inpact 1: how to avoid a failed project - slidecast 1: introducing the inpact assessment process

© Imaginist 2009

Slidecast 1: Introducing the INPACT Assessment Process and the

Project Complexity model

ORGANISATI ONAL CAPABILITY

THE PROJ ECT

Culture Proce

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ORGANISATI ONAL CAPABILITY

THE PROJ ECT

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The Change Equation

Or how to avoid a failed change project!

Peter DuschinskyManaging Director, The Imaginist Company

© Imaginist 2009

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%?

3

© Imaginist 2009

‘The Change Equation’ is based on three key contentions:

1. The success or failure of a change project is dependent on the complexity of the project being within the capability of the organisation

2. The management of change cannot be achieved within the lifecycle of the project – it has to start earlier and go on afterwards

3. Management typically:

• underestimates the complexity of the project, and

• Is unwilling to invest in change management early enough

The Change Equation

4

© Imaginist 2009

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

V.HighV.HighV.High

V.HighV.HighHigh

V.HighHighHigh

HighHighHigh

HighHighHigh

HighHighMedMedMed

MedMedMedLow

MedLowLow

LowLow

5432Level 1

9. Pragmatic/Empowered

8. Systemist

7. Imaginist

6. Empiricist

5. Pragmatic/ Aligned

4. Aligned

3. Dialectic

2. Structuralist

1. Pragmatic/ Anarchic

Management Culture

Business Process Capability

V.HighV.HighV.High

V.HighV.HighHigh

V.HighHighHigh

HighHighHigh

HighHighHigh

HighHighMedMedMed

MedMedMedLow

MedLowLow

LowLow

5432Level 1


8. Systemist

7. Imaginist

6. Empiricist


4. Aligned

3. Dialectic

2. Structuralist


Management Culture


V.HighV.HighV.High

V.HighV.HighHigh

V.HighHighHigh

HighHighHigh

HighHighHigh

HighHighMedMedMed

MedMedMedLow

MedLowLow

LowLow

5432Level 1


8. Systemist

7. Imaginist

6. Empiricist


4. Aligned

3. Dialectic

2. Structuralist


Management Culture


8. Systemist

7. Imaginist

6. Empiricist


4. Aligned

3. Dialectic

2. Structuralist


Management Culture


9 Pragmatist/Empowered9

8SystemistImaginist

7

6Empiricist

5

3Dialectic

INTERNALFOCUS

(Individual)

EXTERNALFOCUS

(Organisation)

Pragmatist1

3Rationalist

4Aligned

Structuralist2

5 Pragmatist/Aligned


8SystemistImaginist

7

6Empiricist

5

3Dialectic

INTERNALFOCUS

(Individual)

EXTERNALFOCUS

(Organisation)

Pragmatist1

3Rationalist

4Aligned

Structuralist2



8SystemistImaginist

7

6Empiricist

5

3Dialectic

INTERNALFOCUS

(Individual)

EXTERNALFOCUS

(Organisation)

Pragmatist1

3Rationalist

4Aligned

Structuralist2


9999

8SystemistImaginist

7Imaginist

7

6Empiricist

6Empiricist

6Empiricist

55555

3Dialectic

3Dialectic

INTERNALFOCUS

(Individual)

INTERNALFOCUS

(Individual)

INTERNALFOCUS

(Individual)

EXTERNALFOCUS

(Organisation)

EXTERNALFOCUS

(Organisation)

EXTERNALFOCUS

(Organisation)

Pragmatist1Pragmatist1

3Rationalist

3Rationalist

4Aligned

Structuralist2

Structuralist2

StructuralistStructuralist2


1.InitialAd hoc process

Chaotic

2.RepeatableStable process

Controlled environmentBasic

management control

3.DefinedStandard process

Consistent ExecutionProcess

definition

4.ManagedMeasured process

Quality and Productive Improvement

Process measurement

5.OptimisedEffective process

Continuing ImprovementProcess control


Chaotic



management control



definition



Process measurement




Chaotic1.InitialAd hoc process

Chaotic



management control



management control



definition



definition



Process measurement



Process measurement





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Not simple -needs some

project management

A complex project –needs an

experienced project

manager

Beyond this point your project is too complex –

break it down into separate projects

and employ a programme

manager

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manager




manager

- %Total potential impact on benefits

+ %Total potential impact on project timescales/costs

Other factors impact estimated at:

