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1. Post a link to the fail

2. Write bullet points about why the project failed.

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links: https://www.coca-colacompany.com/about-us/history/new-coke-the-most-memorable-marketing-blunder-ever

Reasons for failure:

Lack of Market research done in the planning stage

The general perception that the whole project was unnecessary and fueled by "corporate greed"

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New Coke was the unofficial name of a reformulation of the soft drink Coca-Cola, introduced by The Coca-Cola Company in April 1985. It was renamed Coke II in 1990, and discontinued in July 2002.

By 1985, Coca-Cola had been losing market share to diet soft drinks and non-cola beverages for several years. Blind taste tests suggested that consumers preferred the sweeter taste of the competing product Pepsi-Cola, and so the Coca-Cola recipe was reformulated. The American public reacted negatively, and New Coke was considered a major failure.

The company reintroduced the original formula within three months, rebranded "Coca-Cola Classic", resulting in a significant sales boost. This led to speculation that the New Coke formula had been a ploy to stimulate sales of the original Coca-Cola, which the company has vehemently denied. The story of New Coke remains influential as a cautionary tale against tampering with an established successful brand.

After World War II, Coca-Cola held 60 percent of the market share for cola. By 1983, it had declined to under 24 percent, largely because of competition from Pepsi. Pepsi had begun to outsell Coke in supermarkets; Coke maintained its lead only through venues such as soda vending machines and fast food restaurants, especially McDonald's.

Market analysts believed baby boomers were more likely to purchase diet drinks as they aged and remained health- and weight-conscious. Growth in the full-calorie segment would come from younger drinkers, who at that time favored Pepsi by increasing margins. Meanwhile, the overall market for colas steadily declined in the early 1980s, as consumers increasingly purchased diet and non-cola soft drinks, many of which were sold by Coca-Cola. This further eroded Coca-Cola's market share. When Roberto Goizueta became Coca-Cola CEO in 1980, he told employees there would be no "sacred cows" in how the company did business, including how it formulated its drinks.

Coca-Cola's senior executives commissioned a secret project headed by marketing vice president Sergio Zyman and Coca-Cola USA president Brian Dyson to create a new flavor for Coke. This project was named "Project Kansas", from a photo of Kansas journalist William Allen White drinking a Coke; the image had been used extensively in Coca-Cola advertising and hung on several executives' walls.

The sweeter cola overwhelmingly beat both regular Coke and Pepsi in taste tests, surveys, and focus groups. The southeastern United States, one of Coca-Cola's strongest and most reliable markets, narrowly preferred the new flavor; this preference widened once the testers revealed the new taste was also a Coca-Cola product. One bottling company threatened to sue the company if it did not put the drink on the market.

Asked if they would buy and drink the product if it were Coca-Cola, most testers said they would, although said it would take some getting used to. About 10-12 percent of testers felt angry and alienated at the thought, and said they might stop drinking Coke. Their presence in focus groups tended to negatively skew results as they exerted indirect peer pressure on other participants.

The surveys, which were given more significance by standard marketing procedures of the era, were less negative than the taste tests and were key in convincing management to change the formula in 1985, to coincide with the drink's centenary. However, the groups had provided a clue as to how the change would play out in the public, a finding the company downplayed.

Management rejected an idea to make and sell the new flavor as a separate variety of Coca-Cola. The company's bottlers were already complaining about absorbing other recent additions into the product line since 1982, after the introduction of Diet Coke; Cherry Coke was launched nationally nearly concurrently with New Coke during 1985. Many bottling companies had sued over the company's syrup pricing policies. A new variety of Coke in competition with the main variety could also have cannibalized Coke's sales and increased the proportion of Pepsi drinkers relative to Coke drinkers.

Early in his career with Coca-Cola, Goizueta had been in charge of the Bahamas subsidiary. He had improved sales by tweaking the drink's flavor slightly, and so was receptive to the idea that changing the flavor of Coke could boost profits. He believed it would be "New Coke or no Coke", and that the change must take place openly. He insisted that the containers carry the "New!" label, which gave the drink its popular name.

Goizueta also made a visit to his mentor and predecessor as the company's chief executive, the ailing Robert W. Woodruff, who had built Coca-Cola into an international brand following World War II. Goizueta claimed he had secured Woodruff's blessing for the reformulation, but many of Goizueta's closest friends within the company doubted that Woodruff understood Goizueta's intentions. Woodruff died in March 1985, a month before New Coke was launched.

New Coke was introduced on April 23, 1985. Production of the original formulation ended later that week. In many areas, New Coke was initially introduced in "old" Coke packaging; bottlers used up remaining cans, cartons and labels before new packaging was widely available. Old cans containing New Coke were identified by their gold colored tops, while glass and plastic bottles had red caps instead of silver and white, respectively. Bright yellow stickers indicating the change were placed on the cartons of multi-packs.

