The Architect’s Dream, Thomas Cole, 1840 (Courtesy: Toledo Museum of Art, Toledo, Ohio, USA)
Ideas for Leaders #587

How Successful Megaprojects Are Games of Innovation

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Key Concept

Megaprojects are not so much linear constructions of grand designs, but more a ‘game’ of innovation between players slowly ‘shaping,’ through a series of episodes, the project over time.

Idea Summary

Megaprojects are large, technically complex, multi-year, billion-dollar (or more) engineering and financial ventures that somehow overcome challenges, turbulence, risk and resistance to eventually meet the needs for which they are built.

To better understand the success factors of megaprojects, it is more useful to think of them as games of innovation, rather than the linear, step-by-step engineering process perspective with which they are usually viewed. This is the argument advanced in a recent MIT Sloan white paper and upcoming book chapter by the research team of Roger Miller from France’s École EMD, Donald Lessard from MIT, and Vivek Sakhrani, also from MIT.

A ‘game’ involves a group of actors who interact among themselves as they pursue a goal. Through their interactions, the group moves inexorably towards closure. This ‘game’ process more accurately reflects the ongoing, multi-actor, multi-responsibility process of megaprojects.

According to the researchers, megaprojects are shaped over time through the ongoing interactions between two types of actors. The first is the sponsor, who has a problem to resolve and is the driver behind the project. The second type of actor is the large group of expert firms who form a coalition that works to design and build the project. This ‘duo’ of actors, to use the researchers’ term, often becomes a trio when stakeholders resisting the project join the process.

The shaping process occurs as the duos face and deal with a continuous series of issues and challenges. According to the researchers, the ongoing shaping of the project takes place through a series of ‘episodes,’ each episode dealing with an issue or a bundle of issues that need to be resolved to keep the project moving forward. Within each episode, solutions to the issue(s) are developed, investments are made to gain momentum, resistance is met and overcome through rational arguments and diplomacy, and eventually some closure is achieved on the issue or issues. (Note that issues may resurface, but for now, the project moves forward).

The researchers describe a series of six general episodes or sets of episodes that move the megaproject from concept to completion:

  1. Shaping the opportunity. The concept is defined by the sponsor in response to a need. Feasibility studies and other steps are taken to determine the feasibility of the concept.
  2. Shaping the project. Some questions addressed at this stage include: How much will the project cost? Will the value of the project be worth the cost? Where will the money come from? Experts begin to get involved.
  3. Reshaping the project. As the concept starts to become a potential reality, fears and resistance will arise (or resurface), and other barriers, such as regulatory issues, must be overcome.
  4. Engineering the project. Detailed engineering leads to a final project packet, with loose ends tied.
  5. Sprinting to build the project. With major issues resolved, the project moves into the construction phase.
  6. Ramping and operating the project. The project is real, and now sponsors and experts will learn if expectations are met concerning market response, technical functionality and social acceptance.

If the megaproject is a game, the prize of the game is value. Throughout the episodes described above, both sponsors and experts are pursuing their definitions of value (e.g. service levels and service quality for sponsors, reputation and learning for experts) and value capture (e.g. rights and privileges for the sponsor, profits for the experts). Trade-offs in value and value capture emerge throughout the process (for example, sponsors may incur greater costs to fulfill environmental requirements.)

Business Application

Megaprojects are complex. Successfully completing a megaproject — in other terms, defining and capturing the ultimately desired value from the project — requires mastering this complexity. The iterative, give-and-take shaping process offers a path to mastering this complexity. It won’t be easy.

To succeed, sponsors and experts must embrace complexity. Be proactive and make conscious choices on how to address the inevitable complexity. For example, recognizing the potential for resistance, engage stakeholders early in the process — not after major investments have been made.

Identify the mechanisms required to instill governance in the megaproject. In the example above, how do you engage stakeholders early in the process? The Orlyval project in Paris did not have such mechanisms, and the project advanced without stakeholder involvement. The result: a project that was less complex to build (no need to pay attention to resistors) but turned out to be a white elephant.

Keep value trade-offs alive. The best-laid plans, to paraphrase the old saying, never quite materialize as expected. As the project evolves through the episodes, sponsors and experts must continue to balance trade-offs among costs, profit, safety, environmental impact and other elements of the ultimate value of the project.

Grand designs are the stuff of artists’ renderings. Sponsors, experts and stakeholders must recognize that any megaproject will be shaped in a multitude of unforeseen ways before those renderings become reality.

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Authors

Institutions

Source

Idea conceived

  • January 2016

Idea posted

  • March 2016

DOI number

10.13007/587

Subject

Real Time Analytics