Top 6 Reasons Projects Fail – 8 Steps to Avoid the Failures!

I was struck by a recent article that described the top 6 reasons IT projects fail in "What Dooms IT Projects."  Primarily because the reasons have nothing to do inherently with information technology, and thus are identical to why all projects fail – including new product launches, new market expansions, new manufacturing technology adoption, new financing forms and any other new projects companies start.  AND because these are the same reasons I've been reading for 20 years! 

  1. Insufficient user (or customer) involvement. Inevitably someone says that if the team had just spent more time talking to users/customers everything would have worked out OK.  As if for some reason the team had no interest in the customers, and were so arrogant as to simply not care!  We all know that lots of time is spent capturing user/customer input.  The problem is that users/customers don't really know what they want!  Therefore, their recommendations are insufficient to describe what it would take to really make them happy with any change.
  2. Unrealistic Timetable.  Why do people say they'll do a project in 3 months that everyone knows will take 9?  Simply, the team has no choice.  In today's world we have to achieve results quickly.  Long projects are never completed, because conditions keep changing (more on this in #4 below).  So the team is forced into very rapid deadlines.  Only, the deliverables are usually kept the same, making it impossible for the project to complete on time!
  3. Poor Requirements.  As if there was no target? There are plenty of requirements, it's just that (back to #1 above) the customer doesn't really know what they want, so the requirements which look great at the beginning look insufficient (poor) after people are a lot more educated from the completed work!  The requirements look great until you get into the effort and start seeing how much more could be done, and how much of the value lies in going the next step (often in multiple places.)
  4. Scope Creep.  During the project users/customers see early examples or interim deliverables.  Once that happens they say "Oh, now I have a LOT better idea what I really want.  So can't you just make this small change?  It will make all the difference imaginable in how I'll use this – or even whether I'll use this."  Given this interim input, there's almost no way to NOT add on to the project.
  5. Lack Executive Support.  Of course no executive is going to say "I am four-square behind this project" once user/customer feedback starts coming back less than enthusiastic, timetables start slipping, the deliverable starts looking a lot bigger (and the work a lot more expensive) and finger-pointing has started about "why didn't we figure this all out before we started!"  Even when the entire management team yells "go" at the beginning, once a project is deemed problematic support evaporates faster than ethyl alcohol rubbed on hot stainless steel!
  6. Poor Testing. Sure, blame the testers.  Given how many variables have shifted and turned since the project started, who remembers, or knows, what to test any longer?  Exactly what performance requirements will be the triggers that determine acceptability?  Which variables are most important?  And, if the project is now struggling with changed requirements, the timetable is blown, scope has been redefined more than once, users/customers have started griping about delays and the executives are saying "will this nightmare project ever end" exactly what tester is going to stand in front of the train and say "hey, let's stop this thing"?

Bad projects are expensive.  According to, just in American IT projects $63B is lost every year to failed IT projects.  About 25% of the time – really, 1 in 4 times – projects are considered complete failures Less than 1/3 of the time are projects considered successful.  Yet, there is nothing new in this list.  It's been the same list for at least 20 years!  Even though "project management" has now become an academic discipline – results are not improving.

The approach to project management since the 1960s has been the same.  Write down requirements, use some sort of "scientific management" effort – some kind of time/motion study – to estimate the time to complete, freeze the project, get agreement on project outcomes and funding, then "execute."  And project management has been all about how to improve this process by adding more, and more, and more, and more steps.  There are now checklists that are book after book of things to do in order to "nail down" each step.  And there are hundreds of articles written about the "discipline" of keeping to the plan, not changing things, and keeping "everyone on board to the original project" until it is complete.

But all of this simply adds up to do more of what we've always done, try to do it better, via automation try to do it faster and consider using consultants or offshore resources to do all of this extra work cheaper.  There's been no change to how we do project management, no change to the underlying premise.  Even though results are no better now – in fact they may well be worse – than 40 years ago!

So why don't we change the approach?

The problem is that shifts happen.  Customer needs change every day, based upon what happens not only in their work but in what their customers want and in what competitors do. As the world shifts, requirements change.  Customers that don't really know what they want, because they only know what they've done, are asked to do the impossible to define their requirements – and then asked to do the even more impossible task of not wanting more as things shift.  As demands on customers change, and as competitors change the environment, shifts demand changes in expectations.  And testing is all about "does the hurdler jump the bar" without any consideration, by design, as to whether he finishes the race (much less how fast he finishes.) And the incentives are for judges to lower the bar, so the darn race can just end.