The press conference at New York City's Lincoln Center to introduce the new formula did not go well. Reporters had already been fed questions by Pepsi, which was worried that New Coke would erase its gains. Goizueta, Coca-Cola's CEO, described the new flavor as "bolder", "rounder", and "more harmonious", and defended the change by saying that the drink's secret formula was not sacrosanct and inviolable. As far back as 1935, Coca-Cola sought kosher certification from Atlanta rabbi Tobias Geffen, and made two changes to the formula so the drink could be considered kosher (as well as halal and vegetarian). Goizueta also refused to admit that taste tests had led the change, calling it "one of the easiest decisions we've ever made". A reporter asked whether Diet Coke would also be reformulated "assuming [New Coke] is a success," to which Goizueta curtly replied, "No. And I didn't assume that this is a success. This is a success."

The emphasis on the new formula's sweeter taste also ran contrary to previous Coke advertising, in which spokesman Bill Cosby had touted the original Coke's less-sweet taste as a reason to prefer it over the sweeter taste of Pepsi. The company's stock went up after the announcement, and market research showed 80 percent of the American public was aware of the change within days.

Coca-Cola introduced the new formula with marketing pushes in New York, where workers renovating the Statue of Liberty for its 1986 centenary were given cans, and Washington, D.C., where thousands of cans were given away in Lafayette Park. As soon as New Coke was introduced, the new formula was available at McDonald's and other drink fountains in the United States. Sales figures from those cities, and other areas where it had been introduced such as Miami and Detroit, showed a reaction that went as the market research had predicted. In fact, Coke's sales were up 8 percent over the same period as the year before.

Most Coke drinkers resumed buying the new Coke at much the same level as they had the old one. Surveys indicated that the majority of regular Coke drinkers liked the new flavoring. Three quarters of the respondents said they would buy New Coke again. The big test, however, remained in the South, where Coke had first been tasted and bottled.

To hear some tell it, April 23, 1985, was a day that will live in marketing infamy ... spawning consumer angst the likes of which no business has ever seen.

- The Coca-Cola Company, on the New Coke announcement

Though New Coke was accepted by many Coca-Cola drinkers, many more resented the change, as had happened in the focus groups. Many critics were from the southern US states, some of whom considered Coca-Cola part of their regional identity. Some viewed the change through the prism of the Civil War as a surrender to the " Yankees" as PepsiCo, the manufacturer of Pepsi, is based in Purchase, New York.

In a Chicago Tribune story about reaction in the South, a professor at the University of Mississippi observed that "changing Coca-Cola is an intrusion on tradition" and thus would not be well received in that region. An Alabama resident wondered why the company had introduced the new flavor in New York; elsewhere in the state an Anniston Star columnist, noting Goizueta's Cuban origins, insinuated that the flavor change was a Communist plot. The Atlanta Journal-Constitution found a majority of patrons at The Varsity, a popular local restaurant in that city, favored the old formula. "Why didn't they test anybody here?" the co-owner asked.

The company received over 40,000 calls and letters expressing anger or disappointment, including one letter, delivered to Goizueta, addressed to "Chief Dodo, the Coca-Cola Company". Another letter asked for his autograph, as the signature of "one of the dumbest executives in American business history" would likely become valuable in the future. The company hotline, 1-800-GET-COKE, received over 1,500 calls a day compared to around 400 before the change. A psychiatrist whom Coke had hired to listen in on calls told executives that some people sounded as if they were discussing the death of a family member.

There were critics from outside the region. Chicago Tribune columnist Bob Greene wrote some widely reprinted pieces ridiculing the new flavor and expressing anger at Coke's executives for having changed it. Comedians and talk show hosts, including Johnny Carson and David Letterman, made regular jokes mocking the switch. Ads for New Coke were booed heavily when they appeared on the scoreboard at the Houston Astrodome. Even Fidel Castro, a longtime Coca-Cola drinker, contributed to the backlash, calling New Coke a sign of American capitalist decadence. Goizueta's father expressed similar misgivings to his son, who later recalled that it was the only time his father had agreed with Castro, whose rule he had fled Cuba to avoid.

Gay Mullins, a Seattle retiree looking to start a public relations firm with $120,000 of borrowed money, formed the Old Cola Drinkers of America on May 28 to lobby Coca-Cola to either reintroduce the old formula or sell it to someone else. His organization eventually received over 60,000 phone calls. He also filed a class action lawsuit against the company (which was quickly dismissed by a judge who said he preferred the taste of Pepsi), while nevertheless expressing interest in securing the Coca-Cola Company as a client of his new firm should it reintroduce the old formula. In two informal blind taste tests, Mullins either failed to distinguish New Coke from old or expressed a preference for New Coke.

