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Have We Lost the Ability to Listen to Bad News?

December 1, 2016 • STRATEGY & MANAGEMENT, INNOVATION, Emerging Ideas, Strategic Spotlight

By Kim E. van Oorschot, Luk N. Van Wassenhove, Kishore Sengupta & Henk Akkermans

Research shows that project managers continuously prioritised good vibes (positive, but subjective signals) over bad news (negative, but objective signals), which resulted in decisions of poor quality. Without understanding the root causes that generate the bad news and the good vibes, managers could make the wrong decisions.

 

1. Introduction

Managers are frequently surprised by problems in complex new product development projects (Browning and Ramasesh, 2015). Often these surprises come from “unknown-unknowns”: the things we don’t know we don’t know. In response, many tools have been developed to help managers discover these unknown unknowns: to turn them into known unknowns to which risk management procedures can be applied. These tools are both hard and soft, targeting both the analytical, mechanical side of the project, and the behavioural, organic side. Examples of the former are: checklists, decomposition, scenario analysis (Browning and Ramasesh, 2015) and stage gates (Cooper, 2008). The latter includes: informal dialogues with project sponsors (Kloppenborg and Tesch, 2015), building a wide range of experiential expertise (Browning and Ramasesh, 2015), frequent communication (Laufer et al., 2015), help seeking (Sting et al., 2015), and focusing on weak signals (Schoemaker and Day, 2009).

What all these tools have in common is that they aim for clarity in projects that follow an uncertain path through foggy and shifting markets and technologies (Eisenhardt and Tabrizi, 1995). The price to pay for this is more information that needs to be processed by the project manager. Project managers need to make sense of all sorts of signals, whether they come from analytical tools or informal dialogues and communication, whether they are strong or weak, positive or negative, objective or subjective. Eventually, all signals need to be merged to make project decisions. Yet, little is known about how project managers actually make sense of a multitude of (often mixed) signals.



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About the Authors

oorschot-webKim E. van Oorschot (kim.v.oorschot@bi.no) is a professor of project management at BI Norwegian Business School. She received her PhD in industrial engineering from Eindhoven University of Technology. Her research interests include decision making, trade-offs, and tipping points in dynamically complex settings such as new product development (NPD) projects.

wassenhove-webLuk N. Van Wassenhove is the Henry Ford Chair of Manufacturing at INSEAD and a Fellow of POMS, EUROMA, and MSOM. He is also a Gold Medalist of EURO. His recent work focuses on sustainability (circular economy) and humanitarian operations.

sengupta-webKishore Sengupta (kishore.sengupta@insead.edu) is a Reader in Operations at Cambridge Judge Business School, University of Cambridge. His research examines managerial behaviours in the execution of complex projects, and their consequences for the outcomes of such projects. His more recent work focuses on the role of stakeholders in large innovation projects.

akkermans-webHenk Akkermans is a professor of Supply Chain Management at Tilburg University and the director of the World Class Maintenance foundation in Breda, The Netherlands. His research addresses the issue of how inter-organisational supply chains and networks, where no single party exerts full control, can nevertheless effectively co-ordinate their behaviour.

 

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