The old approach was designed for a nice, slow-paced, static world.  Where everything is known, and that's impossible with market needs.  It can work if you're trying to build a bridge maybe, but when trying to design some solution for a complex system (like the modern market, or IT community, or logistics design, etc.) that has infinite moving parts?  And where the speed with which parts change can be amazingly fast?  Let's get real, traditional project management simply won't work in today's complex IT, marketing, finance, HR, operations, production, logistics, manufacturing, sales world!

So, instead, try a new approach.  We've used this for 10 years with all kinds of projects, and it works a whole lot better.  Undertake your project realizing that if it aligns with future needs it will add value – and that is what really matters.

  1. Don't ask users what they want.  Don't ask them for requirements.  They don't know.
  2. Develop your scenario of what would be the PERFECT, ideal solution in 2 or 5 years.  Really.  Not just an improvement over today, what would be perfect!  Even if you have no idea how you would ever do it.  Write that down.  Then, say what those requirements are.  Design to those specs – which are probably 10 to 100 times beyond the current state.  Don't settle for some fractional design.  Don't start if you can't deliver what the market will want in the future when customers aren't bridled by what they don't know today.  Build for a future scenario that is way better than today – not just some initial requirements your Locked-in customer thought about.
  3. If you don't know how to design it, study your competitors – including fringe competitors.  Look at everyone imaginable that is solving a similar problem and see how those you may never before considered are doing it.  See how people in China, Bangladesh, Hyderabad, San Paulo, Moscow, Taipei or Bangkok are doing it.  See how some 20 year old college kid and her buddies are trying to do it.  Look at how the upcoming competitor with .1% market share is doing it.  Don't just go for the well known solution approach.  Don't settle for "best practice" which is a 6 year old innovation that has little competitive value left.  Don't be afraid to do what can provide huge value improvement.
  4. Write a long story, with detail, about how completing this project is going to really screw with your existing competitors.  Describe the huge pain they will feel.  How they will be in shock and awe of your performance once you are able to blow them away with this new capability.  Destroying the traditional competition is a great motivator.  Make them into the villain – after all, they are! (By the way, if you don't think the project will have a positive competitive impact – why are you doing it?)
  5. Focus really, really, really hard on defining important early valuable deliverables.  Fast wins.  Don't just figure out what the end state will look like, it's critical to know what you can deliver successfully in 90 or 120 days! We can't wait forever for results, so throw out complex ROI analysis.  Instead ask the team to simply say how quickly they can start producing, rather than spending, money – and how quickly their project will pay back the investment.  Force them to prove that there are measurable wins in the first year, and payback in less than 3 — on something!!  Don't worry about "scale."  Just the opposite, worry about how to demonstrate value quickly! Keep all timelines under a year, most under 4 months.
  6. Tell everyone you are going to do something new.  You are prepared to be the innovator.  You can, and will, Disrupt the things you've done in order to give spectacular results.  You don't just want a 5% improvement, you want to win. It's not about how much better you were than before – it's about being competitively better than everyone else.  You simply want to win in the marketplace – and you'll do new things to accomplish this.  You care about results more than process.
  7. Give the team permission to do whatever they have to do to succeed.  Don't give them a list of "rules" within which the project has to operate.  Give them the permission to really focus on success – that they can do what's needed to accomplish their goal.  Don't set up barriers.  Instead, tell them there are no barriers and you don't want them to talk about there being any barriers.
  8. Make sure the team does not report to the Status Quo management.  Structure the project so that the team reports to someone who can focus on project success first, rather than abiding by old rules, or fears cannibalization, or has a vested interest in the success of the Status Quo.
  9. Commit enough resources so the project can succeed.  Don't give it piecemeal funding that will require the team constantly battle to keep the project moving forward.  Don't expect success from part-time resources borrowed from other full-time work, or from a team assembled only to do this project then return to their old jobs.  Everyone has to be committed to the project, and its success, and the money should be there if they reach their goals (regardless of the route they took.)

This may not sound like a typical project management approach.  But hey, given how well the old approach has worked out don't you think it's time to give something new a chance?  Would medicine have ever advanced if we just kept on blood-letting?  When will we try something new if not now?

PS – Don't miss my newest column in CIOMagazine. "IT Strategy, Use Scenario Planning to Get Beyond Legacy Systems."  As IT has become one of our highest costs, it's more important than ever we change how we do IT planning and project management.

