In June of 1992 Hewlett-Packard (HP) announced the company's newest innovation, the smallest (1.3 inch) drive disk in the world named Kittyhawk. The drive was developed by Disk Memory Division (DMD) and had a smaller capacity then the industry's currently existing smallest disk drive. After two years, the effort to achieve substantial sales of this device was not successful.
Prior to the Kittyhawk project DMD had a very profitable position in this established markets. Its high-performance products within 5.25-3.5 inch drives were very competitive due to their drivers having a higher megabytes capacity than the industry norm. The division was making plans for the new 1.3 inch drive disk based on the existing market trends and treating it as a sustainable innovation. The company's plans were to expand its computing market share and make HP a major player in the disk-drive industry.
The main causes for Kittyhawk's failure were as follows:
The company had failed to recognize the new product as a disruptive innovation that was not ready to compete in the existing market
The DMD picked the wrong target customers and built the wrong product because corporate expectations left no other choice
The product could not storm any other emerging market in as short a period of time as was expected
Positioning on the market was done not based on realistic market opportunities but by the company's aggressive revenue expectations
Existing computing market trends were driven by capacity and cost per megabyte, not by size. Kittyhawk didn't offer any value for the established markets
Even having a substantial opportunity in emerging markets, DMD attempted to please customers in established markets, where performance expectations were high. It included features that made Kittyhawk too expensive to satisfy customers in emerging markets.
To avoid Kittyhawk failure HP needed to put into consideration that disruptive innovations often see failure before success. Flexibility is critical to survival. The company could be more flexible by initially focusing on a low-cost drive whose requirements would satisfy the lowest common denominator. This way, breakthroughs in manufacturing and design could still be leveraged in the event that the product architecture needed to be redesigned for higher-margin products.
What could HP have done differently to support the Kittyhawk development team, and implement the marketing strategy to introduce the Kittyhawk product?
Attract and retain resources experienced in developing new architectures or cultivating emerging markets
Take into consideration the history of HP's average cycle time for a new disk-drive development time of 18 months and align the project schedule accordingly
Don't make a statement that this product will be the company's future
Not try to analyze markets for this product. Markets did not exist yet
Use in-house manufacturing to provide flexibility while market demand is formed and until the right product is developed.
Having an effective governance in IT Governance and Project Management Office (PMO) helps an organization to get the right people to make decisions and improve performance. Both of them have a two-way nature of their functions: IT – Business and PMO – Business. Assessment of the competency, capability and maturity for both governances would demonstrate signs of inefficiency. Symptoms of ineffective governance are usually listed as follows, first, IT Governance, and then PMO, if there are similarities.
Senior management senses low value from IT investments.
In situations like this, there is confusion regarding how IT decisions will be made and who will make them, and there is an inability for executive management to access information on the performance of IT investments. Similar to that in PMO, the symptom would be a perception that PMO is costly and useless.
IT is often a barrier to implementing new strategies.
IT limits market opportunities for the business. IT becomes an order-taker and builds a separate application instead of being the platform for the company's strategic vision. Every application requires it's own infrastructure. Integration between different applications is missing. The implementation of new business initiatives is very slow and delayed in comparison with competitors due to the incapability of the infrastructure to provide the fast solution.
Mechanisms to make IT decisions are slow or contradictory.
Problems in the decision-making process are often evidenced by circumvention of established rules for IT. One common manifestation of this problem in big organizations is when operating departments set up their own IT functions because centralized IT is perceived as unresponsive and/or ineffective. Decentralization may be a viable alternative,but organizations often jump to this solution rather than fix some of the underlying problems inherent in the existing IT decision-making or implementation processes. For PMO, some of the technical or business units do not address all the needs associated with an effective project management and devise their own methodologies and approaches.
Senior management cannot explain IT governance.
Managerial incompetency in articulating and understanding IT Governance as a whole and as an enterprise architecture in particularly constrain business processes. Senior management is not supporting a standard project management methodology and PMO policy.
IT projects often run late and over budget.
Effective IT governance requires consistent project management, which is one of the main objectives of PMO. Ineffectiveness in IT projects that are shown either by running over budget or not on schedule, thereby raising issues in both PMO and IT Governance.
Senior management sees outsourcing as a quick fix to IT problems.
If outsourcing is a result of frustration with IT, this is a strong symptom of IT Governance inefficiency. Looking for a fast fixes in IT due to lack of value is not a good problem-solving method in IT.
Governance changes frequently.
If every change in business strategy or business processes causes a change in IT governance, this demonstrates that it is not effective. A significant organizational change will have impact on PMO, its structure and it's role within an organization. Likewise, successfully implementing or restructuring a PMO will inevitably have an impact on the organization. A co-evolutionary process is in play whereby PMO and the rest of the organization interact and evolve together. If this process is broken, it means PMO is low-performing.
Additionally, PMO weakness will be propagated by evidence of any of the following factors: cross-functional teams are not efficient and productive; stakeholders are not involved and are unaware of the expectations of the project; project management is not valued in the organization; there is lack of consensus regarding the value of the PMO to the organization; the organizational PMO maturity is not evolving. The competency of personnel is a key issue for PMO performance. The inability to attract and retain competent people is a strong symptom of PMO inefficiency.
Resources:
Peter Well and Jeanne W. Ross. (2004). IT Governance. How Top Performers Manage IT Decision Rights for Superior Results. Boston, MA: Harvard Business School Press
