When was the last time you saw a major project failure? Such disasters can have devastating consequences for high-flying executives. Yet they happen all too often, with little effort taken to prevent failure.
For example, many executives stake their reputations on key projects such as successful product launches. However, research shows that most product launches fail. Nike’s FuelBand, launched with much fanfare in 2012, flopped on arrival. By 2014, Nike fired most of the team behind FuelBand, discontinuing this product.
One of the most important types of projects for a business is a merger or acquisition. Yet 70 to 90 percent of mergers and acquisitions fail to create value, and CEOs who lead failed M&As are frequently replaced. For instance, Microsoft’s CEO Steve Ballmer left in large part due to the tensions around his push to acquire Nokia, which eventually led to Microsoft writing off $8.4 billion.
Process failures can be just as bad. Safety failures led to the recall of over 20 million pounds of food across the US in 2018; from 1996 to 2017, more than 390 million cars and other motor vehicles had a recall, along with 154 million motor vehicle parts.
Japanese airbag maker Takata Corporation, with revenue of $6.6 billion and over 50,000 employees in 2016, declared bankruptcy in 2017 due to the costs of a recall and lawsuits over faulty airbags. Boeing’s engineers knew that the 737 Max aircraft display alert system software failed to meet requirements, but failed to do anything about it before the deadly October 2018 Lion Air crash. The grounding of Boeing’s 737 Max aircraft after that crash and the March 2019 Ethiopian Airlines Flight 302, caused in large part by the display alert system software, cost the company over a billion.
Of course, while examples from big companies make the headlines, executives from mid-size and small businesses have their share of catastrophes. Such mistakes largely come from the many dangerous judgment errors that result from how our brains are wired, what scholars in cognitive neuroscience and behavioral economics call cognitive biases.
Fortunately, recent research in these fields shows how you can use pragmatic strategies to assess and defeat these mental blindspots to avoid disasters: in your business, in your relationships, and in other life areas. You can do so using structured decision-making techniques for making quick everyday decisions, for more complex and significant ones, and for critically important and highly complex choices.
Such techniques will also help you make the best strategic plans, ones that empower you to address threats and seize opportunities in the long term. Finally, you can also gain mental skills and habits to defeat cognitive biases and make the best decisions in the moment.
But what do you do after you make a moderately important or a critical decision? You also need to avoid failures and maximize success in implementing these significant decisions, as well as in managing projects and processes that result from these decisions.
The most relevant scholarship in implementing decisions deals with prospective hindsight, meaning looking back in advance. Prospective hindsight helps you anticipate and avoid threats as well as notice and seize opportunities. Thus, you can defend yourself against failures and maximize the likelihood of success in major projects and processes, and in implementing decisions.
8 Key Steps to Preventing Project Disasters
“Failure-Proofing” is a pragmatic and easy-to-use strategy for obtaining the benefits of prospective hindsight. Having developed this technique based on behavioral economics and cognitive neuroscience studies, I then tested it on the front lines of my over 20 years of experience consulting and coaching leaders in large and mid-size companies and nonprofits avoid project or process failures. I wrote it up so that anyone – not only the people who hire me – can avoid such failures and maximize success in implementing decisions and running projects and processes.
Use Failure-Proofing after you make any substantial choices to ensure success in implementing decisions. Likewise, use it to assess major projects or processes you are about to launch or which you are currently managing. Don’t use Failure-Proofing on smaller, day-to-day decision-making, since doing so would take too much time. For those decisions, use the “5 Key Questions” technique instead. The failure-proofing technique is best done in teams, and should involve representatives of all relevant stakeholders; you can also do this technique by yourself, but consider showing your results to a trusted adviser for an external perspective.
Step 1: Gather all relevant stakeholders
Gather all the people relevant for making the decision in the room, or representatives of the stakeholders if there are too many to have in a group. A good number is 6, and avoid more than 10 people to ensure a manageable discussion.
Make sure the people in the room have the most expertise in the decision to be made, rather than simply gathering higher-up personnel. The goal is to address what might go wrong and how to fix it, as well as what might go right and how to ensure it. Expertise here is as important as an authority. At the same time, have some people with the power to decide how to address problems and seize opportunities that might be uncovered.
It’s very helpful to recruit an independent facilitator who is not part of the team to help guide the exercise. You can get someone from your Advisory Board, someone from another part of the organization, your mentor, or a coach or consultant. If you are going through this technique by yourself, write out various stakeholders that are relevant to the project or process, even different aspects of yourself that have competing goals.
Step 2: Explain the Failure-Proofing process to prevent failure in implementing decisions, or in project and process management
Explain the Failure-Proofing process to everyone by describing all the steps, so that all participants are on the same page about the exercise.
Step 3: Develop two Next Best Alternatives (NBAs) to the current plan for implementing the decision, or managing the project or process
Then, develop two Next Best Alternatives (NBAs) to the plan for the decision, project, or process you are evaluating. Have each participant on the team come up with and write down one NBA anonymously. Anonymity is critical to ensure that unpopular or politically problematic opinions can be voiced (“perhaps we should wait for a better opportunity rather than acquiring this company”).