Of goats and heroes – Sara Lee’s Barnes and Apple’s Jobs

Rumors are flying around Chicago about the health of Sara Lee CEO Brenda Barnes.  Will she stay or leave?  Some investors are wondering as well.  While I join the chorus of voices that wish Ms. Barnes good health, her departure would not be a bad thing for Sara Lee investors, employees, suppliers and customers!  Whether for health or other reasons, a change in the top at Sara Lee is long overdue.

As Crain's Chicago Business reported in "Sara Lee's Secrecy on CEO Barnes' Health Leaves Investors Wondering" in the 5 years Ms. Barnes has been CEO Sara Lee's value has dropped 25%, even as the S&P consumer goods index has risen by 18% During her tenure, revenues at Sara Lee have declined 50% – largely due to asset sales from which the cash proceeds have done nothing to improve results.  Currently, Ms. Barnes has a large deal on the table to sell another multi-billion dollar business in her ongoing effort to make Sara Lee a smaller and less competitive company.

There's nothing wrong with selling a business.  But leaders have a responsibility to either pay the proceeds out to investors or re-invest the proceeds into new, growing businesses with high rates of return that will add more value.  In Ms. Barnes case the money has been spent buying up shares of stock (the plan for any future proceeds, by the way).  That has done nothing more than make the pool of shares, like the company assets, smaller.  As already mentioned, these asset sales have not added anything to revenue or profit growth and thus the company value has steadily declined.

Of course, as I vilify Ms. Barnes reality is that it takes the agreement of Sara Lee's Board of Directors for this strategy to be implemented.  And it takes a leadership team which agrees to go along – without offering strong dissent and driving discussion of results and long-term impact. While I make out Ms. Barnes to be a "goat" there is a lot more wrong at Sara Lee these days than simply the CEO

Sara Lee has long been without any White Space.  The company has tried to "milk" its aged brands, hoping to get more profits out of products that were much more exciting to customers in 1970 than 2010.  While Jimmy Dean Sausage, Sara Lee frozen desserts and similar products were the stuff of my youth the current generation of young adults have chosen much different fare – in not only food but household and health/beauty products.  Sara Lee's leadership before Ms. Barnes started the route of focusing on past sales and simply trying to give existing customers more.  As a result, there has been 2 decades of insufficient scenario planning, limited competitor analysis – and no Disruptions.  There has been no White Space to do anything new.  

Similarly, we can easily make heroes out of CEOs in companies doing wellSteve Jobs at Apple is a case in point.  During his 10 year leadership, Apple has gone from near bankruptcy to value greater than Microsoft.  But this was not all Mr. Jobs.  He has pushed his Board of Directors and leadership team to do more scenario planning, obsess about competitors, implement Disruptions and open White Space for doing new things.  As a result, the Apple organization is now entering new markets and launching new products. 

Mr. Jobs has not been without his own health concerns the last few years.  Hopefully, he is doing well and will live many, many more healthy and happy years.  Yet, if he chose to depart Apple for health or other reasons Apple is well positioned to continue doing well.  Because as an organization it is planning correctly and implementing Disruptions and White Space – critical capabilities of Phoenix organizations.

CEOs matter.  They set the tone for their organizations.  Good ones understand the need to build organizations that can enter new markets – like Mr. Jobs. Bad ones spend their energy trying to Defend & Extend past results, often getting trapped in financial machinations as the organization shrinks and value disintegrates – like Ms. Barnes.  But it's not all about the CEO and we shouldn't get too caught up in that single job.  Good organizations have the skills to produce long-term growth and high rates of returns, and that can be built anywhere.  Let's hope Sara Lee's Board wakes up to this and starts making changes in that organization soon.

Go Beyond Your Customers – Facebook, Apple, Google, Microsoft

I get the most heat when I talk about spending less time listening customers.  But I'm not joking.  To grow revenues and profits you have to go far beyond asking your customers – who are more likely to hold you back from growth than accelerate it. makes this point loudly in an Henry Blodgett article "Ignore the Scream's — Facebook's Aggressive Approach is Why It Will Soon Become the Most Popular Site in the World." Given how many people use Facebook, it's hard to remember that the site is only 6 years old.  What we've also mostly forgotten is that Facebook wasn't even first.  It followed the popular, and well financed after acquisition by News Corp,  Lots of companies got into social networking.  But now the marketplace is dominated by Facebook – which will soon be the web's most popular site (as it closes in on Google.)

