Silence fails

You Bet Your Life

This year leaders across the world will make an awful bet. They will bet a substantial portion of their organizations’ budgets on ventures that have less chance of paying out than a red or black bet on a roulette wheel. Cumulatively hundreds of billions of dollars will be gambled away by companies around the world at these long odds. And yet, as in every year for many decades, leaders will continue to put the money down.

These high-stakes bets come as senior leaders launch cross-functional initiatives, projects, and programs. Senior executives frequently bet their companies on high-stakes efforts like major product releases, strategic IT projects, organizational restructurings, fast-paced downsizings, or aggressive quality initiatives. And these bets rarely pay off as anticipated. With estimated failure rates ranging from 66–91 percent (The Standish Group, 2004; Kaplan & Norton, 2000), companies' collective inability to execute on major projects costs hundreds of billions of dollars a year. For example, it's estimated that of the US$255 billion spent per year on IT projects in the United States, more than a quarter is burnt up in failures and cost overruns (The Standish Group, 2004).

The failure of the cutting-edge baggage handling system at the Denver International Airport provides a dramatic example of this inability to execute. With 26 miles of conveyors, the system promised to more quickly and more reliably carry bags from passengers to planes and back again. By the time leaders admitted failure, the breakthrough concept had racked up hundreds of millions of dollars in cost overruns, delayed the airport's opening by over a year, and drained 10 years of additional resources in various salvage attempts (Jackson, 2006).

In addition to sapping organizational performance, these project failures also cost careers. Now more than ever CEOs are under pressure to either get results or get lost. For example, massive delays in the release of the new A380 airliner have not only cost Airbus significant market share against Boeing, they've also cost CEO Gustav Humbert his job (The Economist, 2006). In 2005, CEO turnover doubled from the year before (Challenger, Grey, and Christmas, 2006). In just the past five years, close to two-thirds of all major companies have replaced their CEOs. CIO's are similarly vulnerable, with a quarter losing their jobs each year (Lucas, 1995). Studies suggest that an inability to deliver on critical projects is a primary reason for this alarming rate of dismissals. Their shortcomings were less about strategy and decision making than about their ability to execute these plans (LeadershipIQ.com).

The Silent Crisis

Over the past 20 years, project professionals and management experts have focused on improving the formal systems related to program governance, project management, and project-related technologies. However, while these new approaches have substantially improved results, today two-thirds or more of projects still miss their mark. Something is clearly missing.

This Silence Fails study dives below the formal systems to identify what's missing. This worldwide study involved over 1,000 executives and project management professionals across 40 companies and encompassed analysis of over 2,200 projects. The results show that failures can be both predicted and prevented with surprising reliability. The surprising finding is that most projects fail for reasons that are widely perceived but rarely discussed. The study shows that the best predictor of the future of a project is the quality of just a handful of high-stakes conversations that must occur along the way—but tend not to. This silent crisis plays out in a deceptively simple dynamic that produces failure 85 percent of the time.

More importantly, the Silence Fails study suggests that leaders can substantially improve their organization's ability to execute on high-stakes projects and initiatives by breaking a code of silence on five astoundingly common yet largely ignored problems that contribute significantly to almost all project failures. Increased effectiveness at the five crucial conversations that address these problems improves project performance by 50 percent to 70 percent or more.

This study shows the problem is not that we have problems—even the five outlined here. Anytime an organization launches an initiative that requires abnormally high levels of interdependence among levels and functions, there will be problems. In fact, Silence Fails shows that 90 percent of project participants regularly experience these problems. And yet these problems are not a project death sentence.

What determines whether these five problems derail an initiative is whether they can be discussed. The data show that when people are able to discuss these problems in effective ways, projects come back on course. But when one or more of these five problems is not confronted—or not confronted well—they fester, workarounds proliferate, politics prevail, and project failure becomes almost inevitable.

The Study

Researchers spent more than 150 hours observing various phases of project chartering, approval, and execution. In addition, interviews, focus groups, and surveys were administered to more than 1,000 senior executives, project sponsors, project managers, and project participants.

