7.4 Understand why termination decisions are so difficult - Video Tutorials & Practice Problems

<v ->How about in bad cases?</v> How about in situations where it's not a good closeout, meaning it's not a successful project that's going to the finish line and in a productive way and reaping benefits. What about in situations where we have to make early termination decisions? What are some of the rules or what are some of the situations in which that actually is gonna take place? Well, the short answer is there's a wide variety of different reasons why we may terminate a project early. So I'm not going to pretend that I'm gonna cover the whole broad waterfront of different reasons why a project needs to be decided to be terminated. But I just wanna suggest a few of the more common ones so we can understand. I've worked in companies that suddenly got a memo saying, your project you've been working on has been terminated, and that is all, and people are very deflated. It's this (sighs), you know, here I've worked all this time on this project and they just killed it. Why? And nobody explains that to them, which I think is a problem because I think you need to keep people in the loop. Talk about a demotivator. Well, one of the reasons that we do this is simply because costs have gotten to the point where they exceed business benefits. We are now pouring money into this project. It is grown into this enormous monster and we're past the point where this is even going to be profitable for us. The original business model said that we were gonna be able to return an ROI of, say, 15% on this product by the time it was completed. This product is now one year late. It's several million dollars over budget. Even if we brought it out tomorrow, it's not going to hit those return on investment numbers. It's time to kill it. So the cost may exceed the business benefits may a perfectly legitimate reason. Another reason projects get terminated is that we changed strategic directions. So originally this project was undertaken under our old CEO, for example, or our old division president, when our strategy was going in this direction. But we have a new strategy in place now. Economic conditions have dictated it, or a new CEO has dictated it, but we're now gonna shift in this direction. So we're gonna pursue these ventures. We're gonna pursue these strategic opportunities. Your project is part of the old guard, it's part of our old way of thinking and it doesn't fit with the new strategic priorities. So sorry about that, but we're getting rid of it because we wanna move in this direction. I hear this all the time. Many times companies say, "We're moving in a new direction. "Your project doesn't fit, so we're gonna cancel it." That's really what they're talking about. It doesn't meet the strategic fit criteria anymore. Another reason projects are terminated is poor performance. If a project is expected to meet certain milestones along the way, and it continues to miss those milestones. It just keeps running longer and longer and longer and the excuses get less and less believable and it just kind of starts spinning out of control. That's a perfectly legitimate time in which we may say, "You know what? "We have to cancel this project. "This is turning into a beast." There's example after example I could give you, I have to be careful not to to reveal any companies when I talk about this but I talk to people in many organizations and I'll bet many of you could relate to this statement as well, that if you ask them, "Tell me "about a project that just wouldn't die in your company, "even past the point where it was just, "it had grown into monstrous levels. "Tell me about a project like that." Just about everybody can smile, sit back and say, "Oh, let me tell you about..." whatever, and they can start talking about one. What we're referring to are these kinds of projects, the ones that have been allowed to just spin on and spin on and spin on, out of control. When a project is continually doing this, at some point, we have to take a hard look at it and say, "You know what? "Enough is enough. "It's time to move on." Another reason that we cancel projects is for perfectly legitimate technology reasons. The technology may simply have evolved beyond the project scope. We were hoping to do the project along the following lines, but you know what? Look at the new changes in the technology in the industry. This is now immediately outdated. Why would we wanna bring this project out and have it declared obsolete right before we even get started with it? Nokia, 15 years ago, was the industry leader in cell phones. Most of us, if we remember that far back, would remember that Nokia were the most well known phones out there. Yes, other companies did that. Motorola had a lot of phones as well, but Nokia was the number one. They were making a fortune off these phones and they would introduce new models of these phones and while they were focusing and fixating on new versions of their cell phones, they completely missed the industry shift over to the smartphone. The idea of getting away from just a phone as a phone and treating a phone now as a personal data assistant, as all the things we can do with phones these days, surfing the web, everything that we can do with a phone that in the old days you simply couldn't do. A phone was a phone. Nokia missed this. And so for a period of five years or so, they kept introducing new models of a phone while the smartphone was sneaking up behind them and stealing their market share. Nokia