Facebook did not win by asking users/customers what they wanted.  To the contrary, Facebook's leaders took the approach of offering what they perceived would be steps forward – and then letting the market react.  Frequently a VERY loud contingent would be VERY upset.  Screaming loudly they hated the change.  But with each advancement, Facebook grew users and the site's success.  Facebook didn't ask users what they wanted, nor did they ask users for permission to do new things.  Facebook went into the market, and using its scenarios about the future Facebook's leaders drove toward what they expected to be a more popular site.  They did it, and learned from their experience.

Too many businesses spend way too much time trying to make small advances, and miss the big shifts.  Microsoft is a great example.  As it launches Office 2010, Microsoft isn't trying to bring in new users to grow its base – like Facebook is doing.  Instead it is trying to preserve its installed base.  Nonetheless, some "loss" is a given.  You can't preserve forever.  If you don't bring in new customers, you can't grow because you have to replace lost ones and find incremental new ones.  But what do we see in Microsoft's offerings (such as Office 2010 and System 7) that is designed to bring in new users? 

Meanwhile, Google is offering more powerful and cheaper Cloud-based solutions, as Apple and Google grow the demand for mobile devices (like iPhone and iPad) that don't use Microsoft products.  The big shifts are all away from Microsoft, while Microsoft's efforts at preservation are leaving these alternatives with limited competition.

Today Bnet Australia posted a podcast interview I did with Phil Dobbie, sponsored by CBS, last week.  In "Disrupt To Win" we discuss the big difference between Apple and Google as compared to Microsoft.  The growing companies use scenarios to develop new solutions which will appeal to new users.  They keep expanding the marketplace.  As new users adopt new solutions, eventually it becomes mainstream – further accelerating growth.  Growth doesn't come from trying to Defend the old platform or user base, but from launching new solutions which grow the market leading to conversion and even greater growth.

Facebook is now a phenomenon, growing in 6 years from obscurity to the second largest global user base.  Because, like Apple and Google, the leadership did not ask customers what they wanted (which was what did).  Rather, they studied competitors and emerging markets to create new solutions – without worrying about cannibalization or moving faster than customers would recommend.  And the leadership has been willing to overlook vocal user minorities in order to appeal to new users, thus driving more growth.  You can't expect customers to deliver great growth, that has to come from aggressive scenario planning, deep competitive analysis and a willingness to Disrupt your organization and the marketplace.

Crossing the Re-invention Gap – News and Chicago Tribune

Is news dying, or are newspapers dying?  That's a critical question.  Most of us know the demand for news is not dying – and if you needed reinforcement a recent McKinsey & Company study verified that the demand for news has increased (McKinsey Quarterly "A Glimmer of Hope for Newspapers").  And a lot of the increase comes from people under 35 who are escalating their news demands.  Of course, most of this increase is coming from the web and mobile media.

Too often, however, we don't see our business growing.  Instead, Lock-in to old definitions make us think our business is shrinking when it is actually doing the opposite!  And that's the Re-invention Gap.  Manufacturers of small printing presses said demand was declining in the 1970s, when in fact demand for copies was exploding.  Only the explosion was from xerography instead of presses.  So A.B. Dick and Multigraphics, small offset press manufacturers, went out of business when demand for the output of their product was exploding!  The market shifted, but it kept growing, and they missed the shift.

Today we see this behavior in most news publishersThose who print newspapers and magazines are talking about how horrible business is.  Only the demand for news is growing more quickly than ever.  It's just not demand for print, which arrives too late for many customers.  And because print is too slow a distribution method for these customers, advertisers are abandoning print as well.  But only if you're Locked-in to printing do you say the market is horrible.  Because with demand for news growing, if you reposition yourself to serve the growing part of the market you should say business is great! 

Tribune Corporation, owner of The Chicago Tribune newspaper is still in bankruptcy.  And its future relies entirely on how well it will serve the needs of on-line news readers.  According to Crain's Chicago Business, in "Former Sports Editor Bill Adee Steers Chicago Tribune's On-line Strategy" print advertising revenues fell by 9% versus last year in the most recent quarter.  And according to a quoted investment banker, nobody would have much interest in the value of a print newspaper.  That business is destined to keep declining.

But simultaneously the volume of on-line ads tripled!  And that's what a business has to do to cross its Re-invention Gap.  It has to move from the old business into the new business – from the declining elements of its business into the growth elements.

