Management by Osmosis
Posted by Charlie Mayes, Managing Director, DAV Management
In July 2014 the National Audit Office announced that the Home Office’s Immigration Case Work (ICW) Programme had been closed in August the previous year, and that despite costing around £350m it had delivered “significantly less” than was expected. The Programme was designed to give Border Force caseworkers a single accurate view of individual applicants and was intended to replace both the legacy Casework Information Database (CID) and other IT and paper-based systems, by March 2014. Interestingly in the same month, The Telegraph carried a report highlighting that Fujitsu was pursuing compensation, after its £896m Connecting for Health contract with the NHS was cancelled owing to disputes around the failed IT strategy. Fujitsu reportedly won £700m, although it appears the IT Services company is still pressing for higher levels of compensation. Of course, these are very large, complex programmes of work and understandably attract the headlines when things go wrong; however, it gave me cause to reflect more generally on the levels of success that are achieved by organisations undertaking strategic change initiatives.
With the business climate becoming increasingly more positive, many organisations are looking to capitalise on this via a range of strategic investment initiatives, be they plans for expansion, new market offerings, more efficient operations, or a combination of all three. All of these initiatives will in some shape or form involve ‘programme’ activity and inevitably require some form of change; whether it be organisational, cultural or technical. So let’s just take a moment to consider some of the statistics:
- According to a recent IBM study, only 40% of projects and programmes meet schedule, budget and quality goals. Further, they found that the biggest barriers to success are people factors.
- Geneca, a software development company, noted from its studies that “fuzzy business objectives, out-of-sync stakeholders and excessive rework mean that 75% of project participants lack confidence that their projects will succeed.”
- The Portland Business Journal found similarly depressing statistics: “Most analyses conclude that between 65 and 80% of projects fail to meet their objectives, and also run significantly late or cost far more than planned.”
- KPMG New Zealand’s 2013 report found that 70% of organisations had suffered at least one project failure in the prior 12 months and 50% of respondents indicated that their project failed to achieve what they set out to deliver.
None of these statistics should come as a surprise, over the years there have been plenty of well publicised stories of the kind highlighted above; however, project success statistics have remained stubbornly at these levels and we need to keep asking ourselves what else can we do to improve performance and deliver better value for money from the projects and programmes that consume so much time and money.
One of the anomalies that I’ve come across many times is where senior managers and executives don’t fully appreciate the difference between announcing a major change initiative or new project and actually making it happen. All too often such leaders assume that once the announcement has been made change will just occur without their ongoing investment in time and effort, as the sponsor, to make things happen. I call this ‘Management by Osmosis’ and from my perspective, there are a combination of factors that lead to this way of thinking.
An unfortunate legacy of the 2008 financial crisis seems to be a prevalence of short–term thinking that consequently drives short-term planning and targets, in equal measure. Organisations have become very action-oriented, pro-active and assertive, and there is an assumption that just by taking action quickly rather than planning the activities properly, projects and the changes required, will be delivered successfully. However, in practice, this pressure to ‘just get it done’ often leads to unrealistic timeframes, squeezing or cutting corners and a lack of appreciation of everything that needs to be done to manage and deliver the required change. If a piece of work should take six months to deliver but the sponsor wants it done in three, there will inevitably be an impact on quality and the benefits realised as a result.
An interesting by-product of this short-term approach is that I see business cases being put forward that are overly optimistic (in time, cost or benefit), based on the premise that if they were realistic then the board might not find the case attractive or aggressive enough and probably wouldn’t approve the work in the first place. Whilst this is often done with the best of intentions, in the belief that corners can be cut and timeframes squeezed, the outcome is nearly always that the project or programme is ultimately perceived as a failure; and yet would probably have been successfully delivered within the original, more realistic time and cost projections.
I have also found that in many enterprises, the matrix nature of decision making means that it is too easy for managers, even if they are the project sponsor, to abdicate their responsibility and accountability – everyone assumes that someone else is doing what needs to be done. For example I’ve come across situations where managers say: “I have delivered what is in my control” but nobody has taken full accountability for the overall outcome of the project leaving the project or programme manager to deal with the fall out of plan delays and escalating costs.
There is also a growing talent management problem in many organisations. For various reasons – the recession and internal cost cutting, shortage of skills and experience, the cost and time involved in successful recruitment – organisations are now over promoting from within. As a result I often find people in very senior positions who, whilst clearly competent and committed, are not experienced or skilled enough to do the job they have been given. Also, during the recession, many experienced staff were made redundant and not replaced without a full analysis of the impact of losing that skillset from the business; thus serving to exacerbate the problem. Ultimately, the consequence in all of this is that experience in the management team is lost, they come under increasing pressure to deliver short-term results and the collective ability to understand and manage the changes typically required is diminished.
This combination of factors – short-term approach with a “just do it” culture, lack of accountability, reduction in management skills and experience – also has an impact on the performance and morale of the rest of the business. Without clear leadership and sponsorship, prioritisation of work is almost impossible and functional teams are expected to deliver project and programme tasks with no additional time or resource allocated – effectively trying to ‘change the business whilst running the business’. At the end of the chain some relatively junior team member has to make a judgement call on what to prioritise and, unsurprisingly, they do this based on who shouted at them the loudest, who shouted at them last, what fits within their ability and comfort zone, or simply what they can do before they go home.
The end product of all of this, for many organisations, is that tasks don’t get completed on time because the priority was not understood, things quickly go wrong because responsibility is lost in the matrix structure, senior leaders don’t report, track and check that what they asked for has actually been done, and sponsors have no space in their calendar and are not accessible when important decisions need to be made.
Little wonder then that project and programme success statistics remain stubbornly difficult to address when this is the reality for many organisations. It is clear that continued “management by osmosis” will not fix these problems. Until organisations ensure that their boards of directors and senior executives have the appropriate time, the right skills and experience, are able to take a medium to long term perspective and can demonstrate the will to take on the accountability that goes with being a sponsor of change, it is difficult to see things improving.