A Risk Management Lesson from “Silicon Valley”

The video clip linked below is from HBO’s “Silicon Valley”. This television program follows a group of software engineers as they launch an innovative app and their associated start-up company (both named Pied Piper). This clip focuses on Pied Piper’s primary competition, a tech conglomerate named “Hooli”. The clip shows a speech by Hooli’s CEO, followed by several discussions between members of a project team.

HBO’s Silicon Valley on Risk Management

This scenario highlights several instances of risk management failure which are tragically relevant to the workplace. Some of the failures I observed are lack of communication within the project team, lack of escalation within the project team and larger organization, and absence of risk planning and mitigation planning early in the project. In today’s hyper-competitive, fast-paced marketplace proper risk management is critical to project success. Has anyone observed this type of situation at their workplace?

Recently I encountered a scenario where the customer made a significant design change late in the project. The product was nearly qualified, but was deemed unacceptable due to reliability and performance requirements. The team was faced with a tough decision: kill the project or redesign.

As the contract manufacturer in this arrangement, I raised concerns regarding the potential risks this design change could have on the project. Any delay or high defect rate would result in lost revenue and profit to my organization as well as the customer. I was reassured there would be no issues and no change to the product ramp/launch dates and product cost.

As we built increasing numbers of the product the failures began to pile up. Both customer and manufacturer turned to firefighting mode and additional resources were dedicated to expedite resolution. In my customer’s organization I could see finger-pointing among several teams as each department tried to cover themselves and avoid being the next bearer of bad news to upper management.

Eventually the product was fixed and had a successful (yet slightly delayed) launch after several weeks of many stressful meetings. Could this situation have been prevented? I believe so, but only if the correct tools, controls, and planning were put in place at the beginning of the project at both the customer and manufacturer. The following article details such risk management best-practices:

Risk management and project management go hand in hand

Some noteworthy items include ingraining a risk management culture/mindset in the project team, frequently analyzing the project status and forecasting new risks, developing and agreeing to risk response plans in advance, and assigning an owner to each risk who can drive corrective actions and track progress. Although you cannot predict every possible risk in a project, I’ve seen how important it is to conduct this planning at the beginning of the project to avoid firefighting late in the project.

Does your company have a formalized process for risk management? Are these successful, or would you suggest alternate approaches? Do you have any horror stories similar to mine? Please share your experiences!

 

4 thoughts on “A Risk Management Lesson from “Silicon Valley”

  1. I agree, a lack of risk planning will break a project. More importantly though, you mentioned the issue of a lack of communication WITHIN the project team. It is easy to become focused on the communication with the client, but if your team is not efficiently communicating in the first place, this can be a huge roadblock to success. Great advice from the article to assign each risk to a particular “owner.” This is an issue I have observed with larger project teams–when tasks are not assigned to anyone in particular it doesn’t get done, and when it goes wrong, then comes the finger pointing. This is pretty commonplace in my workplace on client account teams. When reports are filed late or the audit hits a bump, people look around for someone to blame for starting the domino effect causing their own task failures. Most of the time the issue is rooted in a lack of communication and follow-up between the team members throughout the whole process.

  2. What a great reference! First off, I am a fan of the show. Although they are ridiculous at times, some of the core struggles amongst both Pied Piper and Hulu and quite accurate. I like how you’ve analyzed Hulu and how their inherent flaw is their lack of risk mitigation. It is incredible how such large companies do not appropriately or adequately prepare for the worst-case scenario. One current example of this is the poor risk mitigation planning by VW. Aside from their lack of integrity, they did not adequately prepare for the fallout associated with their emissions scandal. Strictly from a financial perspective, they only set aside roughly 30% of the >$20B they are expected to shell out.

    As far as my company goes, I experience similar issues to those you’ve mentioned in your personal story. Most of our projects involve updating or improving the medical devices that we manufacture and sell. The major problem is that our headquarters in Copenhagen performs all of the R&D and they tend to think in terms of European healthcare guidelines. The US FDA is much more stringent of certain aspects of our devices. The result is a device that does not meet FDA regulation because Copenhagen forgot to consider what the US requires. When this happens, sales in the US come to a halt until Copenhagen creates a “fix” for what they should have done in the first place. It is a bunch of wasted time and money, and it could have been avoided had the R&D team considered regulations globablly.

  3. Daniel – great post, and love the reference to Silicon Valley. The launch of their streaming video product ultimately failed, and I anticipated your story going in the same direction. However, it doesn’t surprise me that your team pulled through, and a big part of it is the human capital in place to handle these project issues. Your article addresses risk management, and tailoring resources around potential risks. This is important to safeguard your project, and have a plan in place when an unforeseen event arises. To answer your questions, I do not know if our project managers have a formal process of risk management, but can assume they plan for unplanned events. And sorry, no horror stories of specific projects, just mild stories of acquiring other companies and delays of integrating their platform to Expedia’s site.

  4. Great post Dan! Epic fail from the launch of streaming video products, assessment of improvement will come in the future sooner than we all think. Your team is intelligent and are able to handle these various issues. I believe you have to create a plan and put it in place when project issues arise. I don’t have many issues of dramatic projects gone bad since I’m still new to project management.

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