What most businesses do wrong is try to apply their old business model to the new business.  The old Success Formula has Lock-ins to metrics, schedules, processes, frequent decisions, decision-makers, strategic plans, etc. which the leadership tries to apply to the new business.  For example, most newspapers are used to selling ads for several thousand dollars, based upon the number of subscribers.  These are pretty large price points.  But on-line, ads are sold per page view or per click.  Now we're talking pennies sometimes.  And to make money, you have to get a lot of views. Likewise, newspapers work on a 24 hour cycle of news accumulation and publishing, whereas the internet is 24×7 with the opportunity to change headlines and what's reported continuously.  If a newspaper tries to apply the old Success Formulas related to sales, pricing and editorial process they fail.

And that's why crossing the re-invention gap requires a big Disruption.  You have to get the organization to understand that while you are managing the old business, it is destined to eventually go under.  So you have to be prepared to Disrupt the Lock-ins, to discover a new way to do the business.  And that can only happen if there is a White Space team dedicated to building a business the way the new marketplace will pay for it.  Totally separated from the old business.  And exactly the opposite of what Tribune is doing by placing the team in the middle of the old newsroom!

At Tribune, one of the big problems is not only the ad pricing model and news scheduling, but the fact that the leadership is still trying to drive content like they did at the newspaper.  Over a decade ago Tribune took a direction of accumulating less news on its own, and as a result it republished lots of content.  But now on the internet republishing (or content aggregation as it is called on-line) is far less valuable because readers can go to the source.  There are thousands and thousands of aggregators – making competition intense and profits negligible.  Why page view a Chicago Tribune web page that's feeding info from the New York Times or Marketwatch or MSNBC when you can go directly to the New York Times or Marketwatch or MSNBC and get it yourself – possibly with other interesting sidebars?  Succeeding in the new market requires developing an entirely new Success Formula – which Tribune Company has not done.  It's still trying to find that magical "leverage" which will allow it to preserve its "history" (its old Success Formula) while tiptoeing into the new marketplace.

I don't know any newspaper or magazine publisher that has really attacked its Lock-ins, really Disrupted, or set up a true White Space team to explore how to make money in the growing new news market.  News Corp. had the chance when it bought, but failed as it destroyed the MySpace business by "helping" its leadership.  This market requires understanding how to get the news and report it cheaply and very fast, to computer and mobile device users.  That is necessary to obtain the traffic which would be valuable to advertisers.  And simultaneously the new team must package ad sales so as to maximize revenues from page views.  Most are far too reliant on single ad sales, and not effectively linking the right ads to the right pages to generate more click-throughs as well as views.

Re-invention Gaps emerge because we let Lock-in blind us to growth opportunities.  We define the business around the Lock-ins (such as printing a newspaper) rather than defining it around what the market wants (news.)  Then when revenues stumble, starting a growth stall, the energy goes into preserving the old Success Formula (and its Lock-ins) first with cost cuts, and later with efforts to "synergize" or "leverage" the old Success Formula into the new market.  And this never works.  The growing part of the market is entirely different, and requires developing an entirely new Success Formula.  That's why even in growing markets businesses fail, unless they commit to Dis
rupting the Lock-in and using White Space to move back into the growth Rapids.

Disrupt to avoid failure – Blockbuster

Blockbuster Video is in big trouble.  Most analysts think the company is going to file bankruptcy – unlikely to survive – with a mere $.30 stock price today.  Most of us remember when the weekly (or more frequent) trip to Blockbuster was part of every day life.  Like too many companies, Blockbuster was in the Rapids of growth when people wanted VHS tapes, then DVDs, to rent – and CDs to purchase.  We happily paid up several dollars for rentals and purchases.  Blockbuster grew quickly, and developed a powerful Success Formula that aided its growth.

As it is failing, I was startled by a article "What Blockbuster Video Can Teach Us About Economics." The author contends that this failure is a good thing, because it will release poorly used resources to new application.  Like most economists, his idea has good theory.  But I doubt the employees (who lose pay and benefits), shareholders, debt holders, bankers, landlords and suppliers – as well as the remaining customers, appreciate his point of view.  Theory won't help them deal with lost cash flow and expensive transition costs.

As the market shifted to mail order and on-line downloads, Blockbuster could have changed its Success Formula.  But instead the company remained Locked-in to doing what it has always done.  It will fail not because some force of nature willed its demise.  Rather, management made the bad decision to try Defending & Extending an out of date business model – rather than exploring market shifts, studying the competition intensely then using Disruptions and White Space to attack both Netflix and the on-line players.  Blockbuster's demise was not a given.  Rather, it was a result of following out of date management practices that now have serious costs to the businesses and people who are part of the Blockbuster eco-system.  I struggle to see how that is a good thing.

