Fox-Meyer: a project failure that brought down the company

Overpromising in order to land a big contract is always tempting to a business. But it can be a disaster when you don’t deliver.

Such was the situation with the Fox-Meyer Drug company in the mid-1990s. They committed to a customer to produce a product for them. Having just implemented a new $65M Enterprise Resource Planning (ERP) system and new warehouses, they saw it as a way to demonstrate their production prowess with new tools.

The strategy was risky in concept: testing a new ERP system with a big customer order. Everything would have to go right for it to be a success.

It was a big gamble that ultimately brought the company to bankruptcy.

The specifics are interesting but unsurprising. As the system failed to deliver the product to the customer, the expected cash flow dried up. One Chapter 11 filing later, it was all over. Fox-Meyer, valued at $40B prior to the ERP project was eventually sold for $80M.

So what is the takeaway from this?

This was a case of project management hubris. The new ERP system was in place but untested. The test was done in real time, a risky move. Internally senior management was pressuring them to get it into place as their previous legacy system was woefully inadequate. That pressure led them to push the new system into implementation to disastrous effect.

In our work Managing Risks is one of our most important Key Success Parameters. If the project team behind the ERP had emphasized to senior management the risks of testing the system during an actual important production run, they would have discovered the flaws in their system.

But it was all but over the day they accepted a customer contract that they had no realistic way of fulfilling. What happened next could have been foretold.

Knuckling under to management pressure cost the company everything. The Fox-Meyer name now crops up mostly in the annals of project failures.

There is plenty to learn from the mistakes of the past. The key is to make certain your project doesn’t end up in the same book as Fox-Meyer’s.

The glittering Sydney Opera House a project disaster

What’s always struck me about project failures is how well some hide their private disasters behind the facade of public profile.

Consider the story of the Sydney Opera House. Today it stands as an architectural marvel and, with apologies to Crocodile Dundee and Fosters Lager, the de facto symbol of Australia.

That is the current reality. But the backstory is fascinating. When Danish architect Jørn Utzon won the design competition in 1957, few would have predicted that the facility wouldn’t open its doors until 1973.

But that’s exactly what happened. The why is an almost predictable story, one that most modern projects have learned to avoid since.

Unbeknownst to the the folks behind the project, failure was almost inevitable from the outset. While a worthy goal, running a design competition that discounts budgetary concerns is a recipe for trouble.

Simply put, an architect is not a project manager and as such, there were design alterations done after the fact, specifically to the interiors, that caused budgets to balloon. When Utzon saw the results developed by the construction team, he was upset because they did not represent his vision.

Of course any changes to the project design meant adjustments to the project budget. And contractors who saw project creep happen after they had already committed to their contracted terms were up in arms.

Frustrated, Utzon walked away from the project in 1966, leaving three new architects to puzzle over his original intentions. That, of course, led to cost overruns and further delays for the project.

As I noted above, the building was finally completed in 1973, Utzon was never to return to Australia but nonetheless was awarded an important architectural prize in 2003 for his design.

So why did the project fall apart almost as soon as it began?

If we use our Key Success Parameters  as to guide successful projects Clear Definition at the outset is critical.

Clear Definition means a clear understanding of the terms of the project goals and definitions. Of course with Utzon redesigning and adjusting as the project moved forward, the scope and scale kept changing.

Another Key Success Parameter involves a commitment to Rigorous Quality. And unfortunately, that one factor was the only constant through the entire project. Simply put, the creators of the Sydney Opera House, and the Australian government, insisted that it be the best of its kind. Given that the project was mostly funded by a national lottery, this was possible. But it meant that deadlines were of little concern. Still I can’t imagine anyone would have thought in 1957 that the four-year goal for the completion of the facility would end up being 17 years.
Not all projects drag on for almost two decades. But without proper training and processes in place it’s easy to see how project teams can unwittingly contribute to extended delays and cost overruns.

Organizational Agility and Multi-Tasking

I just finished a webinar for a client where I presented The Infinite Resource Pool (one of my favorite speeches). Smack in the middle of this presentation, I realized something.

