“Well, what kind of fraud is it?”

September 15, 2009

Business and engineering goals sometimes seem to be in perfect alignment when just the opposite is true.  When everyone seems to be making progress but the goal is not getting any closer, it might be time to ask whether worlds are colliding.  This happens more often in large organizations, but in fact everyone is vulnerable: if you misread your partner’s agenda there are very few ways to avoid a disastrous collision.

Here’s an example[1].  The project was high profile and complex, but not so complex that it could not be managed by a single project manager – let’s call her Alice — who reported in a line to senior executives.  The ultimate goal was to produce a working prototype based on new computing technology. A successful demonstration of the prototype would almost certainly lead to full-scale development of a new product, a spectacular win and probable promotion for Alice. There were a few nuts-and-bolts engineering goals but the overriding goal was a dramatic safety improvement, and this was how the project was sold internally: a public demonstration that the prototype would function safely under the most adverse conditions. There were many ways to achieve this goal, but Alice had been sold on a radical new technology that would not only leapfrog existing approaches but would be a platform for many future projects.

Alice invested well.  She funded a group of skilled and capable engineers and scientists.  In fact, she funded the team that invented the technology, so her investment was leveraged by several years of prior research, and  — refer to my last post “Loose Cannons, Volume 1” — this is the way managers are supposed to select promising technologies. The scientists were led by Edward, a senior technologist who had guided his R&D team to a string of patents, technical reports and publications that slowly and carefully put in place the building blocks for the prototype.

Under Edward’s supervision, the building blocks for careers were also being put in place.  A PhD dissertation here, a toolkit from a master engineer there, and senior R&D managers whose reputations were to some extent staked on the applicability of the technology to an important product just like this one.  At Alice’s direction, the engineering team focused on near-term milestones.  One was a technology demonstration for a critical component.  Another was the integration of key components.  A third was a real-time simulation of the prototype.  At each step, in careful technical prose, the engineering team reported constant and impressive progress,

But there were internal and external critics who thought that the technology was overly complex and that the claims needed to be more carefully examined.  Some critics, like Bob, were promoting competing technologies.  Others thought, like Charlie, that the underlying approach was flawed and should be discarded.  Others were seasoned but neutral scientists like Doris, who was skeptical of all sweeping claims but had no particular ax to grind.  Even the critics agreed, however, that the engineering team was first-rate and that if the approach could be made to work at all, this was the team that could pull it off. Alice was aware of the critics and to help her balance the technical risks, she invited Bob, Charlie and Doris to serve on her Advisory Board – to become her skeptical insiders for the project.

Quarter after quarter Alice reported both the steady progress and the risks to her management who asked the appropriate questions but gave her the green light to continue, largely on the growing reputation of Edward’s team.  As the project drew to a close, Alice was asked to prepare a balanced summary and recommendation.  Alice scheduled a final project review.  Bob, Charlie and Doris helped select a dozen additional reviewers while Edward began assembling the massive project documentation and preparing his team to brief the reviewers.  Alice’s direction to Edward was this: “We all understand your technology, so you don’t have to educate us about it.  We need to know exactly what was accomplished.”

It took several months to prepare for the review.  About two months before the review date, Alice and Edward scheduled a series of demonstrations at headquarters.  Charlie was there along with a group of a dozen executives including some of the review panelists, but the marketing nature of the meeting was unmistakable.  Sprinkled in the group were senior representatives from customer organizations, government agencies, most of Alice’s managers, and Edward’s boss.  Alice had staked her personal credibility on a successful outcome.  She was confident enough to preview the results and she wanted use that preview to build excitement as the product phase was launched. To the rest of the group – and especially to Edward — she was not Edward’s customer.  Alice was a partner in a new and exciting era that was being launched that day.

The day did not go as planned. The demonstration was a computer simulation of the prototype.  The group crowded around the color monitor (a big deal in those days) as the prototype was put through its paces.  Alice told the group she knew that a live demo was gutsy.  Then the image on the display began spinning and then froze.  Edward rebooted the simulation.  Still nothing.  Alice pushed on as if nothing had happened, inviting the group to a demo at the upcoming project review.  It is not clear that Alice and Edward understood the significance of this episode.

Couriers delivered large review packages to the reviewers’ offices as preparations for the meeting accelerated.  Charlie started receiving phone calls from Bob: “Charlie, I’ve been looking over the reports, and I have some problems with what Edward is claiming.”  “These are based on papers published in top journals,” Charlie said.  “It’s not the scientific claims,” Bob said, “It’s their application to the product.  I think they messed with the experiments to get the result they wanted.”

The review began on Tuesday morning in a large conference room.  Bob’s comments had spread quickly through the Advisory Board and there were perhaps a dozen back-channel conversations taking place about what it meant.  Edward’s team should have been on edge, but, although the atmosphere in the room was tense, the younger team members — buoyed by Alice’s collegial demeanor and Edward’s favorable report to the team of the outcome of the live demo — seemed unusually relaxed.

Over the next two days, every scientific claim was dissected. “Yes, we see what was claimed in this published report, but it looks like a purely mathematical result. What does it have to do with the prototype?”,  said one reviewer.   Several panelists wanted Edward to square published claims with the apparent inconsistency of the disastrous live demo.  Still another rushed to the blackboard and proceeded to find a counter-example to a published claim.  Bob wanted to know how Edward’s team could have pulled off what Bob’s competing team could not do.  This was hardball, but it was nothing that Alice had not expected.

Finally, at the end of day two, William – the youngest member of the Edward’s team  — moved to the podium and began a scientific summary that included his original research and the less technical summaries of it that had been prepared for popular consumption.  It was clear that William’s PhD dissertation had an enormous impact on the course of the project. .