Projects considered ranged from US$10,000 IT projects to billion dollar organizational restructuring efforts. Participating organizations came from a wide variety of industries including pharmaceuticals, a fast food conglomerate, an international construction company, airlines, financial services, government agencies, and consumer products. While most of the forty were Fortune 500 multinational companies, about ten percent were smaller, regional firms.

In addition, study participants ranged in experience from veteran, university-trained, and certified project managers to newly minted managers with little formal training in project management. Some organizations had sophisticated project governance and management processes and policies, and others had far less mature approaches.

Interestingly, the frequency of the problems identified in the study does not seem to depend on the maturity of the organization's project management strategy. It depends instead on whether and how project participants handle crucial conversations related to the project.

The case of Bob Kelley, a seasoned project leader in a relatively sophisticated project-management environment, illustrates the nature of the problem.

The Last Roundup

Bob Kelley¹ led an effort codenamed “Roundup” to in-source the billing system of a major business services company. The billing system was the lifeblood of the company—responsible for drawing hundreds of millions of dollars into the company on a monthly basis by issuing timely and accurate bills to more than 20 million customers. For 20 years, a vendor had handled the billing system. For three years, Kelley led a sometimes unruly and loose confederation of over 1,000 professionals drawn from various functions in his company as well as contractors to change over to a company-owned system. Roundup was a particularly tough assignment given that he was the line manager of only a few of these people, and yet his mission depended on the unflagging support of all of them.

¹ Bob Kelley is a composite character describing issues researchers documented in two different projects.

The stakes couldn't have been higher. And Roundup's status could not have been worse. By the time we met Kelley the project was already 100%overdue and 300 percent over the original budget—an investment of well over US$250 million to that point with no end in sight. Kelley believed, however, that there was light at the end of the tunnel. The first cutover date for a small contingent of customers was two weeks away. As he walked out of a “release review,” he believed that all was in order and the chance of success was high.

A month later, Kelley was handed his head. The release was a disaster. The vendor managing the legacy system failed to transfer data when required. Once they did, the new bills were pocked with errors and the system suffered from multiple “Severity 1” glitches—causing it to crash uncontrollably during the billing cycle. When he was dismissed, Kelley was escorted to his desk by a security guard who then walked him out of the building.

Kelley's demise was the direct result of failure at the five crucial conversations identified in this study. Each of the five key problems emerged at one time or another during the course of the initiative. And yet, as we'll see, the complete undoing of Roundup was not guaranteed by the existence of these problems, but by how they were handled. Most were never fully discussed with the people who needed to hear them. Others were raised, but then muffled by the very executives who should have listened and taken action.

The Five Most Crucial Problems

Crucial Problem #1: Fishing, Check-Kiting, and Sandbagging

Fishing, check-kiting, and sandbagging all describe ways leaders set project parameters without involving—or by falsely involving—project leaders. Project leaders are often given sets of deliverables, budgets, and timelines with no input or opportunity to determine what the project will really take. Other times they are asked to calculate the resources and time needed to achieve a scope of work, but then their estimates are ignored. In either case, the result is a set of timelines, budgets, and deliverables that are unrealistic from the beginning.

For example, when Kelley took over Roundup he was given one year to complete the insourcing and a budget of US$45 million. Ideally, this schedule and budget would have been the result of a careful planning process that involved Kelly, but that's not the way it happened. Instead, Kelly's executive leaders were playing a common game in project execution—they “fished” for the best deal they could get. They set a “stretch” goal and hoped the performance pressure it created would motivate him to achieve it. Kelley was a good soldier and tried to make it work, but he knew from the beginning that it couldn't.

“Check-kiting” describes another way unrealistic constraints get placed on projects. An executive or customer will make commitments to another stakeholder without the project team's consent and then present the finished plan as a fait accomplit. Over time, teams who suffer from these mindless demands begin to “sandbag” when they are asked for project estimates. They pad budgets and timelines anticipating that their estimates will be ignored.

