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Cutting Your Losses: Extricating Your Organization When a Big Project Goes Awry

April 15, 2000 | Mark Keil, Ramiro Montealegre | Operations

Project failure in the information technology area is a costly problem, and troubled projects are not uncommon. In many cases, these projects seem to take on a life of their own, continuing to absorb valuable resources, while failing to deliver any real business value. Executives become so strongly wedded to a particular project, technology, or process that they persist in committing their companies. Instead of terminating or redirecting the failing endeavor, managers are apt to continue pouring in more resources. Escalation of commitment to a failing course of action is particularly common in technologically sophisticated projects with a strong IT component. The special nature of these projects -- including high complexity, risk, and uncertainty--makes them particularly susceptible to escalation.

While prior research shows that managers can easily become locked into a cycle of escalating commitment to a failing course of action, there has been comparatively little research on de-escalation or the process of breaking such a cycle. Through de-escalation, managers may successfully turn around or sensibly abandon troubled projects. During the past eight years, the authors examined more than 40 cases of IT project escalation, seeking to understand how and why escalation occurs and, more importantly, how troubled projects can be de-escalated and brought under control.

The authors present a process framework for de-escalation, based on an intensive longitudinal case study of the IT-based baggage-handling system at Denver International Airport. The framework reveals de-escalation as a four-stage process: (1) problem recognition, (2) re-examination of the prior course of action, (3) the search for an alternative course of action, and (4) implementing an exit strategy. To show its general applicability, the authors apply the framework to a well-documented case study of de-escalation: the London Stock Exchange's Taurus system. The authors offer a set of recommendations for disengaging from a failing course of action.

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