For some time, I’d been trying to figure out where this brilliant idea of multi-tasking came from (you do recognize sarcasm, right?) Of course, my mind switched to this new realization which cause a slight divergence in the speech, but it was worth it (yes; that happens to the best of us).

At the turn of the current century (I have to say ‘current’ because in the speech I go back to the turn of the previous one), there was a big push for organizational agility.

It was the beginning to true globalization and the internet was skyrocketing, new projects were creeping up at a phenomenal rate and organizations had to move quickly.

Organizational agility is simply the ability of the organization to move… to new products, new markets, new whatever.

Back then, we tried to do it right. One of the prominent actions an organization could take to help make themselves agile was cross-training. Here, a person from one department would be cross-trained to do other activities either within their department or in other departments.

This provided two benefits. First, it made a more agile workforce. Second, it tended to break down the silos that often exist within organizational departments.

Well, the need for organizational agility and cross-training hasn’t gone away. But, we’ve now translated that into multi-tasking.

What’s the difference? Simple. With cross-training, people are properly trained to do the other job(s), communication increases, silos dissolve, and work gets done. With multi-tasking, we just find someone who is breathing and throw them at the new task and expect the work to be done right.

Let’s abandon multi-tasking and get back to cross-training. But that’s just my opinion.

How a Las Vegas hotel became a project disaster

It was to be a marvelous hotel, a 49-story gleaming tower with a reflective surface that would mirror the lights that surrounded it in the heart of Las Vegas.

In the end, pictures of its half-finished facade are all that remain of the ill-fated Harmon Hotel. That, plus a pile of rubble in a Las Vegas landfill, hauled there after the unfinished dream hotel was taken down a few years ago.

This failed project is a casebook example of why projects fail. When the soil was turned in 2006, it was to be a hotel and condominium, each taking roughly half of the proposed 49 floors.

In 2008, inspectors found serious installation errors with the steel rebar reinforcements. Further research revealed that the third-party inspectors hired by the project had falsified fully 62 reports in the summer and fall of that year.

After much review and analysis of the costs of redoing the entire building, they decided  to scale down the hotel / condominium to 28 stories.

By that date the project had already lost $1 billion for the Harmon Hotel project.

But it got worse. A 2011 report stated that the completed hotel wouldn’t safely survive an earthquake. At that point the decision was made to pull the plug on the project and pull the hotel down. It was completely demolished by 2015 and all that remains are questions.

Why did the project fail? Certainly the falsification of the reports played a critical role but that was only a symptom of the overall problem. A project’s pace can bring about a ‘too big to delay’ sensibility that does not brook much resistance.

A white paper I read on the failure suggested that communication played a large role. The lack of dialogue between the design and construction arms at early but critical phases of the project created ripples resulting in crucial errors that halted the project and ultimately led to its demise.

If a project is built on faulty data and information, it can’t be fixed later in the project.

We’ve seen this before. Projects fail because of some of the steps we outline in our Key Success Parameters are skipped. In this one, Clear Definition, ensuring a consistent definition of project terms, could have prevented the misunderstandings and confusion that plagued this project from the start.

And of course an insistence on Collaborative Spirit from the outset would have mitigated against a culture where decisions are made on incorrect information.

To learn more about how we can save your business from project failures, please contact us to talk. Before it’s too late.

Project failures often rooted in unfocused purpose

When we go in to rescue projects teetering on the brink of failure, the first thing we do is find out the root causes that resulted in the problems.

For management, the blame is often dropped at the feet of the project manager or project team itself. But that’s not always fair. Frequently, we find that the root cause is actually the project.

Sometimes what a business asks of a project group is not what they really want. And of course, it follows that what they asked for is also not what they need.

This is what drives project teams into twists. With a mandate to produce a product no one needs, stakeholders squabble over features and the team often ends up at odds with each other, trying to parse the intentions behind the requests.

Faced with such a turbulent situation we readdress with the business the intention behind the project… not so much what the team is expected to deliver but why. Answering that why can go a long way to getting a project back on track.

Once we refocus we then make certain the project stays on track by introducing our seven Key Success Parameters.

