Problem: Columbus Instruments

Problems have been building at Columbus Instruments, Inc. (CIC) (not its real name) for several years now with the new product development process. The last six high-visibility projects were either scrapped outright after excessive cost and schedule overruns or, once released to the marketplace, were commercial disasters. The company estimates that in the past two years, it has squandered more than $15 million on poorly developed or failed projects. Every time a new project venture failed, the company conducted extensive postproject review meetings, documentation analysis, and market research to try to determine the underlying cause. To date, all CIC has been able to determine is that the problems appear to lie with the project management and development process. Something somewhere is going very wrong.

You have been called into the organization as a consultant to try to understand the source of the problems that are leading to widespread demoralization across the firm. After spending hours interviewing the senior project management staff and technical personnel, you are convinced that the problem does not lie with their processes, which are up-to-date and logical. On the other hand, you have some questions about project team productivity. It seems that every project has run late, has been over budget, and has had suboptimal functionality, regardless of the skills of the project manager in charge. This information suggests to you that there may be some problems in how the project teams are operating. As you analyze CIC's project development process, you note several items of interest. First, the company is organized along strictly functional lines. Projects are staffed from the departments following negotiations between the project manager and the department heads.

Second, the culture of CIC seems to place little status or authority on the project managers. As evidence of this fact, you note that they are not even permitted to write a performance evaluation on project team members: That right applies only to the functional department heads. Third, many projects require that team members be assigned to them on an exclusive basis; that is, once personnel have been assigned to a project, they typically remain with the project team on a full-time basis for the term of the project. The average project lasts about 14 months. One morning, as you are walking the hallways, you notice a project team "war room" set up for the latest new product development initiative within the company. The war room concept requires that project team members be grouped together at a central location, away from their functional departments, for the life of the project. What intrigues you is a handlettered sign you see taped to the door of the project war room: "Leper Colony." When you ask around about the sign, some members of the firm say with a chuckle, "Oh, we like to play jokes on the folks assigned to new projects." Further investigation of project team members suggests they are not amused by the sign. One engineer shrugs and says, "That's just their way of making sure we understand what we have been assigned to. Last week they put up another one that said ‘Purgatory.'" When you ask the project manager about the signs later in the day, he confirms this story and adds some interesting information: "Around here, we use detached [meaning centralized] project teams.

I get no say as to who will be assigned to the project, and lately the functional heads have been using our projects as a dumping ground for their poor performers." When you question him further, the project manager observes, "Think about it. I have no say in who gets assigned to the team. I can't even fill out a performance review on them. Now, if you were a department head who was trying to offload a troublemaker or someone who was incompetent, what could be better than shipping them off to a project team for a year or so? Of course, you can imagine how they feel when they hear that they have been assigned to one of our project teams. It's as if you just signed their death warrant. Talk about low motivation!" When you question various department heads about the project manager's assertions, to a person they deny that this is an adopted policy. As the head of finance puts it, "We give the project teams our best available people when they ask." However, they also admit that they have the final say in personnel assignment and project managers cannot appeal their choices for the teams. After these discussions, you suggest to the CEO that the method of staffing projects may be a reason for the poor performance of CIC's new product development projects. He ponders the implications of how the projects have been staffed in his organization, and then says, "Okay, what do you suggest we do about it?"

Questions: 1. What are the implications of CIC's approach to staffing project teams? Is the company using project teams as training grounds for talented fast-trackers or as dumping grounds for poor performers?

2. How would you advise the CEO to correct the problem? Where would you start?

3. Discuss how issues of organizational structure and power played a role in the manner in which project management declined in effectiveness at CIC.