- 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?
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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