To learn how we can turn your projects around or train your team to be project management experts, please get in touch.

Levis Strauss project a failure to learn from

In Project planning, my go-to mantra is that those who forget history are condemned to repeat it. If you want to avoid mistakes and errors in future projects, you have to study your project failures and learn why they happened.  

Failures are fascinating because within each one is a blueprint for how you can avoid making the same mistakes again and again.

There was a disastrous project failure in 2008 at the Levi Strauss organization which always has fascinated me. In short, they were implementing a SAP solution in their organization. This enterprise resource planning software install was, on the surface, a simple $5M project.

However during the switchover between systems, there were problems. As a result the whole ordering system went down for a week. One week of lost orders in the life of a business like Levi Strauss may not result in a loss of life, but to the bottom line it certainly counts as a disaster.

The problem had to do with the connection of the new SAP system to existing legacy software. That meant there was a week where they couldn’t fulfill orders. This resulted in a staggering 98 percent income drop week-to-week from the previous year. In the second quarter of 2008, the company took a whopping $192.5M dollar write-off for the botched project.  

Levi Strauss’ SEC filing about their financial position shed some light on what had gone wrong. The complication of integrating the new SAP system into the legacy software led to an emergency update to their internal controls and procedures. This update happened to coincide with testing the new setup, while also training employees on the new system.

They do say hindsight is 20 / 20 but it wouldn’t have taken too keen an eye to see how this disaster could have been prevented.

Of our seven Key Success Parameters, both Ownership and Customer Deliverable Focus would have come into play in a similar situation. Ownership is about ensuring that all members of a team work to the one common goal, in this case the smooth delivery of the project. For a team to have gotten to the point of integrating the new system to the old without some type of field testing betrays poor practices, likely spurred on by deadline panic.

Customer Focus keeps a project focused on deliverables, ensuring a smooth flow of product to the customers. Because the focus, in the case of Levis, was on project delivery, the team lost focus on the customer. If they had valued the customer, they would never have brought the new system online without adequate testing.

In the end, that error in judgement cost them dearly in terms of lost sales and lost confidence in their ability to deliver to deadline.

If you want to ensure your project management teams can avoid any disaster or deftly manage one if it happens, please contact us.

Don’t let silver bullet thinking shoot you in the foot

I read an article recently about the proposed notion of a California Calexit from the 50 states that make up our great country.

Although the notion of a California secession started as a humorous gag, recent political developments have caused more than a few people to consider this once oddball concept with various degrees of seriousness.  

A group called Yes California is currently spearheading a campaign to strike a line from that state’s constitution that denotes it as “an inseparable part of the United States of America”, setting up a 2019 election asking the question “Should California become a free, sovereign and independent Country?”                                 

As a person with a background in project management, I can put the politics aside and look at this development from a purely project-based viewpoint. And what I see is a classic problem of a solution that doesn’t address the problem it purports to fix.

When you fail to take into account the root causes of a problem you almost always set yourself down the path to a costly misadventure. In this case would removing a state from the union solve the reason for the move? The exit attempt is clearly motivated by recent events at the national level. But the notion that leaving would solve the reason for the discontent is unproven. Worse, it’s not even being examined.

The wish for a ‘silver bullet‘ solution always tantalizes those faced with a problem. Many seem to forget that the phrase ‘the devil is in the details’ is actually true. If something seems to be too good to be true, it usually is. Because details matter.

The idea that seceding is California’s silver bullet solution is just as absurd as similar notions in the business sector. Too often resources get squandered on solutions with no guarantee that it will solve the problem at hand.

It comes down to research, a firm understanding of the issue and developing solutions that address root problems. If a project, whether it be state succession or implementing a new IT infrastructure, fails to take into account the root causes to be fixed, then in all probability you’re going to end up with a hugely expensive mess.

Does your business carefully research all aspects of a solution or is it always frantic in a search for silver bullets? Talk to us and let’s make sure your projects deliver the right solutions for the problems they are meant to address.

Learn What Makes People Happy in Their Job

I read an interesting post on LinkedIn recently which focused on what made people happy in their jobs.