Finally, from the back of the room, Doris spoke up, “I want you to explain this claim right here” pointing to a critical and widely reported result that apparently cleared the way to broad applicability of the technology.  Doris had been nearly silent to that point. The dramatic effect of her question brought everything to a stop.  Edward gave a nontechnical answer.  William jumped in with technical details.  Other members of the engineering team tried to help.  Doris wasn’t buying any of it and brushed aside all of the responses with well-reasoned arguments taken from their own published reports.

Doris said, “I certainly believe William’s claim, here.  It’s a groundbreaking result.  But what I don’t believe is the following report that it was used successfully in the prototype you are showing us today.”  The response was not planned, but William blurted: “It wasn’t.  We used a simplified version of the prototype.”  The room went silent.  “There’s no way we could have used the final version.  It would have been too complex.”  Alice stood up and stared at Edward:  “That’s not what you reported to me.”  At that moment, in Edward’s eyes, Alice, snapped back into focus as a customer, and Edward understood that Alice’s goals were not aligned with his. As the effect of Alice’s words sunk in, the more inexperienced William tried lighten the mood with a little humor: “Look.  Everything we said was true.  It’s not out and out fraud.”

Doris rose.  “Well, what kind of fraud is it?”

It took a long time for the panel’s report to appear. The project was buried, the product was never built and although Alice recovered successfully, Edward and his team were wounded, although William and some of the other engineers went on to careers in pure research, continuing their work on the underlying technology.

Edward’s team had been making progress on technology, and their primary loyalty was to the community of peers who would celebrate their continued success.  The prototype was an interesting but not essential piece of their research program – useful only to the extent it helped advance their research goals.  William’s work was the least tightly coupled to the prototype and in fact his primary interest in the project stemmed not from the prototype but from ideas born years before while he was still a graduate student.  They all interpreted Alice’s support over the years as not only endorsement of the underlying technology but also a kind of professional endorsement of career choices that were tied to scientific acceptance of the research.   Alice interpreted the acceptance of Edward’s team as a validation of her own credentials as a technology leader.

This was Edward’s R&D world that went crashing into Alice’s product world, a world where the prototype had value independent of whatever underlying technology it used.  Alice only too late understood that success in the R&D world had its own set of goals and rules for achieving them and that her support did not necessarily advance her own product goals. The Engineering team saw her as an ally in achieving their goals.  Alice saw Edward as a fellow traveler.  He was not.  Edward was imagining the many future projects that would regard his achievement as an enduring technological innovation.

[1] For reasons that will become obvious, I’ve disguised the names of the organizations and people involved, but I’ve been faithful to the conversations and the underlying message.


10 Responses to ““Well, what kind of fraud is it?””

  1. Tucker Balch Says:

    That was intense. I’ve been at one or two of those meetings. I’ll be your straight man: How do we avoid such collisions?

  2. richde Says:

    Thanks for the straight line. The blog is all about how to avoid collisions like this, so I’ll be referring back to Alice and Edward a lot. I’d also like to hear from readers on this point. But there are some clear lessons to take away from the story:

    1. Be clear on agendas (which may require some cultural education). Alice stopped being a customer at some point and fused her product agenda with Edward’s research agenda. It wasn’t necessary to do that because the technology was not on a critical path. It’s a lesson that Alice as an experienced product manager should have known already. I will do a mini-post on Thursday about Edward’s R&D agenda.

    2. Alice missed a signal when the live demo failed. Her first thought should have been: “If this limited technology demonstration in front of Edward’s own boss failed so badly, how confident am I that these guys have their project under control?” That was her last chance to regain some control over subsequent events.

    3. Edward repeated Alice’s mistake by putting so much weight on William, the youngest and least experienced member of the team. William had virtually nothing invested in the success of the prototype. He was still working in graduate student mode where driving his personal research agenda had the highest priority.

    4. Alice did not listen to her own advisory board. She assembled a team of devil’s advocates but did not act on their advice. In a sense this was her second failure to act as a customer.

    5. Alice’s managers allowed a critical early stage product development project to evolve into a science fair project. Alice’s incentives encouraged this outcome.

    I have to say that there were lots of organizational factors that came into play that could have been addressed. One of the most important — which I’ll touch in in a few weeks — is to give technology a “seat at the table”. Alice controlled all of the technology risk-related information that rose through her management chain. Her management never had the chance to interact directly with Edward.

    A lot to chew on? I’d be interested in hearing from others.

  3. […] “Well, what kind of fraud is it?” […]

  4. Hi there,
    Cool blog, I just found it and I am already a fan.

  5. […] “Well, what kind of fraud is it?” […]

  6. […] as we saw in “Well, what kind of fraud is it?“, worlds collide when there is confusion about context. The collisions are damaging to […]

  7. […] I had planned to write a post later this spring on the collisions between what engineers sometimes perceive as practical and what turns out in practice to be useful.  It’s a complex issue and there are examples that cut both ways, suggesting that a deeper understanding of both the underlying technology and the social “soup” where innovators thrive are needed to avoid some famous traps.  I mentioned this briefly in my discussions of the impact of social fragmentation on innovation and the pitfalls of ignoring social contexts. […]

  8. […] as we saw in “Well, what kind of fraud is it?“, worlds collide when there is confusion about context. The collisions are damaging to […]

  9. […] I want point out something more fundamental that I think helps explain why Alice and Edward in “Well, kind of fraud is it?” lived in worlds that were on a collision course from the beginning: many R&D managers are […]

  10. […] they were the problems of some alien world into which the GM R&D Center had been dropped.  In “Well, what kind of fraud is it?” Edward clearly lived in a different world, and the many “Loose Cannons” who I still hear from […]

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