Fortunately, has a great article about ideas for attacking a threatened Success Formula in order to avoid becoming a Blockbuster entitled "Leadership Caffeine: 7 Odd Ideas to Help You Get Unstuck."  The author specifically takes aim at the comfort of Lock-in, and describes how managers can start to make Disruption part of everyday life:

  1. Fight the tyranny of Recurring Meetings
  2. Rotate Leadership
  3. Break the back of bad-habit brainstorming
  4. Do something completely off-task with your group
  5. Introduce your team to thought leaders and innovators
  6. Play games
  7. Change up your routine

Described in detail in the article, these are simple things anybody can do that begin to reveal how deeply we Lock-in, and expose the power of how we could behave differently.  If Blockbuster management had applied these ideas, the company would have been a lot more likely to return positively to society – rather than become another bankruptcy statistic.

Disrupt to Succeed – Forbes

"From the day we start kindergarten we fear the teacher's call to our
parents saying, "Hello Mr. and Mrs. Smith. I'm sorry to tell you that
Mary has been disruptive in class." We are taught, trained and
indoctrinated to go along and get along, to not disrupt. In fact we're
constantly told to seek harmony. But in business that can destroy your
entire value."

That's the first paragraph from my column, posted today, "To Succeed You Must Seriously Disrupt."  Companies that don't Disrupt remain Locked-in to Success Formulas with declining value until all hope is lost – just look at Sun Microsystems. Although Chairman Scott McNealy was famous for his Disruptive corporate behavior – he was unwilling to tolerate disruptions from his own organization to the company business model.  In 10 years Sun went from $200B market cap to out of business. 

Now Toyota is struggling because it wouldn't Disrupt.  Meanwhile Honda is doing much better than most, because it is willing to Disrupt.  Listen to the 40 second video on Disruptions, and read the article so you can see the need for Disruption and adopt in your business!

Be Flexible, and Forward Thinking – Office Depot, Apple

"Strategic Plans Lose Favor" is a recent Wall Street Journal headline.  Seems like some big companies, and big consulting firms like Accenture, McKinsey and the Boston Consulting Group are rapidly learning what this blog has been pushing for a few years.  That flexibility trumps traditional approaches to strategic planning.

  • When Office Depot's strategic plan was leading to revenue struggles, the company set up a situation room to track key indicators and adjust to market shifts much quicker.
  • "Strategy as we know it is dead" according to Walt Shill, head of strategic planning at Accenture. "increased flexibility and accelerated decision making are much more
    important than simply predicting the future
    ."  (Do you think he's been reading this blog and my book?)
  • "business leaders will start to rely less on static five-year strategic
    plans and more on rough "adaptive" strategies that consider multiple
    "  according to Martin Reeves, Senior Partner at BCG.  (Where'd he read that – on this site?)
  • ""The rate of change and width of volatility is much wider and faster
    than what we would have assumed
    coming into this," Jeff Fettig, CEO at Whirlpool
  • McKkinsey has opened a "Center for Managing Uncertainty."  Really.

As this recession has come on, and lingered, businesses are clearly starting to realize that market shifts happen fast, and businesses cannot be slow to change.  Adaptability is one of the most important capabilities to compete in the post-2000 business world.

And the real market leaders are incorporating this kind of thinking into their organizations.  While the earlier quotes show how, caught on the defensive, organizations are finding new ways to react, the best performing organizations are taking market leadership by being Disruptive.  Like Apple.  In a Harvard Business Review blog Roberto Verganti, professor at Politecnico di Milano tells us "Apple's Secret:  It tells us what we should love." 

The good professor of design and management points out that Apple does not ask customers what they want.  Instead the company designs products which take customers to new levels of performance beyond what they imagined.  Instead of being reactive, Apple uses scenario planning to understand future market needs and create shifts with its products.  This approach leads to breakthrough performance, such as the success of Nintendo and its Wii product line.

To be successful businesses can no longer try to Defend & Extend their old strategies.  They have to be market focused, and flexible to manage through market shifts.  And to earn superior rates of return they have to be market leaders that use scenario planning and White Space to launch new solutions meeting emerging needs which attract customers and grow sales.

