a corporation to exist and it is recognized that there are values beyond simple profit that the corporation brings to its environment, including the town in which is exists, the employees, any good will towards the company, etc.
Social responsibility is definitely on the table here.
With regard to your point about cost vs. value I recall a business case study where a manufacturer made wheel chairs. They standardized all the parts and assembly and tried to make the product as good as possible while being a cheap as possible as well. This was a race to the bottom.
They subsequently turned around and decided to expand into new concepts and were one of the first companies to make sport wheel chairs. That is an example of adding value and looking to make your product line meaningful to more people.
The second type of company will always have a loyal following while the first will have Wall Mart people.
Taylor Tomasini