IT Solution9

Relationship with suppliers8

OTHER FACTORS

Delivery of Project Impact estimated at:

Benefits Realisation7

Distrust factor6

Visibility of process5

DELIVERY OF PROJECT

Project Impact estimated at:

Complexity of project4

Clarity of objectives3

PROJECT

Capability Impact estimated at:

Capability Maturity2

Management Culture1

ORGANISATION

Benefits-%

Time/Cost +%

Potential ImpactStatusComponent

- %Total potential impact on benefits

+ %Total potential impact on project timescales/costs

Other factors impact estimated at:

IT Solution9

Relationship with suppliers8

OTHER FACTORS

Delivery of Project Impact estimated at:

Benefits Realisation7

Distrust factor6

Visibility of process5

DELIVERY OF PROJECT

Project Impact estimated at:

Complexity of project4

Clarity of objectives3

PROJECT

Capability Impact estimated at:

Capability Maturity2

Management Culture1

ORGANISATION

Benefits-%

Time/Cost +%

Potential ImpactStatusComponent

Time & Cost

Distrust

(Trust % - 100)

People trust each other, relationships are good = Speedy change = Low cost = SUCCESS Levels of trust are poor, relationships

difficult = Slow or no change = Costs go up = FAILURE

Time & Cost

Distrust

(Trust % - 100)

People trust each other, relationships are good = Speedy change = Low cost = SUCCESS Levels of trust are poor, relationships

difficult = Slow or no change = Costs go up = FAILURE

Possible OutcomesAccountability?

Plan in place?

No

No

Yes

Yes

This project will not achieve its savings objectivesNo

Without formal framework, local managers will not be held accountable in practice – put one in place

Yes

Make local managers accountable for adopting the new processes and redeploying released resources to drive improved performance, or the benefits will not be realised

No

This project has a good chance of achieving the planned benefits

Yes

Possible OutcomesAccountability?

Plan in place?

No

No

Yes

Yes

This project will not achieve its savings objectivesNo

Without formal framework, local managers will not be held accountable in practice – put one in place

Yes

Make local managers accountable for adopting the new processes and redeploying released resources to drive improved performance, or the benefits will not be realised

No

This project has a good chance of achieving the planned benefits

Yes

Complexity

Too ComplexComplex

Not SimpleSimple

Low

Med

High

Capability

Complexity

Too ComplexComplex

Not SimpleSimple

Low

Med

High

Capability

The Change Equation

5

© Imaginist 2009

‘The Change Equation’ shows you how to take two models:

1. the Organisational Culture Evolution spiral

2. 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

ORGANI SATI ONAL CAPABI LI TY

THE PROJ ECT

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ORGANI SATI ONAL CAPABI LI TY

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1 2

3

© Imaginist 2009

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!

© Imaginist 2009

Change projects often fail to deliver

© Imaginist 2009

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

© Imaginist 2009

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% SUCCEED50% PARTIALLY SUCCEED

© Imaginist 2009

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?

© Imaginist 2009

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

Some examples… Terminal 5

© Imaginist 2009

So what went wrong?

1. Shortage of staff car parking spaces

2. Only one employee security checkpoint operating

3. Some staff unable to log on to the computer system

4. Hand-held communication software running slow

5. No managers on the ground to re-allocate work

6. 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

© Imaginist 2009

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. The Ministry of Justice suspends the project

How can they have let a Minister do that? Surely someone knew…?

© Imaginist 2009

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”

© Imaginist 2009

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.

© Imaginist 2009

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!

© Imaginist 2009

What went wrong?

The sequence of the collapse was:1. Poorly trained staff did not update system with location and

status of units

2. The increasingly out-of-date database meant units were being despatched non-optimally and multiple units were being sent to the same calls

3. A software bug generated a large number of exception messages– and un-responded exception messages generated repeat messages…

4. Lists scrolled off the top of the screens and were lost

5. The public repeated un-responded calls, adding to the chaos

© Imaginist 2009

What went wrong? cont…

6. 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

7. CAD system partly disabled. Part-manual system seizes up completely

8. Operators now using tape recordings of calls, then reverting to a totally manual system

9. 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!