now no longer is an independent company, when it comes to their cell phones. They've merged with AT&amp;T in order to try and salvage something of the market share by using other people's operating systems. So they went to Windows and they asked Microsoft, we want to use your Windows in a new cell phone. They got so far behind in the technology, they got so far behind in their projects and the focus they had for their projects, that they literally missed all opportunities. Some of the issues that I'd like you to think about with project termination, there's a nice, elegant way I think to divide this by looking at the major termination issues, and we can even think of this as a work breakdown structure, can't we? We can look at the termination issues as being a combination of emotional and intellectual issues that we have to concern ourselves with. Let's start with the intellectual. Intellectual, the way I'm describing this is, I'm talking about all of the programmatic or administrative or formal details that have to take place within the project. So internally, intellectual issues, concern, disbanding the team, signing off on all reports, making sure that all of the administrative details are followed, making sure that all of the lessons learned are achieved or all of the administrative work that has to be done in order to fulfill the project termination. So these are the duties that I have to do within house, in my organization, to make this happen. Intellectual details externally oftentimes revolve around the customer. Maybe not always, sometimes the intellectual issues may be in certain kinds of projects, I have to deal with Department of Environmental Protection or some other federal agency or state agency or someone else who has oversight and can look at and is required to do final sign offs on that project as well. So what do I have to do in terms of working with the customer to transition the project to them? What do I have to do in terms of working with these external groups to make sure that I get all necessary sign-offs, if that's necessary as well. So the intellectual termination issues really refer to sort of the corporate or the formal details that I have to take care of at this point in time. But I'm more interested really in focusing on the other side of the coin, the emotional, because I suspect for many of us, we probably haven't thought too much about this emotional side of this very much, and I want us to think about it because when we're running projects, we need to recognize that part of the termination process is, it's a good thing. Assuming the project is going well, termination can be a good thing, can be very positive but we have to manage it, and we have to manage it and recognize and allow for, not simply intellectual issues but the emotional side as well. So let me cite a couple examples here to kind of illustrate the emotional. In many organizations, the staff are emotional or they make emotional decisions here, and when I mean that, I don't mean weepy decisions or emotional in that sense but I mean decisions, how it relates to them personally. If I'm working on a construction project, I know that a very large percentage of my staff are hired on a temporary basis, and as that project starts coming to completion, we're not done by any stretch, but I can start seeing we're moving toward completion. Members of my project team are already starting to think, where is my next job coming from? And even though though they're still working on my project, maybe they're getting their resumes cleaned up and they're already sending them out and they're asking for a day off here and there. Why? Well, they may take a sick day but we know they're really going interviewing for other jobs. And so low and behold, maybe before the project's even done, some of those staff up and leave, they say, "I'm sorry, I may have to give you a one week's notice "because I have another job pending and I'm out of here." And don't be upset by that too much. Recognize that this is a natural phenomenon. Now even in house, even within your own organization, so it's not a construction project, the same emotional issue is prevailing with your staff. They're already starting to think, this project is starting to wind down. Where am I going next? What are my next challenges or what are my next jobs? Who should I start connecting with for my next project assignments? And you have to recognize that kind of emotional issue and you have to allow for it, and as much as possible, manage it. Now, how do I manage this? I'm not going to say there's any one clear cut way to do it. What I am gonna suggest though, is something to think about. Recognize, number one, that your staff are having these kinds of reactions to the completion of your project. They are thinking about themselves and about their future and they're bored or they're anxious or whatever. Recognize this as the case and meet them where they are. Hold a meeting with them. Basically something like this, for example, this happened to me one time and I know that it worked very well in my situation. I was the person called in and my boss basically said, "Look, I recognize you're getting antsy. "I recognize that you're starting to think about this. "I've already done some digging on your behalf. And he kind of laid out for me the projects and the opportunities that were coming up. And he said, "I've already talked to these folks about you. "I have an opportunity here to write out your final review "and I have an opportunity to kind of plant