Swim with the current – Newspapers, Facebook, YouTube

Over the last week everyone has heard stories about how Facebook, and Twitter, became primary communication conduits for people with connections in Haiti.  Telephone and slower communication vehicles simply have not been able to connect family and friends in this crisis like Facebook.  When shift happens, it accelerates as new uses come to the forefront quickly.  For everyone trying to connect with employment candidates, suppliers and customers this shift has immediate and important impact on behavior.

Yahoo v facebook audience 

Source:  Silicon Alley Insider

For advertisers, the impact is significant.  Where should ad dollars be placed?  On a traditional home page and search site – like Yahoo! – or on Facebook?

And it's not just the sites themselves, but how long people are on these sites.  From an advertising point of view, you can start to think about Facebook – and YouTube – almost like a "channel" from early television days.  Where the audience comes back again and again – offering you not only a large audience, but more opportunities to reach them more often.  Facebook and YouTube are beginning to dominate the "user views."

Facebook page views
Source:  Silicon Alley Insider

YouTube viewing
Source:  Silicon Alley Insider

Of course, the impact isn't just regarding the web, but how any business would use media to reach a target audience.  Most advertising agencies, and ad people, are still focused on traditional media.  But, as we can see, that WILL shift — even more than it traditionally has.

Time spent v. ad spending
Source:  Silicon Alley Insider

Anybody investing in newspapers, expecting a resurgence in value, is pretty foolish.  Newspapers are going to lose ad dollars – not gain.  Relatively, newspapers already are getting too much of the ad spend.  Talk radio has growth.  And clearly the web.  Since we can expect that newspaper and magazine readership will continue recent downward trends, and television is fragmenting as well as stalling, the big growth is on the internet.

The market shift is really pretty clear.  We aren't speculating about the market direction with this data.  The question becomes, will you be an early adopter of these new media channels or not?  Given that the web and mobile have the lowest ad rates of all media, why wouldn't you?  Over the last 2 months Pepsi has decided to NOT advertise on the Super Bowl, instead putting the money into social media.  And after introducing the Granite Concept car at the Detroit auto show, even behind-the-times GM is now considering a launch of this vehicle, intended for buyers under 35, using only web advertising.

So what are your plans?  Do you have scenarios where Facebook and YouTube are integral to your marketing?  Do you have pages, groups and channels on these sites?  Do you post content? Are you using them to interact with potential customers, vendors and employees?  If not – what are you waiting on?  Do you need a Disruption to create some White Space and get started?  If so – isn't it time to get going?

Use Disruptions, not Goals, to Succeed – GM

Many people think the best way to grow is by setting big goals – even Big Audacious Hairy Goals (BHAGs).  But increasingly we're learning that goal setting is not correlated with success.  At there's a partial text, and MP3 download, of a recent interview between General Motors leaders and a University of Arizona Professor titled "It's not always good to create goals." 

The story relates how about a decade a go, with market share hovering at 25%, GM set the goal of moving back to 29%.  It became a huge, multi-year campaign.  Lapel pins with "29" were made and all kinds of motivational programs were put in place.  The GM organization had its goal, and it was highly aligned to the goal.  But it didn't happen.  Despite the goal, and all the energy and talent put into focusing on the goal, GM continued to struggle, lose share – and eventually file bankruptcy.  The goal made no difference.

Worse, the interview goes on to discuss how goals often lead to decidedly undesirable, sometimes unethical – even illegal – behavior.  Instances are cited where goal obsession led company employees to falsify documents, even  ship bricks in place of products to meet sales targets.  No executive wants this, but goals and goal obsession – especially when there is a lot of reinforcement socially and monetarily on the goal – can become a serious problem.

Results are exactly that.  Results.  They are an outcome. They are the way we track our behaviors and activities – our decisions.  When we focus on goals – usually some sort of result – we lose track of what is important.  We have to focus on what we do.  And for most organizations a big goal merely leads people to try working harder, faster,better, cheaper.  But when the Success Formula is mis-aligned with the market – even when the whole organization is aligned on maximizing the Success Formula results will still struggle – even falter.  Goals don't help you fix a Success Formula returning poor results.  Just look at GM.

