‘Failure’ Is Anything Short of Full Success
Obviously when a project fails completely, is cancelled or never delivers anything, the investment is considered a waste. But more insidious are projects that deliver ‘something’, even deliver ‘to specification’ but fail to deliver true business success.
NB You don’t want to measure success at the project level or even the project output level, you need to measure success at the business improvement level.
“True business success” is the full achievement of the desired business end-states, the full realization of their associated benefits and optimum (net) financial value in the business on an ongoing basis.
The measures of success used vary [1]
From "Delivery" including the infamous on time/on budget delivery measures.
To "Use" including productivity and efficiency improvements.
To "Improvement" to both the immediate and long-term business operational and market results.
Any success measure short of measuring the immediate and long-term improvements results in significant, albeit often unseen, cost, waste and loss.
A Real Life Case Example
Let’s take a real-life example of a bank developing a new platform for 12 of its institutional banking products so as to “bring them into the new century, offer new features and reduce the costs to both the customer and the bank”.
The program was approved to be delivered for $72 million. It was given to the bank’s premier program director to deliver.
It was delivered two years late at a total cost of $212 million, only delivered two of the initial 12 products and no longer provided the platform for the other 10 products.
The program was considered a ‘success’ in terms of eventually delivering (two) products—but at what cost?
Customers
Instead of reducing the costs to customers, the two new products were supplied at the same cost as the ones they replaced as the bank tried to recoup its massive over-investment.
Competitive
The other 10 products were not available, and their subsequent cost of delivery had been increased as they would have to establish their own base platforms – which led to a massive duplication of system functionality behind the scenes.
The non-availability of the other 10 products put the bank at a competitive disadvantage to its peers who had at least some of these products in the market at competitive rates.
Capability
The bank was constrained in terms of adapting to changing requirements/customer requests by the clunkiness of its systems behind the scenes. There was not one platform to change but several.
Productivity
The productivity gains from the introduction of modern, streamlined systems were missed. After spending $212 million, most staff were still doing the same processes as before.
Financial
The excess expenditure of $140 million was only the beginning of the extra costs as each subsequent project to deliver the other 10 products also had to build their own platforms at extra cost.
In addition, the planned benefits from the other 10 products were at best delayed if not lost completely.
Risk Reduction
The competitive risk was increased as the bank was now locked into the new system with all of its limitations, deficiencies and constraints putting it at a competitive disadvantage in the marketplace.
Recognition of the Costs
So we’ve seen this particular program cost $140 million more than planned, increased the costs of the subsequent projects, delivered a highly compromised result, increased the bank’s competitive risk and more. How many of these ‘costs’ were recognized by the bank?
Those involved in the program did not want to admit failure so they lauded the “successful delivery” of the two products.
Plans were put in place to deliver the other 10 products, but these projects had difficulty justifying their ROI as most of the benefits had been either claimed or negated by the initial program. (The Investment Committee did not allow them to be claimed twice.)
The business unit was frustrated at the unavailability of the 10 other products but carried on regardless. As projects and programs had a reputation for not delivering, this was accepted as ‘par for the course’.
No one called the sponsor or program manager to account for the failure as they at least delivered ‘something’. Yet they most certainly did not “bring the bank into the new century, offer new features and reduce the costs to both the customer and the bank” as promised.
So a program that by any external observation was a massive failure, was lauded as a “success”, accepted as the norm and the perpetrators received no sanction.
Your measures of success determine your results.
What standard of ‘success’ do you think this bank has now? The same—that as long as you deliver ‘something’ you can claim success regardless of the actual business value realized. This is, of course, a recipe for massive ongoing waste.
This example program rendered the bank worse off than before. Yes, it had two new products but at such a cost as to be uncompetitive. They did not have the other 10 products nor were they likely to have them at a competitive cost due to the limitations of the original program.
This type of high-cost compromised program is too often seen in many if not most organizations. Consistently, research confirms that around 40% of projects/programs leave their organizations worse off than before (as in this example). Therefore, this is not an isolated example; we could have used any number of projects and programs from any number of organizations to illustrate the same point.
In Conclusion
If you use the wrong measures of success you are incurring massive short and long-term costs, waste and losses.
Therefore, step one to improving project performance is to change your measures of success from measuring project/program "delivery" or output "usage" to actually specifying, tracking and measuring the short and long-term business improvements and value delivered.
This is what the TOP Value Equation™ equips you to do. It really is that simple.
To see what a difference the Value Equation makes see these real-life case studies.
[1] For a full discussion on the eight levels of success measures see the TOP Thought Leader article, “The Eight Levels of Success” on the TOP website
