New research suggests that five crucial conversations — often overlooked or avoided — are essential to the success of any high stakes project or initiative.
This year, as in every year for many decades, corporate leaders around the world will bet a substantial portion of their organizations’ budgets on ventures that have less chance of paying out than a roulette wheel. With estimated failure rates of 66%–91%,1 companies’ collective inability to execute high stakes cross-functional initiatives like major product releases, strategic information technology projects, organizational restructurings, fast-paced downsizings or aggressive quality initiatives costs hundreds of billions of dollars a year. For example, it’s estimated that of the $255 billion spent per year on IT projects in the United States, more than a quarter is burned up in failures and cost overruns.2
In addition to sapping organizational performance, these project failures also cost careers. Now more than ever, chief executive officers are under pressure to either get results or get lost. In 2005, CEO turnover doubled from the year before.3 In just the past five years, close to two-thirds of all major companies have replaced their CEOs. Chief information officers are similarly vulnerable, with a quarter losing their jobs each year.4 Studies suggest that an inability to deliver on critical projects is a primary reason for this alarming rate of dismissals. Leaders’ shortcomings were less about strategy and decision making than about their ability to execute.5
Project professionals and management experts have attempted to respond to these failures by improving the formal systems related to program governance, project management and project-related technologies. However, while these new approaches have somewhat improved results, with more than two out of three projects continuing to disappoint, clearly something is still missing. Our research shows that most projects fail for reasons that are widely perceived and that the failures can be both predicted and prevented with surprising reliability. (See “About the Research.”) The best predictor of the future of a project is the quality of just a handful of high-stakes conversations that must occur along the way — but tend not to. More importantly, the study suggests that leaders can substantially improve their organizations’ ability to execute high-stakes projects and initiatives by breaking a code of silence on five astoundingly common yet largely ignored problems.