STRATEGY : Plan Boldly – Act Cautiously

It was back in the early 1990s that I first started thinking seriously about why ‘Big Bang’ projects often fail to deliver. Grand projects, particularly ones based on ambitious information technology solutions, were promoted with much fanfare. Then, when they failed to live up to expectations, they were either ditched altogther or accepted for what they were – expensive-to-feed white elephants.
My first article on this topic was published in November ’93, the same year that the NZ Police nominated IBM as the preferred supplier for its comprehensive INCIS database development. The original contract was for $90 million. It was abandoned six years later after costs blew out to over $130 million and fulfilment of the police specifications was still unsatisfied. There have been more big-bang failures since then and, I hasten to add, not all of them have all been associated with government departments or IT.
Now we are witnessing the very significant problems encountered by the Auckland Regional District Health Boards’ big-bang decision to switch to new laboratory testing services supplier. Of even greater concern must be the upcoming creation of the Auckland Super City, which aims to consolidate seven local bodies in major single exercise. This is truly big scale, ‘big bang’.

Avoiding the pitfalls
I suggest applying two key principles to avoid the problems that can result from adopting big-bang approach to projects.
1. Make clear distinction between the proposal’s strategy or vision and the actual execution or implementation.
2. Accept that organisations can be guided by two fundamentally different mindsets – bold and cautious – when it comes to adopting and implementing ambitious proposals.
My original approach to evaluating process was developed for larger IT projects. However, the principles are applicable to any situation involving major change – for example: business mergers, organisational restructuring or major product launches.
The two principles can be combined in matrix (see Figure 1).
Strategy or Vision
Strategy or vision is about identifying and specifying the end point of the proposal or initiative rather than the way to get there. cautious strategy means “more of the same” and is therefore unlikely to lead to significant long-term gains. On the other hand, bold strategy or vision suggests biting the bullet with major advances expected in, for example, business volume, profit, service levels and competitive position. The typical features of “cautious” and “bold” strategies are summarised in Figure 2.

Execution or Implementation
Execution or implementation is about the journey to get to the end point via the different milestones or projects making up the proposal. bold execution effectively means “all or nothing” while cautious scenario means “a step at time”.
See Figure 3 for the typical features of cautious and bold executions.

Policy Options
Four distinct policy options (Figure 4) can be developed from the ‘Two Principles Matrix’ shown earlier.

Policy A: Cautious – Cautious
This policy can be summed up as “not much pain and very small gain”. cautious strategy coupled with cautious execution tends to be low in risk but is unlikely to result in any real strengthening of the strategic position. While there is good chance that cost and delivery time projections will be met, further expenditure will be needed sooner rather than later to cater for new requirements.

Policy B: Cautious – Bold
This policy is probably the worst of the four as it is about “significant pain for little gain”. It might be strategically similar to policy A, but the “all or nothing” execution delivers additional risks. Cost and time overruns and the increased possibility of total failure are both more likely.

Policy C: Bold – Bold
This policy seems to be the most common but is also the riskiest. It is about “significant gain and much pain”. There is chance of strategically worthwhile solution, but major cost and time overruns are very likely. The possibility of total failure is high.

Policy D: Bold – Cautious
This is about “significant gain and minimising pain”. The objective is to have cautious implementation plan ‘nestled inside bold strategy’. Putting it another way, although the end point might be ambitious and stretching, the execution is designed to ensure adherence to cost and time estimates and to minimise the risk of failure.

If Bold–Cautious policy had been adopted for employing the new Auckland community pathology service provider, Auckland’s DHBs might have put modest (say 20 percent) portion of business up for tender as first step. As the new contractor proved capable of meeting the required standards, more of the work would be gradually transferred until the changeover was complete.
By contrast, an interesting example of what appears clear case of Bold–Cautious policy is the progress towards amalgamation of the Otago and Southland District Health Boards. There has been gradual shift toward sharing specialist staff, facilities and some administrative functions. More recently the boards have been operating with common CEO. The cautious step-at-a-time execution has evidently given the parties the confidence to carry on with further consolidation leading to eventual total amalgamation. The Bold aim.

Adopting Bold – Cautious policy
It is senior management’s responsibility to evaluate and approve (or reject) all manner of proposals. To ensure that decisions avoid undue risk, management must be aware that proposal champions will often advocate Bold–Bold approach regardless of the nature or size of the proposals.
To facilitate the adoption of Bold–Cautious policy in appropriate circumstances, organisations should consider adopting the following “plan boldly – act cautiously” procedure:
• The two key principles together with any information on the size and nature of the proposals to which the procedure is to apply;
• The requirement that for all major initiatives proposals to be unbundled as much as possible into identifiable projects. (A project has definite start and completion dates, controllable budget and an agreed and preferably measurable benefit.)
• The requirement that the ‘strategy’ of proposals to be presented first followed by the planned execution to enable each to be considered and evaluated individually.
After the evaluation of proposal, the strategy should be approved for the complete proposal. The implementation should be approved separately and in principle only. definite “go” approval should be given for the first project only. On successful completion of the first project, approval should be given for the next and so on for each subsequent step of the journey.
And run staff training session as part of the approach to introducing Bold–Cautious policy. M

Gerard La Rooy is business improvement consultant. [email protected]

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