The article referenced a report called It’s Time We All Work Happy: The Secrets of the Happiest Companies and Employees.

In it the author specifically pointed out:

  • Six universal factors that affect workplace happiness
  • The unique elements that drive joy for each age group, experience level and industry
  • The link between happiness and performance
  • Specific steps you can take to increase employee satisfaction

The link between happiness and performance intrigued me. It’s always been my contention that a happy employee is a productive one. And of course productive employees make a company more profitable.

So is there a link between a happy workplace and profitability?

The report certainly seems to back up that assertion as it gives some credence that happy employees are more productive, focused and collaborative given the opportunity.

Opportunity is the key word here. We have seen how our Key Success Parameters develop Project Management teams into performance dynamos using some of the same strategies touched on in the report. The report notes that small businesses of up to 9 employees experience the highest levels of happiness. Oddly enough if you think of this as the typical size of a project team, then you can see how the common purpose and team spirit can affect outcomes. Properly trained project teams are the engine that propels new development in organizations and of course new opportunities for profits.

Give us a call and let us show you how to build project teams that are happier and more productive and profitable.

New research suggests great bosses also technically skilled

What makes a great boss?

I read an article the other day that asked that very question. And new research appearing in the Harvard Business Review points to a number of compelling answers.

We we think of a great boss style or charisma are often seen as key elements.  But this new research took a different tact, looking at how a bosses technical acumen increases their ability to lead.

Simply put, if a boss can’t do your job, do you respect them less than if they could?

The research considered these issues:

  • Whether the supervisor could, if necessary, do the employee’s job.
  • Whether the supervisor worked his or her way up inside the company.
  • The supervisor’s level of technical competence as assessed by a worker.

As it turns out employees are markedly happier when managed by someone with solid expertise in the work they are doing on a daily basis. This turns conventional wisdom on its head.

Contrast that to the accepted thinking that engineers should lead engineers, for example, which is a terrible idea.

So why should a manager have to know job specifics if they have compensating organizational skills and personal charisma?

The reason why isn’t fully explored in the research, but I understand why technical expertise is being increasingly seen as an essential skill for managers. A leader urging employees to greater productivity is respected because they know of what they speak, and employees know that they know and understand some of the reasons for the current pace.

At Ally Business, we use our Key Success Parameters to help businesses reach their project management potential. The seven KSPs work in tandem with each other, dovetailing to create a complete project management transformation. Specifically they are Clear Definition, Ownership, Customer Deliverables Focus, Cooperative Spirit, Managing Task Interdependency, Managing Risks and Rigorous Quality.

Although all members of a team have different roles, Managing Task Interdependency, goes some way toward ensuring that disparate parts of the process are known by all team members. And by extension any manager the team reports to will have a strong knowledge of the process as well.

To find out how Ally Business can transform your managers into experienced ones, please contact us.

Research shows value of project management guidelines

Someone sent me an article recently from early last year about the seven best practices for Project Management leaders as compiled by Gartner Research.

Although the focus was on IT projects, the research caught my eye for some very specific reasons. One was this observation by Mbula Schoen, senior research analyst at Gartner: “A failure to evolve and adjust to changes (in technology) can result in a PMO being misaligned with an organization’s goals, and therefore being seen as failing to deliver value.

That resonates strongly with us at Ally Business. Aligning project teams with organizational goals is part of what we do when we work with project teams. If that doesn’t happen and senior management doesn’t buy into a project’s value and direction, then it stands a very good chance of failing.

The other interesting aspect of the paper was the recommendation of seven best practices for project managers. At Ally Business we have developed our Key Success Parameters, seven methods of project management that work in tandem with each other.

I could put the seven recommendations in the article up against our seven but that would be missing the point.

Here are two factors to consider with our Key Success Parameters:

They all work in tandem with each other

We work with organizations to train their teams on how to put them into practice.

And perhaps I’ve buried the lead here. The success of organizations that use our seven KSPs is the increased profitability that can be traced to individual teams.

If you want to discover how our Key Success Parameters can transform your project

management culture, please contact us.