Unlikely tension—Ignition springs, information and KM

Organizations whatever their ilk face mounting costs for information access. The indirect costs—that is, the money spent that is part of business—may be even higher. Coping with technology’s challenges raises the bar for managers. When leadership lacks management skills and technical insight, disasters become more likely. Post mortems identify the principal cause of a fatal collapse. Evidence-based management, however, continues to foster some failures that are difficult to understand.

An unlikely tension seems to exist between fungible products like tiny springs manufactured by the thousands, cost control and digital information. Knowledge management may be less about finding information and more about deciding what to do with a particular fact.

I thought about this as I learned about General Motors’ (GM) ignition spring problem. The company experienced a knowledge management implosion in my opinion. As I understand the situation, GM installed defective ignition switches in some automobiles. Allegations suggest that as many as 13 deaths can be attributed to the devices.

Information and its management play a central role in this unfortunate corporate drama. The knowledge, after decades of management, was findable. Those with access to the knowledge elected to interpret it in a way that appears to have some consequences. The costs associated with information rarely include consequential or incidental damages. In fact, there is more talk about costs and their control than meaningful actions based on actionable intelligence.

Managing and mismanaging information

In the wake of the allegations, General Motors’ executives have been in the spotlight. GM reassigned the executive who “dealt with U.S. safety regulators probing defective ignition switches.” (See reuters.com/article/2014/05/12/us-gm-recall-exec-idUSBREA4B0EW20140512.)

As the legal proceedings and investigations evolve, more information will become available about who knew what, what management decisions contributed to the situation, and the cost of managing or mismanaging knowledge at a major company.

In an article on NBC News (“Did GM Reject Safer Ignition Switch Design in 2001 Because of Cost?”), Rich Gardella and Talesha Reynolds wrote: “In an interview, Ditlow [executive director of the Center for Auto Safety] told NBC News that, based on his 40 years experience in the auto industry reading engineering and cost documents, he can reach no other conclusion other than that GM opted for the shorter part because of the price.” (See nbcnews.com/storyline/gm-recall/did-gm-reject-safer-ignition-switch-design-2001-because-cost-n81526.)

The knowledge management facets of the ignition switch matter moves information to center stage. For more than 20 years, GM has deployed and refined its knowledge management system.

In 2007, Jerry Ash wrote, “Everything GM did from the early 1980s to the end of the century set the stage for the consolidation of companywide engineering knowledge (although it was not the purpose at the time). For example, GM recognized that its autonomous structure of product engineering organizations across the globe had created a culture of knowledge hoarding, not sharing.” (See http://www.ikmagazine.com/xq/asp/sid.0/articleid.628AE717-8E87-?4379-849C-DBB6CBC38293/eTitle.Case_report_General_Motors/qx/display.htm.)

Cost overruns

As the volume of information grows, organizations are faced with daunting digital challenges. Senior managers in most enterprises have limited options for containing the financial demands associated with creating, perusing, storing, finding and making effective use of digital information.

The ignition spring matter is not an isolated instance of management and technology blending to create serious, large-scale, expensive and seemingly irresolvable problems.

Since the onset of the economic downturn, controlling costs has been a persistent challenge. In 2008, ZDNet published information about a study from the European Services Strategy Unit (european-services-strategy.org.uk). (See zdnet.com/blog/projectfailures/new-research-it-cost-overruns-delays-and-contract-terminations/565.) Among the findings were:

• On £30 billion of projects in the sample, the amount of overrun was £9 billion (or about $15 billion). That works out to about one-third more than the procurement process estimated.
• Almost 60 percent of projects in the sample experienced overruns.
• About one-third of the projects were killed. Any money paid for information technology did not return a benefit to the funding entities.

The bright spot in the study was that when strategic partnerships were used for projects, only one in 10 projects failed completely.

In 2010, the United Kingdom’s Ministry of Defence (gov.uk/government/organisations/ministry-of-defence) found itself in the spotlight for cost overruns. In 2009, the National Audit Office revealed that MoD generated more than $6 billion in cost overruns for project management. (See computerworlduk.com/news/public-sector/3244388/mod-fighting-33bn-cost-overruns-with-in-house-project-management-system.)

More recently, the HealthCare.gov misstep cost “only” a fraction of the mind-boggling MoD figure. The number ranges from $350 million (mediamatters.org/blog/2013/10/24/the-myth-of-the-634-million-obamacare-website/196585) to $700 million (thehill.com/policy/healthcare/192761-healthcaregov-costs-at-677m-through-october) by the end of 2013.