Addiction to Projects

If you've attended business school, you have probably learned how to calculate and apply two classic formulas to inform your decision-making. For every project, you need to calculate the Return on Investment by determining the cost and the benefit of the project. If you take it one step further you calculate the Net Present Value to determine if the investment is worthwhile to go through with. Even if you don't do the calculations, ROI thinking is one of the strongest hidden assumptions we have on how to run an organization, along with Sloanism and Taylorism. Combined, these three assumptions are arguably the root cause of waste. Both environmental waste, employee disengagement, and the classic lean wastes. It informs our actions and those of others. Especially when deciding which projects to do and how to prioritize and it's fueling our addiction to big projects.

From giant public IT projects to new manufacturing machines and new buildings, we seem to have collectively forgotten about maintaining and developing the assets we already have. We have become addicted to big projects that will somehow save us from our current predicaments. Don't get me wrong, sometimes big projects are a necessity, but it's become the norm. The bigger the better. For instance, in Norway, a giant digitalization project in the health sector has gone off the tracks, but its cheerleaders cling on to the original story of one journal, one system. If they had bothered to read any literature on the success rate of large projects, they might have had second thoughts. Ask Nestlé, who nearly broke their back when implementing a global ERP system, or better yet, visit the Wikipedia site that lists all the ones that came before (there are a few), but alas, we soldier on.

It is heart breaking to read the stories of the Gemba people, the nurses, and doctors, highly skilled, passionate people with a strong sense of ownership for their patients. They are now coping with the chaos of the failed implementation in any way they can. Instead of facing the consequences of their actions, the project owners have instead accused the same people who are working hard at dealing with the failed implementation of being "resistant to change". In terms of real return on investments, the only ones who make any money on a project like this are the people who sell the solution and the consultants who assist in the implementation. It is also a classic example of participatory Taylorism. Participatory because the nurses and doctors were involved in the implementation (not so much the acquisition or decision-making mind). Taylorism because the new processes are determined by the system and forced upon them regardless of their unique skills and competencies. What about Sloan? Well, the whole health sector is organized by his model of Profit and loss centers.

So what is the alternative you may ask? Because like me and everyone else, we've become domesticated to believe that these are the only options we have. A large project, ROI, Design the system of best practices and organize the business in profit and loss centers. The lean alternative to this model is ROA, Return on Assets. As soon as we start thinking in terms of developing our assets to develop the organization a different path becomes available. As opposed to ROI, Designing best practice processes and organizing in P/L centers, lean teaches us to think in terms of ROA, put people first – customers and gemba people, and improve the system as a whole, forever.

This change starts with… drum roll… maintenance, which we seem to have collectively forgotten about in the West. Maintenance isn't a boring must-do activity. It's a key activity that ensures the development of assets. Like Imai told us, Kaizen starts with care. Let's start by bringing our systems back into the conditions they need to be to function properly to make good parts, and to serve patients better. To remove the overburden that poorly maintained systems inevitably put on front-line people. They put people over processes and trust their skills and competence to do a good job. If you have to change something, make sure you follow it up to the end, and create ownership of changes because every new change, and new solution comes with a new set of problems. No more throwing the ball over the fence, and make sure the change improves the whole system. It's a different path.

My sensei once told me that when you stand on top of the mountain you feel like you have endless choices and the opportunity to change your mind, but what we quickly discover is that the choice we make at the top leads us into one valley only. When we discover it's the wrong valley, we have to go all the way back up. The switching cost is terribly high. So we convince ourselves we are in the right valley after all. Even though we really planned for the other one.

So what if we took a different path at the top? What if we invested as much time and effort in developing our assets as we do in new projects? It doesn't mean that innovation will stop, innovation rarely happens in large projects, but it means starting by fixing what we already have in place. To discover where we need to upgrade, what we need to do differently, what we need to do to keep our assets in good condition, and where we need to innovate because the solution we have today clearly isn't working. It doesn't take that much imagination. Does it?