Fishing, check-kiting, and sandbagging reflect failures of crucial conversations at every level. When project managers realize fishing and check-kiting are taking place, they must be willing and able to call the bluff. If they avoid this crucial conversation and either commit to something they know can't happen, or sandbag their way to success, they set themselves and their projects up to fail.

Similarly, executives who fish or check-kite are avoiding a crucial conversation. Instead of discussing their doubts about an estimate's validity or the team's competence, they use their power in a way that generates political rather than valid agreements. Then when failures follow, their doubts about the team are confirmed, and they feel justified in their use of fishing and check-kiting.

The only way out of this vicious cycle is for project managers and executives to candidly and effective express their suspicions, doubts, and data. While these crucial conversations aren't easy, they are the only path to rational commitments.

So how common are these problems? This study found that 85 percent of project leaders routinely face fishing, check kiting, and sandbagging. When they face these problems they know the stakes are high, and 61 percent make some effort to raise their concerns—often in an understated way. Or, they lay out their issue, but when they are hit with resistance they respond like this:

More than nine out of ten project leaders describe this conversation as between “difficult” and “impossible” to resolve. In fact, only about 19 percent are able have the conversation in a way that works. When project leaders are unable to succeed at this conversation, their projects turn into slow-motion train wrecks.

When the conversation fails, nine out of ten project leaders share their concerns with project team members and with others across the organization. The impending failure becomes widely anticipated. Team morale takes a hit in nearly three quarters of these cases as people become aware that they're on board a train headed towards failure.

By this point in the project, the unrealistic specs are rarely resolved. Eighty-eight percent of the time, they remain for the life of the initiative or beyond. Seventy percent of the time people take inappropriate shortcuts, cut documentation, or skip testing. And, in the end, these projects do fail. In fact, more than 80 percent achieve the “hat trick” of project failure. They miss their deadlines, go over budget, and fail to achieve their deliverables. Forty-three percent end up with a long list of problems to resolve after the project itself has ended.

DATA TABLE

Crucial Problem #2: AWOL Sponsors

Project sponsors are responsible to provide leadership and political support. And they frequently don't. When the sponsor is AWOL (absent without leave), the project team is stranded and exposed. They're sent off to accomplish a task and don't have the firepower needed to implement the project. For example, key leaders whose help or resources are needed to enable the project may fail to come through as needed and the sponsor who has the organizational muscle to hold them accountable fails to do so.

In Bob Kelley's case, the sponsor who should have fought the political battles required to get the old vendor to cooperate rarely returned calls, seldom followed up with commitments, and ultimately left Kelley to fend for himself.

When Kelley took on Roundup he made a fatal mistake. He was told through the grapevine that his sponsor was a bit of a deadbeat. Rather than directly address this issue, he began working around it. He called on other executives for help and enabled the problem by absolving his sponsor of responsibility.

This study shows that 65 percent of project managers regularly face problems with AWOL sponsors. And, when they face this problem, about half of them make some attempt to bring up their concerns. But this is a tough conversation. Eighty-eight percent describe the conversation as between “difficult” and “impossible” to have. Fewer than one in five project leaders is able to hold the crucial conversation with their sponsor in a way that solves the problem.

When the project leader fails to solve this “AWOL Sponsor” problem, the project is destined to fail. More than three-quarters come in substantially over budget, behind schedule, and below specifications. In fact, 11 percent come in more than a million dollars over budget.

DATA TABLE

Crucial Problem #3: Skirting

Powerful stakeholders and senior leaders often skirt the formal decision-making, planning, and prioritization processes. They need what they need, and don't want to be burdened with practical considerations. So they work around the process. The result is often outrageous overcommitment, disappointment, and burnout. Projects get approved for which there are no resources. Scope creep bloats approved projects far beyond the resources originally budgeted. And team members deliver a succession of disappointing results and suffer from battered morale.

