technology would not meet expectations and would have to be fundamentally changed. As market prices for the product 66 MIT SLOAN MANAGEMENT REVIEW WINTER 2002 •Learning and response •Exchange of unstructured information along emerging interfaces •Flexible use of methods to reap upside rewards •Tracking assumptions and unknowns Acer Mobile Systems Unit PC Notebooks Alpex Pharmaceuticals Ladera Ranch Earth Moving IhrPreis.de Internet How Management Style Changes •Planning and anticipation •Exchange of structured information along defined interfaces •Fulfillment of targets •Tracking progress Chaos Unforeseen Uncertainty Foreseen Uncertainty Variation How Management Style Varies With Uncertainty Profile Knowing your project’s uncertainty profile — ranging from simple variation to outright chaos — will help you choose the right management strategy. For the exclusive use of K. Haskins, 2015. This document is authorized for use only by Kai Haskins in Babson SME TOM taught by Jennifer Bailey, Babson College from August 2015 to December 2015.
collapsed, the third partner pulled out. Cleveland-Cliffs and Lurgi wavered. They agreed to continue only after an elaborate trust- and team-building effort. Lurgi’s efforts to rethink the technology finally bore fruit in March 2001. The plant began to produce volume and now has business potential, although world market prices are still down. One manager reflected, “Why did we all agree to go through this pain? Only because we all underestimated what was ahead of us. The risks we thought we were facing turned out to be irrelevant; the problems that did hit us were unexpected; and the outcome was different from the original idea.” Striking a New Balance Though many projects are characterized by one dominant type of uncertainty, they often will display a blend of types. Managers must be flexible enough to adopt the right approaches at the right time. The challenge in managing uncertainty, to whatever degree, is to find the balance between planning and learning. Planning provides discipline and a concrete set of activities and contingencies that can be codified, communicated and moni- tored. 12 Learning permits adapting to unforeseen or chaotic events. The two require different management styles and project infrastructure. Projects in which variation and foreseen uncer- tainty dominate allow more planning, whereas projects with high levels of unforeseen uncertainty and chaos require a greater emphasis on learning. (See “How Management Style Varies With Uncertainty Profile.”) Openness to learning is new to many com- panies. But it’s obvious from the many spectacular project fail- ures that the time has come to rethink some of the traditions in project management. In an era of rapid change, uncertainty is a rule, not an exception. Companies that understand that have the greatest chance to produce spectacular project successes.
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