© Imaginist 2009

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

© Imaginist 2009

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?

© Imaginist 2009

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!

© Imaginist 2009

Complexity is EXPONENTIAL!

Conclusion?

© Imaginist 2009

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

© Imaginist 2009


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)

© Imaginist 2009

… 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.

© Imaginist 2009

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

© Imaginist 2009


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

Risk Factors Weight Risk Potential Total

Scores

Low 1 2 3 4 5 High

ORGANISATIONAL

Urgency of need to change Little Vital

Culture Innovative, lively Closed, dead

Climate / Politics Open / Friendly Conflict / Bad feeling

Business Environment Static Rapid Change

Competition Low High

Growth / Stability Slow / Stable Rapid / Unstable

Management Style Inclusive Dictatorial

Management Experience Highly competent Naïve

Responsibilities and Leadership Clear Unclear

Perception of problems Shared Disagreed

Staff characteristics Willing and Able Unmotivated, inept

Adoption of IT Effective Ineffective

Quality Assurance procedures Well established Rough and ready

Available Finance High Low

© Imaginist 2009


There’s more…

PROJECT

Definition of Aims and Objectives Clear Vague

Room for improvement Great Little

Project Plan Detailed Unprepared

Feasibility Certain Uncertain

Size Small Large

Budget < £10.000 > £1,000,000

Development Timescale < 3 months > 2 years

Operation / Delivery Date Flexible Tight / exact

Quality / Standards Minimal / Lax Strict / Rigorous

Monitoring and control mechanisms In place / Good Do not exist

Newness of project / Ambitiousness Familiar / Common Strange / Unique

Complexity Easy Difficult

Resource Availability Plenty Inadequate

Project Manager’s Experience Experienced Inexperienced

Project Team’s Competence Expert Naïve

Skills required Few Many, varied

Number of bosses / Owners One Many

No. of People / groups involved Few Many

No. of interfaces to other systems 1 > 10

Legacy equipment Integration None High / many

Need for Security Low High

Management Commitment Strong Weak

User demand Keen Hostile

Anticipated User involvement High throughout Minimal

Staff Capability High, adaptable Low, untrained

© Imaginist 2009


And still more…

You think this is daunting? Have you looked at government’s Gateway Review?

OPTIONS

Operational Matches objectives Fits few of the needs

Financial Well within budget Over budget limit

Economic return Good investment Poor investment

Social upset / Staff happiness Improvement Anger & disruption

Achievability of Schedule Easily on Time May be late

Amount of change caused Highly beneficial Little difference

Potential User Impact / Retraining needs

Low High

Legal / Ethical problems Few Many

Number of Suppliers 1 > 5

Supplier support High, reliable Low, inadequate

Security Risk Low High

Newness of technology Tried and tested Frontier breaking

Build or Buy Modular package Bespoke software

© Imaginist 2009


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?

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Complexity Factor

© Imaginist 2009


The INPACT Exponential Complexity Tool uses the following 3 factors:

1. Number of people or Stakeholders involvedMore people = more complex = higher risk

2. Number of business activities or Processes affected More ambitious = more complex = higher risk

3. Elapsed Time to implement (in months) Longer to implement = more complex = higher risk

© Imaginist 2009

The INPACT Exponential Complexity Tool

Think about a project you are familiar with. Where do you think you are? Now do the numbers: Stakeholders x Processes x Time (in months) Where are you actually?

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Not simple –needs

experienced project

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A complex project –

needs dedicated

project team

Beyond this point your project is too complex – break it down into smaller

projects and employ a skilled programme

manager

Simple project – needs some

project management

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Not simple –needs

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Not simple –needs

experienced project

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Not simple –needs

experienced project

management


needs dedicated

project team


needs dedicated

project team



manager



manager


project management


project management


project management

© Imaginist 2009

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.

© Imaginist 2009

Thank you for listening!

Peter Duschinsky

[email protected]

‘The Change Equation’ is now available from

Amazon.co.uk

© Imaginist 2009

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 protected]

inpact 1: how to avoid a failed project - slidecast 1: introducing the inpact assessment process

Business

change equation

management of change

change management

change projectsdo

change project isdependent

failed change project

impact of change efforts

change projectsare successful