For example, the VP of Marketing in Kelley's company repeatedly injected additional requirements into the project with no consideration for their impacts on the budget or schedule. He did so through both direct intervention and deal-cutting with sponsors and executives. Kelley and his team were left to deal with the fallout. Once again—the problem was not only that the Marketing VP “skirted” decision-making processes—the problem was that no one confronted his violations in a way that stopped them. Bob Kelley and his sponsors failed to step up to the crucial conversation when repeated skirting made the scope of his project impossible to fulfill. As a result, the violations continued, and added momentum to the oncoming train wreck.

This study found that 83 percent of project leaders routinely contend with stakeholders and others who skirt the formal planning and execution system. But 79 percent describe the discussion as between “difficult” and “impossible” to resolve. As a result, only 13 percent are able to skillfully raise their concerns in a way that gets heard.

With so few people able to succeed at this crucial conversation, it's no surprise that when skirting happens it continues to plague four out of five of these projects for the life of the project or beyond. Seventy-eight percent of these projects go over budget and 87 percent miss their deadlines. Two thirds leave teams with battered morale. And 80 percent fail to achieve their deliverables.

DATA TABLE

Crucial Problem #4: Project Chicken

Once a project gets underway, it can derail when various sub-teams or team members fail to honestly report project risks. Almost every organization reported some form of “Project Chicken” and over half of project managers say they face it regularly.

This costly game resembles the lunatic practice of driving cars head-on as a test of nerves to see who swerves out of the way first—or who is more “chicken.” The corporate version is played when project participants fail to admit they may fall short on deliverables and need more time. Instead, they hope some other group that has problems will speak up first. Whoever speaks up first will be blamed for causing the delay, but everyone who is behind will benefit. When project participants play chicken, the status and review process becomes a joke. The team loses opportunities to gracefully respond to problems by revising goals, shifting resources, reorganizing plans, etc. Instead, the project hurtles forward on a collision course with failure while everyone watches— nervous but silent.

The enormous pressure to give good news set Kelley up for failure by making it difficult to discuss risks. It made it hard to admit that a single problem vendor could pose a risk to the entire project, even though the problems with the vendor were longstanding and many. It made it hard to admit that shortcuts during testing could pose a risk to the entire project, even though testing had been seriously limited to meet the aggressive release schedule. The problem was that none of these risks were addressed either in Kelley's final project review or in prior sessions. Project participants had seen these trains coming for months, but no one had spoken up in an effective way.

Fewer than one in four project leaders is able to effectively discuss project chicken with those who appear to be playing the game. And when they fail, 86 percent of their projects miss schedule commitments, 78 percent go over budget and 74 percent deliver less than they were required.

DATA TABLE

Crucial Problem #5: Team Failures

From the beginning, Kelley suffered from the common lot of all project managers—he had far more responsibility than he had authority. He “led” a group of 1,000+ professionals only seven of whom reported to him. All had other masters—and it showed.

Eighty percent of project leaders report being hobbled by team members who don't show up to meetings, fail to meet schedules, or lack the competence to meet ambitious goals. Often these leaders have no say in selecting or replacing these non-performers, and feel powerless to coach them. Instead, they ignore their deficiencies and “work around” the problem.

Kelley, for example, was assigned a senior systems architect whom he thought was incompetent. Rather than addressing his concerns openly, he brought in a second architect and made sure this person received the most critical tasks. Not only was this a costly duplication of effort, it created an environment of resentment and mistrust between the two architects and among other team members they dragged into their jockeying.

A second source of team struggle comes when project leaders must negotiate with functional managers to staff their projects. These functional managers often have many other priorities and are unresponsive to the project manager's needs. Once again, if project leaders can't hold effective crucial conversations with functional managers who fail to deliver, then project success is dicey. The study showed that when project managers fail to effectively address performance problems in their teams, four out of five projects suffer from budget, schedule and quality problems.

DATA TABLE

The Good News

Although this report has centered so far on important findings that predict and explain failure, the most important implication of the study is the potential leaders have to influence success.

While the data show that fewer than one in five project managers and executives effectively engage in crucial conversations needed to solve these five problems, the good news is that one in five do. And much can be learned by studying them. The study examined whether these unique individuals produce different results than their stymied peers.

