10 April 2009

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Avoiding Project Failure by Managing Organizational Culture

While valuing and practicing project management, an organization may still experience project failure if its own culture contains biases that undermine the human process of sound decision making.

The concept of project management evolved for the purpose of improving project success. There is evidence that higher success rates can be largely credited to the increased application of project management principles.

Still, failures persist. Much research and writing has focused on what causes these failures. One way to look at this question is the behavioral view of project management. This view examines the actions of individuals and groups and how people make the decisions that ultimately lead to project outcomes.

An article in the December 2008 issue of Project Management Journal^® entitled “Systematic Biases and Culture in Project Failure”—by Barry Shore, PhD, Whittemore School of Business and Economics, University of New Hampshire, Durham, New Hampshire, USA—explores the role of systematic biases, their impact on decision-making and their contribution to project failure.

An article on the topic of avoiding project failure was requested by a reader from the Latin America region.

Finding Cultural Biases in High-Profile Case Histories

To find the information he was seeking, the author first identified a set of nine common systematic biases in organizations, defined by prior researchers. Second, he selected eight high-profile failed projects for which data was available through public or government sources:

Last, the author assembled 22 business professionals. He divided them into five groups, and asked them to discuss the list of systematic biases and study detailed case histories of the failed projects. They then had to reach consensus on which of the biases could best explain why each project had failed.

Four Types of Bias Most Linked to Project Failure

The research process described above singled out four types of organizational biases. These were characteristics of culture that the experts agreed may have contributed to the failures:

Even considering the small sample size, the author believes this finding suggests these four biases may be more common than the others as contributors to project failure.

Another critical finding was that failure appears associated with organizations that tend to protect their own structure and processes, resist change and dismiss external threats. These cultural traits may create an environment where biases will occur despite the application of the principles of project management.

Challenge of Studying Project Failures

The author stressed that studying project failure is inherently difficult.

Most organizations are not willing to talk about their failures. Consequently, researchers are often limited to studying public projects or those where the products or services involved are subject to government regulation. Even in these cases, much information may remain hidden to protect organizations or personal interests.

On the other hand, when an organization recognizes that cultural issues can have a real impact on the quality of decisions and project success, it’s in a good position to take constructive action.

The author cites two examples that illustrate this.

Boeing established radically different project management methods for its 777 project to improve on outdated management and engineering processes. Central to this approach was a highly cross-functional culture that did not discourage conflict. The result was a very successful aircraft.

Second, Merck realized it had created a culture that punished failure. Instead, they began giving incentives to scientists who could recognize when a project no longer showed promise and were willing to terminate it. This made it less likely they would fall into the “sunk cost” syndrome described earlier.

Concluding Thoughts

Project managers may find it difficult or even painful to examine or discuss objectively the question of failure—due to management pressures, fear of being held responsible and a lack of time to study the more systemic factors that may be at work.

This article looks at the topic of failure in a strategic way, and brings important insight. It shows that a rational consideration of human behavior and cultural issues can help an organization recognize and address the biases that may impede wiser decisions and prevent greater successes.

PMI’s Project Management Journal is a peer-reviewed journal “dedicated to advancing the understanding of project, program, and portfolio management through empirical investigation and theoretical research.”

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