Let Them Fail

Filed under Leadership | Posted by PMStudent

I listened to one of my favorite podcasts yesterday, EconTalk.? The episode was a discussion about credit

Image via WikiPedia

Image via WikiPedia

default swaps and more generally about the financial woes we have gotten ourselves into.? Then this morning, I read this article in the New York Times, “U.S. Shifts Focus in Credit Bailout to the Consumer“.

[Editor:? Digressing so early in the post?] My first impression was that we gave the Treasury Department a check for $700 Billion without any real plan for what they would do with it.? You could argue that they are being adaptive and changing their scope and method of execution in response to new information.? Personally, I think they just had a bad plan to begin with, and now that has fallen through they are shooting from the hip.

What I would really like to discuss is the necessity of failure (don’t worry, I’ll tie this into project management at some point)!? In the EconTalk program, Arnold Kling brought up an excellent point.? During the internet bubble, did we go bail out all of the internet start-ups that went belly up?? No.

Companies who operate in such a way that leads to failure should be allowed to fail.? Otherwise, you create an implicit risk-reducing factor in the markets which leads to even more problems in the future.? You also prop up organizational structures and models of behavior that are not self-sustaining otherwise.? What does not fail on its own merit is what is working.? What works should persist until it ceases to work.??? Others see what is working and adapt it for themselves.? (for instance, I just adapted the [Editor:] style in this blog from Andy Meyer!? This is evolution, and this is why systems improve when they are not artificially “helped”.

In projects this happens all the time.? Companies keep pouring in good money after bad into projects that should have never been funded in the first place, or should have been evaluated to discover they are no longer viable.? This is a key reason why organizations need portfolio management which is somewhat detached from the functional and project departments.? Sponsors, stakeholders, and the project manager are unlikely to press for the termination of their project.? Their incentives are likely to be aligned with the project’s continuation.? If it costs more, they get a bigger budget to work with.? When they are given more money not tied to scope increases, there is an implicit precedent put in place that failure to plan well is OK.? It’s not OK, regardless of whether you do waterfall, spiral, lean, agile, whatever.? With known high-level scope a project manager should be able to give a decent estimate with a +/- range, even though the detailed requirements and features are defined later.

Another point Arnold brought up was the fact that many analysts and “geeks” in these organizations knew the risks and what was going on, but their voices in the organizations are not heard or disregarded by top management.? This is another excellent lesson for project managers.? Your staff and stakeholders collectively know much more about how things are going and the risks involved than you, your sponsor, or any one person.? Find ways to make communication easy and transparent and leverage collective knowledge.? Recommended reading:? Two Great Wastes at ReformingProjectManagement.

I’d love to hear what you think about all this.? Leave a comment below!