One of the frustrations I experience is when managers or analysts share with me that their organizations tried to implement progressive management methods, and they either failed or abandoned the efforts.
A prominent example is an unsuccessful attempt to implement activity-based costing to measure and manage costs and profit levels of products, services, channels and customers. Other examples include risk management, customer analytics, enterprise resource planning systems and the balanced scorecard.
What causes these failures or the quick loss of interest?
Experiencing Failure is a Foundation for Success
Failure is a topic few wish to discuss. I advocate having a positive view of failure and leveraging disappointing or botched implementations of an advanced managerial method or system as a learning experience. Failure can be a great teacher. Perseverance and determination are important for success. Don’t believe that you need to avoid failure; you have to accept risk when taking on improvement projects.
There are some inspirational lessons about early career failures by individuals who ultimately were highly successfulo. Consider these:
- Winston Churchill failed sixth grade, and he was defeated in every election for public office until he became prime minister at the age of 62.
- Charles Schultz, the creator of Peanuts, had every cartoon he submitted rejected by his high school yearbook staff.
- Twenty-seven publishers rejected Dr. Seuss's first book, "And To Think That I Saw It on Mulberry Street."
- After film star Fred Astaire's first screen test, the memo from the testing director of MGM, dated 1933, read, "Can't act. Can't sing. Slightly bald. Can dance a little."
- Henry Ford went broke five times before he succeeded.
- Thomas Edison's teachers said he was "too stupid to learn anything," and he was fired from his first two jobs for being "non-productive."
- Albert Einstein’s PhD thesis was rejected as being “irrelevant and fanciful.”
Is this enough evidence that failure is just another name for experience?
Failures with Improving Measurement and Monitoring Systems
In my introduction, I mentioned activity-based costing as a potential example of a “tried-and-died” managerial method. I have a substantial amount of experience with implementing ABC. I was a pioneer implementing ABC systems in the 1980s during ABC’s takeoff and subsequently wrote books about it. Since ABC is a proven and reliable method with value for most organizations, yet some fail implementing it, let’s use it as an example from which to generalize.
A common problem with implementing ABC is excessively over-sizing and over-engineering the ABC model. This is due to the accountants’ misplaced quest for precision, detail and accuracy. The result is that the model is too complex to be understandable, and it becomes unmanageable to maintain. Yes, if accountants report wrong information for external regulatory reporting with financial accounting, they risk going to jail. But ABC is primarily intended as managerial accounting for internal decision making. So if the ABC information is approximately correct rather than precisely inaccurate, they don’t risk going to jail! Financial accounting is for valuation, like for inventories, whereas in contrast managerial accounting is for creating value – for both customers and shareholders.
But there are other obstacles. If the sponsors for ABC do not secure organizational buy-in from managers and determine the planned purposes for using the information in advance, there is a likelihood there will be less interest. Lack of proper training is another obstacle. I recall a user looking at the ABC information and saying, “I feel like I am a dog watching television. I don’t know what I am looking at!”
There are also misperceptions about the level of involvement by employees to provide input data. They fear they must complete daily time sheets and record counts on anything that moves. Although it is counterintuitive, the accuracy of the output costs, such as for products or customers, is much more determined by the design of ABC’s cost assignment network. With a good design, the costs are good enough for gaining insights and making better decisions.
There is also the “one-and-done” syndrome. This occurs when there is a busineses problem, like understanding which customers are more or less profitable, and an ABC model is constructed as a one-time study rather than as a repeatable and reliable production system. If the information is needed once, there should be interest in regularly refreshing the model to monitor progress with improvement initiatives.
Lessons Learned: Valid Methods Don’t Die, But They Do Go Dormant
To generalize from this single example, there are dozens of books available about project management that can provide useful information. However, when I step back and look at the big picture, the ultimate lesson is that implementers should not underestimate the importance of behavioral change management and overcoming people’s natural resistance to change. This includes employees who are afraid of knowing the truth and do not want to be held accountable or measured.
My advice is to consider how much emphasis to place on three factors that, when combined, overcome resistance to change: discomfort with the current situation, a vision of what a better state looks like, and first practical steps (e.g., a pilot project or a rapid prototyping exercise). Many project champions dwell on the vision by explaining the benefits of their proposed project. The key is to focus on the first factor by creating or revealing discomfort in managers and co-workers. Constantly ask, “How long do we want to continue to make decisions with flawed, misleading or incomplete information?” That creates the interest in the vision – a solution.
After a tried-and-died project fails, the need that triggered interest in the project typically does not go away. Like a hibernating bear, the project simply goes dormant. Inevitably, managers will repeat the same questions, like “Where do we make or lose money?” There will always be a second chance to successfully implement the project. Learn from your failures. Do not underestimate the value of experience. Never lose hope.
Register or login for access to this item and much more
All Information Management content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access