Reason #1: One Big Swing

The Denver Airport Baggage System is a classic project management failure due to “one big swing”. The scheme was intended to automate baggage handling throughout the airport, but proved to be much more complex than planners assumed.

The project went hundreds of millions of dollars over budget and caused the new airport to sit idle for sixteen months after original construction. It was so bad that every airline but United refused to use it.

After four project reboots, a decade and an investment of $600 million, the Denver airport gave up and returned to standard manual processes. Until then, passengers’ luggage was lost and mangled, flights were delayed and the airlines’ reputations were tarnished.

This miserable result all began with the original decision to equip a new airport and its newly assembled staff with a bespoke, untested baggage system. It overloaded an already ambitious project with an enormous burden of unknown unknowns. The construction of the airport buildings began before the new baggage handling system was fully developed.

The motivation for the rush is obvious – and hard to resist. There are calls to “do this right the first time” and “we’re only going to this once” which sound reasonable. Overly ambitious projects begin with rosy, compelling estimates of return on investment, but create the conditions for failure.

Reason #2: Not enough user feedback

Coke had a good reason to worry about their mainstay product, Coca-Cola, which in the 80s was being targeted by Pepsi in their Pepsi Challenge ads, which purported to show the majority of “blind taste testers” preferred Pepsi over Coke.

Coke developed a new formula and replaced all its previous product with New Coke. The sales results were terrible – to the point that Coke capitulated and returned to their old formula under the Coke Classic moniker.

This was a failure to be sure the new product was desirable. Feasibility and viability were all but assured – the product cost about the same, sold through the same channels and was made in the same manner. All that was different was how customers responded. Not only did they not like the taste, they rejected the idea that their favourite beverage had somehow been lacking in the first place.

Yes, Coke did testing on focus groups before choosing their new formula, but this obviously missed the mark. Some have suggested that the Pepsi Challenge itself was misleading since – in the small quantities participants were asked to try – a sweeter beverage was preferred, even though a whole can of the more sugary drink might be cloying. I suspect this same problem applied to the focus groups who assured Coke they had a winner with the new formula.

There’s no need for speculation however, either now, nor back before New Coke was released. Coke could have sold New Coke alongside its old formula. They could have sold New Coke in a specific market, instead of across North America all at once. They could have made an “exclusive” arrangement with a retail outlet. There were so many ways they could have assessed true customer reactions to their product without waiting for a customer revolt.

Design thinking calls for progressive elaboration of a product or service – tweaking, prototyping, getting feedback from the user and repeating. With each iteration the bets the company can make get bigger.

Coke went from “people like it in the lab” to “people will love it nationwide” too quickly.