The facilitator gathers what people wrote – thus ensuring anonymity if the facilitator is not part of the team and doesn’t know people’s handwriting – and voices the alternatives. Then, have team members vote on the choices that seem most viable, and choose two to discuss. Make sure to give them a fair hearing by having two team members – including at least one with authority – defend each NBA.
After discussing the NBA, take an anonymous vote on whether the NBA seems preferable to the original project or process under discussion. If the original project or process still seems best (which is what happens in the large majority of cases), consider if the project or process can be strengthened by integrating any components of the two NBAs into your plan. If you are going through the technique by yourself, get outside input at this stage if you have difficulty generating an NBA.
Step 4: Imagine that the decision, project, or process definitely failed, and brainstorm reasons for why your plan failed
Next, ask all the stakeholders to imagine that they are in a future where the project or process definitely failed (an approach informed by the Premortem technique). Doing so gives permission to everyone, even the biggest supporters of the project or process, to use their creativity in coming up with possible reasons for failure.
Otherwise, their emotions – which determine 80-90% of our thoughts, behaviors, and decisions – will likely inhibit their ability to accept the possibility of project or process failure. That’s why simply asking everyone to imagine potential problems works much less well. Supporters of the project experience a defensive emotional response that leaves their minds much less capable of creatively envisioning possible problems.
After giving such permission, have each participant anonymously write out plausible reasons for this disaster. Anonymity is especially important here, due to the potential for political danger in describing potential problems (“the product launch will fail because the marketing department overhyped it, leading to unhappy consumers). Ask everyone to come up with at least three most plausible failures, while highlighting that the reasons for coming up with these failures is to address them effectively.
These failures should include internal decisions under the control of the project team, such as cost and staffing, as well as potential external events, such as an innovation introduced by a competitor. Encourage participants to focus particularly on reasons they would not typically bring up because it would be seen as rude or impolitic, such as criticizing someone’s competency, or even dangerous to one’s career, such as criticizing the organization’s strategy. Emphasize that everyone’s statements will remain anonymous.
The facilitator gathers everyone’s statements, and then highlights the key themes brought out as reasons for project failure, focusing especially on reasons that would not be typically brought up, and ensuring anonymity in the process. If you are going through this technique by yourself, write out separate reasons for project or process failure from the perspective of each relevant aspect of yourself.
Step 5: Decide on the most likely and serious problems leading to failure
Discuss all the reasons brought up, paying particular attention to ones that are rude, impolitic, and dangerous to careers. Check for potential cognitive biases that might be influencing the assessments. The most significant ones to watch out for are loss aversion, status quo bias, confirmation bias, attentional bias, overconfidence, optimism bias, pessimism bias, and halo and horns effect.
Then, assess anonymously the probability of each reason for failure, ideally placing percentage probabilities. If doing so is difficult, use terms like “highly likely”, “somewhat likely”, “unlikely”, and “very unlikely.” Also consider how harmful each reason for failure might be, and pay more attention to the ones that are most harmful. Here, the expertise of individual members of the team will be especially useful.
The leader or person assigned as note-taker writes down all the problems brought up, as well as assessments of the probabilities. If you are going through the technique by yourself, get outside input at this stage.
Step 6: Brainstorm ways to fix problems and integrate your ideas into the plan
Decide on several failures that are most relevant to focus on, and brainstorm ways of solving these, including how to address potential mental blindspots. Also, discuss any evidence you might use that would serve as a red flag that the failure you are discussing is occurring or about to occur. For this step, it is especially important to have people with authority in the room.
The leader or note-taker writes down the possible solutions. If you are going through the technique by yourself, get outside input at this stage.
Step 7: Imagine that the decision, project, or process succeeded spectacularly, brainstorm ways of achieving this outcome, and integrate your ideas into the plan
We addressed failure: now let’s make sure you not simply avoid failure, but maximize success! Next, imagine that you are in a future where the project or process succeeded far beyond what you expected. Have each participant anonymously write out plausible reasons for this success. Next, have the facilitator highlight the key themes.
Discuss all the reasons, and check for the same cognitive biases as above. Evaluate anonymously the probability of each reason for success, and decide which deserve the most attention. Then, brainstorm ways of maximizing each of these reasons for success.
The leader or note-taker writes down the ideas to maximize success. If you are going through the technique by yourself, get outside input at this stage.
Step 8: Revise the overall plan based on this strategic exercise
The leader revises the project or process based on the feedback, and, if needed, repeats the exercise.
Make sure to use the “Failure-Proofing” technique prior to implementing any significant projects and to check in occasionally on existing processes. To see case studies with in-depth guidelines of how you can apply this strategy as an individual or a team, see the Manual on Failure-Proofing. Using these steps, executives can excel at preventing disasters and maximizing success!
ExecuNet members can watch the author’s engaging and entertaining recorded ExecuNet Master Class, “How to Avoid Disasters in Managing Your Career,” at this link.
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