What happens when an organization makes a “big” decision? It becomes truth. The level of cognitive dissonance is such that facts,
dissenting views, and even wise and pertinent questions are disdained - the “word” has been given.
A few years ago, the Canadian government decided to upgrade their fleet of fighter planes. After a protracted “analysis” they decided to purchase 65 Lockheed F-35s for $9 billion. (They’d already spent $160m by mid-2010 + another $350m in related contracts, despite the fact that the first plane won’t see Canadian shores until 2016.)
During the process, assumptions made early on were so endemic that they became fact. This phenomenon persisted over months. In the end, the project was a house of cards vs. a rigorous, fact/truth-based analysis.
But this wasn’t the only problem. Price creep also set in. When you or I go out to buy a car, we start with a budget - say $30k. With initial good intentions, I look slightly below the limit ($25-27k), and then “out of curiosity,” check out the $30/32k cars. “Wow - this is so much better!”
Now what were luxury features become necessities, “No way I can live without heated seats.” Pretty soon, I’m looking at $35k cars, thinking, “It’s only another $5k - I can swing it.” I walk out happy, having rationalized “only” spending 17% more. Kicker #2 - my next car’s baseline is at least $35k probably closer to $40k (massaging and cooled seats!) -- price creep.
The bigger the organization, the more faux truths and creeping price risk $billions being wasted. In the case of the F-35 fighter, 2012 the “revised estimate” is $25 billion!! Ouch!
It gets worse - the original motivation is also not questioned: “Of course we need new fighter planes - we have no choice!!” Really? What would happen if we retired the current fleet and didn’t replace it? Yes - commitments and capabilities would change, and people would lose their jobs.
But we’d also save $billions - what could we do with that money to employ more people, find new ways to solve the old problem, and maybe even give back a few $billion to the national coffers.
Will this happen? No. The assumption that Canada needs fighters is based on century-old thinking (Canadian planes were part of the RAF in WWI). They’ll never question it – stupid, stupid, stupid.
Government (and most large organization) departments assume power based on the size of their budgets vs. their service to the mission. Budgets are assigned every year on a LOBA (lower of budget or actual spending) basis, which means you have to spend everything you were given, and then figure out ways to get more, ‘cause that demonstrates your relevance. There is zero incentive to do more with less - it’s actually discouraged because this kind of efficiency lowers the department’s “standing.”
This article in the Atlantic is a great example of entrenched thinking at GE vis-à-vis outsourcing. Look also at Boeing’s 787 project and how much difficulty, patching, and mitigation they’ve had to do to overcome what was initially a cute idea (multi-site sourcing), but quickly became the de facto and not-to-be-questioned strategy. Even a nimble company like Apple is going to inshore some of its product assembly.
No assumption deserves absolute faith forever.
Always, always question your assumptions. More than 50% of American marriages end in divorce because the preconceptions were proven wrong. We no longer consider marriage a de facto state; permanence, multi-race, age disparity, and gender are now part of the new normal of marriage. In the same way, there should also be a new normal for divorce - why does acrimony have to persist?
There is a Mexican proposal to redefine marriage as a 2-year contract that must actively be renewed - I think this is a brilliant approach to ensuring that the parties involved continually question their assumptions and actively choose to “re-up” vs. passively enduring a bad situation until things become so bad that hate and anger and vindictiveness ensue.
Entrenchment leads to bad decision-making, costly repercussions, and sadness.
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