you with one "of those projects where it can do your career most good. "What I need from you is I need you to commit here "for these final three, four, or five weeks" or whatever it was, "to help me get this project across the finish line. "I know this is taking place. "I have your best interest at heart." In other words, in in today's parlance I think he'd say, "I've got your back." I appreciated that. It was a straightforward, honest communication with him where he called me where I was. He said, "I know you're nervous "and I've been thinking about you." And that was hugely important to me. How about the emotional issues with the client? Now, clients are an interesting case at this point, aren't they? Because up until now, we work with a client and we go through these peaks and valleys with most clients and it works something like this. Now I'm gonna paraphrase or I'm gonna kind of give you a broad perspective. So for some of you, you may see this. For others, maybe not. Also, I see this more often with external clients. So if I'm working for a company that's dealing with a client outside of the organization, but not exclusively I've seen this internally as well and it works something like this. So if we look at our pyramid here we've got the emotional issues related to the client. I woo the customer. I'm one of the companies that's trying to get this project and we sign a contract. At that point in time, the customer and I are very tight. We're in good shape, we support each other, we're very enthusiastic, we've got a lot of mutual energy built up. Now during the development of the project, we have the normal ups and downs where all of a sudden we disagree on the contract language. So our relationship starts plummeting a little bit. We disagree on change orders. Our relationship goes down a little bit more. It comes up a little bit. It go, you know what I'm saying, we kind of go through these ups and downs, these hills and valleys in our personal relationship. Then all of a sudden, the project is getting close to delivery and you magically see this improvement in relationship between us and our customer because they're anticipating the delivery of the project. It's almost like Christmas morning is coming, and so boom, life is good. We're happy again. Everyone's everyone's best buddy. Then all of a sudden they get the project and we start hearing things like, "Well, that's not what I wanted. "Well, I don't like it that way. "Well, that shouldn't have been done that way. "Well, why is this doing this?" And we start fighting again, and the relationship starts falling in the other direction. What I'm suggesting here is, again, very simplistic example. Maybe some of that relates to you, maybe some of it doesn't, doesn't matter, the point is that our relationship with our customer is going to go through these same sorts of emotional peaks and valleys, and we have to recognize that. Companies that are very successful in dealing with stakeholders are companies that do recognize that and go out of their way to make sure that they maintain a good relationship with these folks. I'll give you one example. On the west coast of Finland is a company that makes very, very large, when I say very large, I mean enormous, deep water drilling rigs for the Gulf of Mexico, for the Caspian Sea, for places like that, they're very deep water, and so they need rigs that can basically tolerate that kind of setting, and these rigs cost about, just in steel and development there, maybe $400, $500 million each. So these are an enormous investment and that the oil companies maybe order one or two of these a year. They don't need that many, but when they do need them they need them done right. This company in Finland has recognized over the years that when the oil companies, particularly the US, but can be anywhere, send over their representatives, these folks arrive and they're on site for 18 months. So of course they bring their families with them. And what they've found is over time that it's not necessarily the relationship with the representative that gets bad. It's the representative's family starts going to pieces. They're in a foreign country. They don't speak Finnish, they don't read the road signs they don't know how to work at a bank, or do anything, and they're feeling very abandoned, very isolated and that starts bleeding off into the relationship between the representative and the company. So some years ago, this Finnish company deliberately set up these liaisons and their whole role is to help smooth the process by which, not just the representative but the representative's family, transitions over to Finland. So they're always on call, they're always there to help, they're always there to translate they're, basically, it's almost like a concierge service to help not just the representative but the representative's family. What this company recognizes is that part of the process here in relating to your customer has got to remain emotional, personal, and on that kind of level, and so they take steps to make sure that they keep those relationships positive. During the termination phase, there's a lot of emotion, not just in terms of my staff, there's a lot of emotional reactions from the customer as well. Let's recognize and plan for that. If it's as simple as them getting a new IT system, let's make sure that we transition them in. Let's make sure that we give them enough of lead in and enough feedback to allow them to feel comfortable once the system's in place. That's what we're talking about.