In fact, it can make matters worse.  In "White Bears and Other Unwanted Thoughts" (available on the authors point out that when you try to turn a negative (a problem) into a positive (a challenge, or goal), you often achieve a rebound effect making people obsess about the problem.  Tell somebody not to think about a white bear – and it's all they think about.  When your company has a problem and you try to tell employees "hey, don't think about the problem.  Go do your job.  Work harder, increase your focus, and all will work out.  Sure share is down, but don't think about lost share, instead think about the goal of higher market share" frequently the employees will start to become obsessive about the problem.  It will reinforce doing more of the same – perhaps manicly Instead of becoming innovative and doing something new, obsessive devotion to trying to make the old methods produce better results becomes the norm.  Goals don't produce innovation – they produce repetition.

So what should you do when facing a problem?  Disruptions.  GM didn't need a big goal.  GM needed to Disrupt its broken Success Formula.  GM needed to attack a Lock-in (or two).  GM leaders needed to admit the market had shifted, and that competitors were changing the game.  GM needed to recognize, admit and encourage employees to engage in attacking old assumptions – and recognize that market share would continue eroding if they didn't do things differently.  Setting a big goal reinforced the old Lock-ins and even an aligned organization – working it's metaphorical tail off – couldn't make the outdated Success Formula produce positive results. 

Only a Disruption would have helped save GM.  After attacking some Lock-ins, like the desire to move all customers to bigger and more expensive cars, or the desire to focus on long production runs, GM should have set up White Space teams to discover new Success Formulas.  Instead of putting all its management energy and money into growing volume at Chevrolet, Cadillac, Buick and GM nameplates, General Motors leadership should have revitalized the innovative Saturn and Saab to do new things – to develop new approaches that would be more competitive.  Instead of pushing Hummer to have 3 identical cars in 3 sizes, GM leadership should have unleashed Hummer to explore the market for truly unique, limited production vehicles. GM should have allowed Pontiac to really take advantage of the design breakthroughs happening at the Australian design studio – to change the nameplate into a performance car segment leader.  By attacking Lock-ins, Disrupting, and using White Space GM really could have turned around.  Instead, by creating a BHAG GM reinforced its focus on its Hedgehog concept – and drove the company into bankruptcy.

You can see a 40 second video about the value and importance of Disruptions on YouTube here.

A 75 second video on White Space effectiveness on YouTube here.

Read free ebook on "The Fall of GM:  What Went Wrong and How To Avoid Its Mistakes"

Sacred cows – Google and Nexus One

So out of the blue I got called by a reporter asking me what I thought of Google posting an advertisement for the new Nexus One on its homepage.  It was an easy question – the Google homepage isn't sacrosanct.  Like everything, it needs to be used in a way that's most valuable for customers and suppliers.  Times change, and it should change.  So I answered that the Google home page wasn't a sacred cow, and it's smart for Google to try things

So quotes me on Thursday in "Google Runs Multimillion-dollar ad for Nexus One." 

  • "Has Google changed its stance on using the
    home page as a promotional platform? Adam Hartung, an analyst with
    Spark Partners, refers to Google's home page as a "sacred cow." The
    company has something that almost seems like a religious idol. This ad
    demonstrates that Google is willing to change that and "attack a sacred
    cow to step the company forward," he says. "And that's a very good sign
    for investors."

I didn't record myself, but it sounds like me.  Sacred cows get you into trouble.  You have to constantly test, try new things.

But the CEO of Burst Media didn't agree with me.  Picking up on my quote, in the "Google Should Not Give Up the Sanctity of Its Homepage" Mr. Coffin takes me to task for violating what he considers a sacred public trust.  He fears that anything added to the Google homepage creates cracks in Google's foundation putting the company at risk.

How does anyone in web marketing get so Locked-in?  It just goes to show that you don't have to be old, or a big company, or have a lot of money to be Locked-in to something.  Google's homepage isn't even a decade old.  Nor is Burst Media, an on-line marketing company, I don't think.  But here a reputation leader in on-line marketing is working, working hard actually, to defend a sacred cow"Sanctity" of a web page??? Give me a break.

Google has excelled, grown and made more money, because it has been willing to Disrupt its Success Formula and use White Space to test new things.  That's why it's become a household name – and in the process almost singlehandedly destroyed the newspaper industry.  And now is threatening to change how we do personal computing (with Chrome) and enterprise applications (with Google Wave) and even mobile computing (with Android and Nexus One).  Google should consider nothing sacred, because that's the kind of Lock-in which kills tech companies. Sun Microsystems was busy protecting its sanctity while the market shifted right out from under it

Lock-in is inevitable.  But winners – those who grow and make above average rates of return – learn how to manage Lock-in.  They are willing to Disrupt and use White Space.  Good for Google.  I would have expected nothing less!