Research on this contingent of crucial conversations successes helps answer questions like:

• Does it affect project success when they speak up effectively?
• Can others be taught to do speak up more skillfully with similar results?

What Happens When People Speak Up?

In each of the five key problem areas, the study found a clear difference between speaking up and speaking up well. Across the problem areas, about half of project participants make some attempt to speak up. But most are ineffective. Some speak up but don't share their full concerns. Since they water down their concerns, the issues are never fully aired. Others speak up but do so in a way that provokes defensiveness from others. And a handful—about one in eight—are able to share their full concerns and, by the end of the conversation, feel their views are understood and respected.

The research showed also that while the skillfulness of the initiator is a key ingredient in ensuring these crucial conversations are held well, the receptiveness of the other party is key as well. Project managers who are adept at holding crucial conversations are far more effective in dealing with even prickly and defensive executives. But their skill isn't a 100 percent guarantee that their concerns will be addressed. Unless And until leaders take extraordinary measures to ensure their environment is conducive to crucial conversations, a significant number of these issues will remain unaddressed, invisible, and fatal.

However, when a skillful project manager finds even a moderately safe environment, the results are a stounding. For example, the likelihood of a project failing to meet budget is reduced by almost half. The likelihood of hitting schedule and quality specs are equally impressive. When projects participants effectively step up to these crucial conversations, hitting schedule is at least 40 percent more likely, quality improves almost 60 percent and the likelihood the project will end with strong morale and intact stakeholder relationships is almost 70 percent greater.

1. Fishing & Check Kiting – The 19% who are able to address this problem…

   • Cut the dollar impact of the problem by 47%.^*

   • Reduced cost overruns by 29%.^*

   • Reduced schedule delays by 17%.^*

   • Improved quality and functionality by 69%.^*

   • Were 47% less likely to result in inappropriate shortcuts. ^*

   • Were 58% less likely to have a long list of problems to resolve after the project ended. ^*

2. AWOL Sponsors – The 17% who are able to address this problem.

   • Cut the dollar impact of the problem by 41%.^*

   • Reduced cost overruns by 33%.^*

   • Reduced schedule delays by 33%.^*

   • Improved quality and functionality by 50%.^*

   • Were 66% less likely to experience damaged stakeholder relationships.^*

   • Were 70% less likely to have a long list of problems to resolve after the project ended.^*

3. Skirting – The 16% who are able to address this problem.

   • Cut the dollar impact of the problem by 39%.^*

   • Reduced cost overruns by 35%.^*

   • Reduced schedule delays by 28%.^*

   • Improved quality and functionality by 44%.^*

   • Were 64% less likely to experience damaged team morale.^*

   • Were 71% less likely to have a long list of problems to resolve after the project ended.^*

4. Project Chicken – The 17% who are able to address this problem.

   • Cut the dollar impact of the problem by 47%.^*

   • Reduced cost overruns by 55%.^*

   • Reduced schedule delays by 69%.^*

   • Improved quality and functionality by 56%.^*

   • Were 66%lesslikely to experience damaged stakeholder relationships^*

   • Were 70% less likely to have a long list of problems to resolve after the project ended. ^*

5. Team Failures – The 17% who are able to address this problem.

   • Cut the dollar impact of the problem by 55%.^*

   • Reduced cost overruns by 64%.^*

   • Reduced schedule delays by 60%.^*

   • Improved quality and functionality by 64%.^*

   • Were 66%lesslikely to experience damaged stakeholder relationships^*

   • Were 70% less likely to have a long list of problems to resolve after the project ended.^*

^*These differences are all statistically significant, p < .05

Can People Be Taught To Speak Up More Effectively?

