“Facts do not cease to exist because they are ignored.” — Aldous Huxley

It started at an off-site meeting.

The President of ACME Inc. and his executive team were off at a three day strategic planning session. They had just finished lunch and the participants were starting to leave the table, checking their emails and making last minute phone calls before the afternoon session started.

As the President pushed back his chair he said to no one in particular, “I wonder if overhauling inventory control could save us any money. I’ve been president 10 years now and I don’t remember ever looking at inventory control.” Something had caused him to recall an article about advancements in inventory control that he had read in an airline magazine during a trip to a recent sales conference. He stood up and started to walk back to the conference room.

Mr. James Keener, the COO, was sitting across from the President and overheard the comment.  Jim had been with the company for about seven months. He was looking for an initiative that he could hitch his wagon to and demonstrate that he was someone who knew how to get things done.  The President wasn’t going to be around forever and when the time came Jim wanted to be his successor.

In the space of the next five minutes the following text conversation took place.

chg phone txt

Jim pocketed his phone and strode purposefully back towards the meeting room; he was on a mission.

At the next break Jim took the President aside.

“I heard what you said about inventory control – it’s something I’ve been looking at. I think we could completely overhaul the process in about eight months.”

The President paused for a second. He was thinking about the presentation that the SVP of Sales had just given on the five year sales outlook; the growth projections were less than he had expected. “What’s the cost and what’s the benefit?”

Jim was ready with the answer, “I’d be surprised if it was more than $1M.  We haven’t calculated the savings yet but I think we’ll break even in less than 18 months.” Jim knew that 18 was the magic number; any initiative with a breakeven of greater than 18 months would be rejected. After a brief pause, he added, “I personally guarantee this will work.”

The President was still distracted by the sales projections.  “If you can do it without any additional staff then go ahead.”

The next day Jim called his staff together for an emergency meeting.

Once everyone was in the room, Jim began speaking, “The President has given us a critical task – we’re going to revamp inventory control. We’ve got six months and $750K to make this a reality.  I realize that this is a lot of work and everyone’s got their day jobs but he made it clear that this the most important task we have.”

There was a rustling of paper somewhere in the back of the room and a voice spoke up. “I don’t see it on the project list anywhere.”

Jim was a go-getter; he was ready for this. “It’s not on the list because it’s not a project.  I’ve told the President we can do it operationally. I know most of you aren’t used to working like this but I am; it’s going to work because I’m running the show. Anybody who doesn’t agree … well, there’s the door.”

And so it began, another initiative born of MBWT – Management by Wishful Thinking.

Why are people so willing to ignore reality and to make commitments and plans based on what they want to happen rather than what is likely to happen? There are many reasons but two of the biggest are rampant optimism and overconfidence.

Rampant Optimism

Some people have a brighter outlook on life than the average person.  They tend to be less risk adverse than average because they have an inherent belief that everything will work out for the best. Optimism is not a bad thing; in fact, a strong argument can be made that optimists are disproportionally responsible for making progress as they are able to persevere through risks and setbacks that would cause an average person to change their course.  But a successful optimist maintains a close contact with reality; they have a positive outlook but aren’t willfully blind to negative scenarios. Rampant optimism is a different matter. When an optimist starts disregarding reality and replaces it with an unrealistic outlook they have stopped being an optimist and have become a dreamer; and in the land of dreams anything is possible.

Overconfidence

Confidence is not a bad thing. Look at Jim for example. He’s a COO of a major company; he didn’t get there by accident.  He’s almost certainly got a MBA, and he’s had a series of jobs where he has learned, gained experience and been successful enough to warrant being hired by ACME. He has been successful and has earned the right to be confident in his judgment and his abilities. In fact, Jim has to be confident (or at least perceived as confident); who wants a COO that appears apprehensive or uncertain? The trouble begins when confidence and hubris mix. Problems will ensue when Jim starts believing that he can generate positive outcomes using his sheer force of will. He will ignore or minimize risks, he won’t see potential negative outcomes, and will set overly aggressive plans with little or no contingency.  The result is a failure just waiting to happen.

Management by Wishful Thinking is difficult to counter.  For one thing, it’s contagious. It takes a strong individual to continually play the devil’s advocate in these situations; it’s much easier (and likely less of a career risk) to go with the flow. The best advice I can offer is to make sure that the standard processes and procedures are followed.  Go by the book – there will be pressure to make exceptions and to take shortcuts, particularly once issues arise and the timeline begins to be impacted.  When exceptions are made make sure the particulars are well documented. It’s sad, but once your organization has decided to execute a MBWT initiated there isn’t really much you can do other than to fulfill your responsibilities as completely as possible and to protect yourself by documenting everything.

And how did everything at ACME work out? Revamping inventory control cost ACME $2.3M and it took 19 months. Three people quit and another is off on stress leave. No one is really looking at the payback right now because everyone is just so relieved that it’s over, but when they eventually crunch the numbers they will find the payback period is 33 months. Jim has struck a committee to find out why the development process is so badly broken. He’s promised the President that he’ll get to the bottom of this and make the appropriate changes.

He gave his personal guarantee.

Have you been on an MBWT initiative? Have you ever been on one that’s successful?

Feel free to comment.

photo credit: laurabillings via photopin cc

 

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