• you get less than you expected at the planned cost,
• or you get what you want but at a higher cost,
• or you get less than you expected at a higher cost,
• or the project fails completely, and everything is shut down and the money spent up front is thrown away.

So there is a huge amount of money going into projects that fail. So the upside of having better control in your projects is huge.

The benefits of running projects right are huge

With a little calculation based on the benefit-value analyses that I myself have been involved in over the years, we can calculate that the projects that fail are on average 20% more expensive. This is a rather conservative calculation, but I thought that the precautionary principle should apply here. Let’s imagine that your organization is involved in projects worth 500 million per year.

So what does it mean for your business if we adopt the above figures?

1. Of your projects, 35% achieve their objectives, which in monetary terms means that SEK 175 million reaches its target, i.e. the money does the good that the project owner intended.
2. The remaining SEK 325 million will not reach the target, but with a 20% increase in costs, they need to be increased by SEK 65 million to get what you intended. So your budget is half a billion and you need to add 65 million SEK to reach your goals.
3. Or you can turn the calculation around and say that you get SEK 65 million less value if you choose to keep the budget and instead you completely or partially delete some functionality along the way. In other words, you don’t get what you intended and were prepared to pay for.

And the above calculation is per year. This cannot continue, something needs to be done about it. One way to do something is to ensure that you have a well-functioning project model and that you make sure to train staff in how to use the project model.

Project model? Ugh…

Some organizations have a project model, but they don’t really care about it. It is more voluntary whether you have to follow it or not. The people who care most about the model are the project managers, and that is not enough. Other organizations have a project model and say that it must be followed, but due to a lack of understanding of what the model actually means, it is usually mainly the professional project managers who follow the model. Then they have to chase the other role holders to get them to act as expected. It is not at all unusual for these project managers to end up being the ones who run all the roles themselves. “You are so good, can’t you write the project directive for me,” says the person who should act in the role of project owner, “you know what we should do?”.

For some, everything is a project

Still other organizations misuse the word project and use it for just about anything, where something is to be done that is a little outside the usual work. But they don’t meet the definition of a project, and they don’t give the person they call project manager the right conditions to succeed. Still others have allowed the finance department to get hold of the word “project”, where it exists in the financial system more as a cost center. Costs are entered there, even for things that have nothing to do with actual projects.

To stop this major leak, you need to do something! Project modeling is one thing. Training in the model is another. Monitoring its use and providing ongoing support to those working in projects is a third. You need to make sure that all three work. When it comes to training, don’t forget about staff turnover. It is not enough to hold the training once and then hope it works. You need to make sure you hold training on a regular basis. Both as a refresher for those who have already been trained and work according to your project model. And don’t forget the new employees in your organization.

• Do you not have a project model? Clean Stream can help you develop a well-functioning model for your business. We start from a well-functioning basic model and adapt it to your needs.
• Do you have a project model, but it is not working well? Clean Stream can help you improve your project model, seeing what works and what can be improved.
• Are you missing training on how to work according to your project model, how to manage projects, how to lead projects or how to plan projects? Clean Stream has the knowledge and training you need, both online and in person.

Contact me and I can tell you more. But above all, do something about your projects so you don’t have leaks in your business. If the above example applies to you, imagine what you could do with 65 million a year. I am convinced that it would be transformative for you to have this money for other things.

The post A project model that is followed saves you money appeared first on Clean Stream.

SpaceX has unprecedented speed

Several complete rockets have been built and launched with the knowledge that they will most likely just break up. Testing may seem completely logical, and NASA also did this at one time when they were active in developing rockets. The big difference is that SpaceX has a pace that has never been seen before in these contexts. The whole effort is that they go on and build and test, build and test, over and over again. It costs a ton of money to build these whole rockets. The idea is that it’s cheaper overall to build them and send them up now, in quick succession, than the overall cost of being too cautious and maybe facing a big failure at the end. We can learn from this when it comes to our improvement efforts. It is almost always better to develop and then try, to learn and then do again and better. All the time in a series.

Failure in business development

You will “fail” in your business development, where there will be things that do not work as intended, but note the quotation marks around “fail”. Because actually you have had success. Success because you dared and because you have now learned a lot along the way. With the new knowledge and the positive feeling of being on the way forward, you then take the next step and do the same; try again. You are constantly learning things that you would never have learned if you did not dare to try.

“Those who do not dare to take the next step, easily end up standing on one leg”
– Chinese proverb.

In an organization where it is not allowed to make mistakes, it is easy to become mentally locked and not dare to try. If you are punished in some way when you make a mistake, you are reluctant to try. Initiative is taken away from you and you wait and see. This is an enormous cost and an enormous potential that you miss out on. I see it over and over again in so many organizations. What is it like in your organization; is the cost of failure higher than the benefit of taking an initiative? In our Certified Improvement Leader and Certified Business Designer courses, we teach the importance of keeping up the pace and trying things out. The experience and knowledge you gain from trying almost always exceeds the price you pay for waiting for the perfect solution. Of course, there are times when we shouldn’t take chances, like when life and health are at stake. But most of the time, when it comes to our improvement work, we are not even close to the kind of critical things that can happen if things go wrong, and then caution harms our progress.

What is the worst that can happen?

Often the worst that can happen is that a customer calls and complains, or that a colleague has to do something again, or similar. Here, it is good to work preventively by informing various stakeholders that you are developing in the area. Once this has been done, most people who may experience something negative are content to just move on with their lives. Back to SpaceX. Launch number three ended with the spacecraft crashing on re-entry into the atmosphere. This was widely reported by the media as a failure.

At the same time, everyone who was more familiar with the issue cheered.

You will suffer similar when you now use the test-learn principle. The uninitiated or those who don’t want you to succeed will point that out:

1. you have failed,
2. that you have made mistakes, and
3. that the improvement work you are doing should be stopped as soon as possible.

But then you know better and take it easy, because you have learned a lot and you will do things even better next time.

Below you can see what SpaceX employees look like when others write about their failures. Not much of a trace of failure in these mines.

As my friend Anita, with whom I’ve worked for a long time, used to say: “we must dare to jump!”.

Dare to jump

So the question for you this week is: do you dare to jump? Do you dare to take the risk that everything is not perfect and that someone might get a little annoyed that something is not working as it should? Dare to fail in business development?

I hope so. Because the sooner you ‘fail’, the sooner you move forward. No one can predict all the variables over a long period of time, but you need to test yourself, in a real environment, with real people involved.

The post You will fail in business development appeared first on Clean Stream.