Our research and consulting experience demonstrate that it is possible to rapidly and profoundly change these patterns of silence in an organization with significant results. In one organization, for example, within just two months surveys documented an increase of trust levels in leadership from 30 to 50 percent‥ With no changes in process, governance, or management techniques, productivity shot up 93 percent, quality improved 10-15 percent, and customer-care expense was reduced by $20 million annually‥ Not surprisingly, morale also increased measurably. Read more about these significant results in our Sprint case study: www.vitalsmarts.com/casestudies/sprint/

Following are a few of the best practices project managers and leaders have used to both address these crucial conversations when they face them, and to build organizational competence at resolving them system-wide.

What Leaders Can Do

1. Develop a business case for change. The crucial issues we're addressing are so common that most leaders have stopped seeing them. Rapid change can be made but not if these crucial conversations are seen as “soft” issues—or as a “nice to do.” Begin building a case for change by making the problem visible. Track and publish data about project successes and failures. Distribute the Silence Fails study to generate discussion about the root cause of current underperformance. Engage senior leaders in a “listening campaign” where they lead structured focus groups to validate whether these crucial problems affect current results. The goal of this process of publishing results, engaging discussion and focused listening is to help senior leaders connect the behaviors we describe here with results they care intensely about. Once they can articulate this connection, they will see the business need for changing these vital behaviors.
2. Measure behaviors. Leaders who are serious about improving how their people address these conversations regularly measure how people are currently behaving. A survey is available at www.silencefails.com for this purpose. The first time this survey is administered becomes a baseline for how the organization is dealing with the five crucial conversations. These surveys can then either be administered organization-wide on a recurring basis or at key intervals in project teams. The survey helps draw attention to (1) the existence of the crucial issues; and (2) whether they are being adequately discussed and addressed.
3. Invest in skills. Make leaders the teachers. Most project managers and team members lack the confidence to address these politically sensitive issues because they don't know how to lead this risky discussion. Leaders who train their people to deal with these specific crucial conversations see substantial improvement in whether and how the issues get resolved. People will change their behavior more rapidly if leaders deliver the training than if staff trainers or outside consultants do so. Our research suggests when leaders teach the speed of change can be two or three times greater than when those who aren't as credible and connected in the organization lead instruction. One organization saw a 150 percent increase in the frequency with which people skillfully discussed crucial issues within a year after their leaders taught their teams these vital skills.
4. Hold senior management accountable. Investing in project participants’ competence at holding crucial conversations is necessary but insufficient. Holding sponsors, managers, and executives accountable for creating a safe environment for these crucial conversations is the other half of the formula. The survey at www.silencefails.com measures both employee confidence and senior leader support for holding crucial conversations. Effective organizations judge and hold leaders accountable for improving the measures on this survey within their areas of responsibility. The best even tie it to senior leadership bonuses and performance evaluations. When senior leaders know that 25 percent or more of their variable pay depends how well they lead at changing people's behavior, they get much more interested. When they don't, they don't.
5. Make heroes of early adopters. Executives should highlight and reward people who take a risk and raise these crucial conversations. They key to getting 100 people to speak up is to publicly reward the first one who does. Be sure to send a clear and public message that these conversations aren't just important, they're crucial—and those who raise them are highly valued. We have repeatedly documented significant jumps in survey measures of the Five Crucial Conversations For Flawless Execution immediately after a critical incident where a senior leader praised someone who surfaced sensitive project risks or challenged the leader herself in a public forum. If you want to change the values of an organization away from silence and toward candid dialogue, make heroes of those who take a chance with the new behavior.

What Project Managers Can Do

In our research we have spent thousands of hours watching the 10 percent to 20 percent who skillfully raise issues even in unwelcoming environments. They possess remarkable skills for pressing politically sensitive points in a way that does not provoke defensiveness. We've spent thousands of hours studying how these people succeed in these crucial moments and offer some selected advice here.

Conclusion

We called our study Silence Fails, because it demonstrates that the pervasive failure of these five crucial conversations contributes profoundly to wide spread disappointment and disaster in critical project execution. The most important result we hope comes from this study is to draw attention to these five conversations so that leaders and project managers can begin to address them with the intensity they deserve. The data suggest that, when this is done, the result will allow the talents of project participants to more consistently lead to flawless execution and stellar results.