Reflect & Learn: Post-Project Evaluation of Initial ROI Analysis

Source: Praxis

Upon completion of a project, have you ever gone back to evaluate the initial return on investment analysis used to justify the decision to proceed with that initiative?  This type of post-project evaluation can be very instructive.   Did the project deliver the type of return that was expected?  Why or why not?  Did the project fail, or were the expectations regarding the benefits and returns simply overinflated?  

The purpose of this anlaysis should not be to blame people for misguided cost/benefit analysis, or to punish those who did not deliver results in line with expectations.  Instead, spotting errors and and deriving lessons from this type of reflection can enable an organization to enhance the quality of its decisions moving forward.   ROI analyses will improve, enabling managers to make more informed, higher quality decisions.  

What types of issues and errors should one look out for when evaluating results relative to that initial analysis?  Here are a few questions to ask: 

1. Were we experiencing confirmation bias as we collected and analyzed the data?  
2. Did we make fail to engage a devil's advocate to challenge our forecasts and predictions?  
3. Did we make some assumptions that were overly optimistic?   Did we back into certain assumptions simply to make the return on investment seem attractive?
4. Were the initial investment figures unrealistically low?   Did we have to make substantial additional investments that probably should have been anticipated at the outset?  
5. Did we fail to account for opportunity costs when considering the attractiveness of this opportunity?
6. Were people hesitant to challenge or critique the analysis because they perceived the investment to be a "pet project" of the CEO or another senior leader?

A Stubborn Attachment to Existing Beliefs

Source: Rand Corporation

In 1962, Roberta Wohlstetter published a fascinating book titled, "Pearl Harbor: Warning and Decision."   She examined why officials did not perceive the threat of a potential attack in Hawaii appropriately.   She opened her book by writing, "It would be reassuring to believe that Pearl Harbor was just a colossal and extraordinary blunder.  What is disquieting is that it was a supremely ordinary blunder." Later, in assessing the decision making of key leaders, she notes how many of them held a strong pre-existing belief that the Japanese would never attack the United States. That belief clouded their assessment of data and signals, and ultimately led to misguided judgments. She wrote, "Apparently human beings have a stubborn attachment to old beliefs and an equally stubborn resistance to new material that will upset them."  Truer words have never been written. 

I'm reminded of this quote when I think about an organization I've been studying for quite some time.  This once very successful organization made a series of strategic decisions more than a decade ago based on a core set of beliefs and assumptions.   Those beliefs and assumptions were consistent with the strong preferences of senior leaders - i.e., they aligned quite well with the interests and aspirations of top managers and board members.  Years later, quite a bit of evidence suggests that some of those assumptions were invalid.  Yet, leaders remain stubbornly attached to those beliefs.   They haven't been willing to confront the data, question those beliefs, and change course.  

Poor governance practices have exacerbated the problem, as board members prefer not to question the assumptions or the strategy, given that some of the initiatives were "pet projects" in which they were emotionally invested.  Less than desirable outcomes and results are constantly rationalized away, much like a retailer that explains away its poor financial results during a particular quarter by pointing to "weather conditions" that reduced traffic to its stores.  Funny how quarterly financial reports never seem to talk about favorable weather conditions bolstering sales and profits!  

Perhaps the most frustrating element of this story is that the stubborn attachment to existing beliefs has not only led to an unwillingness to change direction or abandon misguided plans, but has led to a "doubling down" on failed policies.  The sunk cost trap is clearly at play.   The organization finds itself throwing good money (and effort) after bad.  The problem, as is often the case, is not simply the prior investment of financial resources.  It's the huge emotional sunk cost; it's the unwillingness to admit when one is wrong.  

Whenever you witness the sunk cost trap in action, you should not only pay attention to the wasted resources as good money is thrown after bad.  One should also pay close attention to the opportunity costs. What opportunities have been missed and what investments have NOT been made because so many resources continue to be allocated based on a stubborn attachment to long-held beliefs and assumptions?  In this particular organization I've studied, the opportunity costs in many ways have been far more substantial than the actual expenditures wasted in support of invalid beliefs and assumptions.  

Has your organization found itself in this predicament?  How can you as a leader help to identify implicit and explicit assumptions and beliefs that need to be tested, challenged, and validated?  How can you protect against the stubborn attachment that Wohlstetter wrote about so eloquently nearly sixty years ago?

Becoming a Better Delegator

Many leaders struggle with a tendency to micromanage at times.  I just read a good short piece at Fast Company by executive coach Melody Wilding about becoming a better delegator.  She offers three pieces of advice.  I've added a fourth key point.  

1.  Assess the cost of your perfectionism. 

What negative impact is it having on others?  Are they losing opportunities to develop and grow?  Are they becoming more disengaged at work because of your micromanagement?  Losing talented people can be a huge cost of your perfectionism.  However, you also have to consider the personal cost.  Will you experience burnout because of your tendency to micromanage?  Be honest with yourself.  Are you experiencing a loss in productivity because you are overburdened?  

Source: Luxafor.com

2.  Strive for small wins. 

If you are hesitant to delegate, start with some low-stakes tasks.  Get those off your plate.  For this evaluation, I suggest the use of the Eisenhower matrix.   Consider those activities that do urgently need to be done, but are not that important.  Start by delegating those tasks.  Once you realize that others can handle that work, you will grow more confident in delegating more critical work to them.  

3.  Focus on the what and the why, but delegate the how.  

You need to establish the goals and explain why they are important.  Explain what needs to be done.   Describe why that is necessary.  Paint a picture of what success will look like.  Then let others determine how best to accomplish those objectives.  

4.  Establish checkpoints up front. 

Make sure you establish some opportunities to check in with the people doing the work.   However, don't look over their shoulder at every turn.  Instead, think through a few key milestones or checkpoints.  Establish those beforehand and communiate them clearly, and then meet with your team members at that point to check on progress.   When you do meet, don't just tell them what to change and why.  Ask good questions.  Encourage them to evaluate their own progress and let them propose the corrective action before you put forth an opinion.   

Speaking Up Effectively

Source: Flickr

After facilitating a conversation the other day with a group of managers, I went back to review something I wrote back in 2009 in a book titled Know What You Don't Know.   The managers asked me how one can dissent in the most persuasive and constructive fashion, particularly in situations where they feel as they the leader may not want to hear an opposing viewpoint.    

Suppose you have a dissenting view, but you aren't sure how to bring your point forward. How can you put forth a different perspective without eliciting a defensive reaction from your boss or backlash from your peers?  I have argued that, "Speaking up requires more than crafting the right series of statements... In large, complex organizations, individuals must pay close attention to social and political dynamics. They need to find a way to gain access to key decision-makers and to build support for their viewpoints."  Here are my tips for speaking up effectively, with a focus on how to manage the political and interpersonal dynamics of your organization:  

Know your audience: Learn about the person you are trying to persuade. Present your arguments in a way that fits that person’s preferred mode of processing information.

Understand the history: Determine who will feel most threatened by your attempts to shine a spotlight on a particular problem. Avoid placing blame on that person; focus on how to improve the situation.

Seek allies and build coalitions: Strength resides in numbers. Find others who will support your viewpoint. Present a united front.

Work through key confidantes and gatekeepers: Identify the individuals who have the ear of the person you ultimately must persuade. Seek them out and try to bring them onboard first.

Focus first on divergent thinking: Remember that your near-term goal should not be to persuade everyone to adopt your view immediately. Begin by simply trying to encourage people to think differently about the situation at hand.

Present alternative solutions: Do not just point out the problem; offer a series of possible solutions. Make it clear that you want to help fix the problem.