Revolution or evolution: What would Darwin say about the social enterprise?
Posted by David Lavenda in Social CRM, Technology on Mon, 28/11/2011 - 01:27
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Many enterprise technologies claim to be revolutionary. But is that really the best way to institute organisational change? David Lavenda of harmon.ie explores.
In business, a revolutionary approach that promises rapid change over a relatively short period of time is often alluring. Especially when compared to the rather mundane alternative of slowly evolving processes. Yet, the promise of fast improvements and the reality are often poles apart. So, what is the most effective way to introduce change to the organisation?
Unfortunately, there is a sad reality that all too often IT projects don’t deliver on their promise – whether it is to automate production, scale fulfilment or enable collaboration. With the failure rate of large projects reported as being between 50% - 80%, even at the lowest percentage it still means half of all technology investments will miss their mark.
Here are just three examples illustrating the point:
- After Roger Smith was appointed its CEO, General Motors (GM) entered into a joint venture with Japan’s robot designer Fujitsu-Fanuc to deploy 14,000 new robots in GM plants by 1990. Costing billions of dollars, the robots never really worked and, instead of increasing productivity, actually lowered it. A nearby Mazda plant produced just as many vehicles, with 1,500 fewer employees. Meanwhile, Toyota delivered low cost, high quality vehicles using comparatively low tech 'lean production' techniques. As one GM finance executive later noted, the company could have bought both Toyota and Nissan for the money invested in the failed robot technology, a point especially painful given GM’s troubles and Toyota and Nissan’s success today.
- US wholesale drug distributor Foxmeyer owed its downfall to a highly ambitious project to revamp both its IT systems and Ohio-based distribution centre. The $5 billion company estimated huge efficiency gains from the new systems – so much so that it started to bid future contracts based on expected cost reductions that never materialised. In fact, the IT systems failed to deliver, and the company never recovered. After filing for bankruptcy, the main operating division was sold to its larger rival, McKesson, for a mere $80 million.
- In 1993, athletic shoe, clothing and accessory maker adidas set out to change the warehouse management system in its Spartanburg, SC, distribution centre. The project had a number of issues and, in hindsight, perhaps adidas went live before the system was really ready – we’ll never know. What we do know is the results were catastrophic with the company only able to fill 20% of its $50 million North American orders, and much of that came from overseas plants shipping direct. As a result, adidas suffered major market share losses that persisted for a long while, while IT and logistics staff left the company in droves.
What do these IT failures have in common?
In my opinion, each introduces dramatic, revolutionary changes to their organisations when a more evolutionary approach would have worked better.
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