Despite ongoing resistance in the South, New Coke continued to do well in the rest of the country. However, the executives were uncertain of how international markets would react. They met with international Coke bottlers in Monaco; to their surprise, the bottlers were not interested in selling New Coke. Zyman also heard doubts and skepticism from his relatives in Mexico, where New Coke was scheduled to be introduced later that summer, when he went there on vacation.

Goizueta stated that Coca-Cola employees who liked New Coke felt unable to speak up due to peer pressure, as had happened in the focus groups. Donald Keough, the Coca-Cola president and chief operating officer at the time, reported overhearing someone say at his country club that they liked New Coke, but they would be "damned if I'll let Coca-Cola know that".

PepsiCo took advantage of the situation, running ads in which a first-time Pepsi drinker exclaimed, "Now I know why Coke did it!" Even amidst consumer anger and several Pepsi ads mocking Coca-Cola's debacle, Pepsi actually gained very few long-term converts over Coke's switch, despite a 14 percent sales increase over the same month the previous year, the largest sales growth in the company's history. Coca-Cola's director of corporate communications, Carlton Curtis, realized over time that consumers were more upset about the withdrawal of the old formula than the taste of the new one.

Roger Enrico, then director of PepsiCo's North American operations, declared a company-wide holiday and took out a full-page ad in The New York Times proclaiming that PepsiCo had won the long-running " Cola Wars". Since Coke officials were preoccupied over the weekend with preparations for the announcement, their PepsiCo counterparts had time to cultivate skepticism among reporters, sounding themes that would later come into play in the public discourse over the changed drink. After the announcement on April 23, PepsiCo gave its employees the day off saying, "By today's action, Coke has admitted that it's not the real thing."

Behind the scenes, some Coca-Cola executives had quietly been arguing for a reintroduction of the old formula as early as May. By mid-June, when soft drink sales usually start to rise, the numbers showed that new Coke was leveling among consumers. Executives feared social peer pressure was now affecting their bottom line. Several consumers even began trying to obtain "old" Coke from overseas, where the new formula had not yet been introduced, as domestic stocks of the old drink were exhausted. Over the course of the month, Coca-Cola's chemists also quietly reduced the acidity level of the new formula, hoping to assuage complaints about the flavor and allow its sweetness to be better perceived (advertisements pointing to this change were prepared, but never used).

In addition to the noisier public protests, boycotts, and bottles being emptied into the streets of several cities, the company had more serious reasons to be concerned. Coca-Cola bottlers, and not just the ones still suing the company over syrup pricing policies, were expressing concern. While they had given Goizueta a standing ovation when he announced the change at an April 22 bottlers' meeting at Atlanta's Woodruff Arts Center, glad the company had finally taken some initiative in the face of PepsiCo's advances, they were less enthusiastic about the taste of new Coke. Most of them saw great difficulty having to promote and sell a drink that had long been marketed as "The Real Thing", constant and unchanging, now that it had been changed.

The 20 bottlers still suing Coca-Cola made much of the formula change in their legal arguments. Coca-Cola had argued in its defense when the suit was originally filed that the formula's uniqueness and difference from Diet Coke justified different pricing policies from the latter - but if the new formula was merely a high-fructose corn syrup-sweetened version of Diet Coke, Coca-Cola could not argue the formula was unique. Bottlers, particularly in the South, were also tired of facing personal attacks over the change; many reported that some acquaintances and even friends and relatives had ostracized them, or had expressed their displeasure in other emotionally hurtful ways. On June 23, several of the bottlers took these complaints to Coca-Cola executives in a private meeting. With the company now fearing boycotts not only from its consumers but its bottlers, talks about reintroducing the old formula moved from "if" to "when".

Finally, the Coca-Cola board decided that enough was enough, and plans were set in motion to bring back the old Coke. Company president Donald Keough revealed years later, in the documentary The People vs. Coke (2002), that they realized this was the only right thing to do when they visited a small restaurant in Monaco and the owner proudly said they served "the real thing, it's a real Coke", offering them a chilled oz. glass bottle of original Coca-Cola.

On the afternoon of July 11, 1985, Coca-Cola executives held a press conference and announced the return of the original Coca-Cola formula, 79 days after New Coke's introduction. Peter Jennings of ABC News interrupted General Hospital with a special bulletin to share the news with viewers. On the floor of the U.S. Senate, David Pryor called the reintroduction "a meaningful moment in U.S. history". The company hotline received 31,600 calls in the two days after the announcement.

The new product continued to be marketed and sold as Coke (until 1990, when it was renamed Coke II) while the original formula was named Coca-Cola Classic, and for a short time it was referred to by the public as Old Coke. Some who tasted the reintroduced formula were not convinced that the first batches really were the same formula that had supposedly been retired that spring. This was true for a few regions, because Coca-Cola Classic differed from the original formula in that all bottlers who had not already done so were using high fructose corn syrup (HFCS) instead of cane sugar to sweeten the drink, though most had by this time.

"There is a twist to this story which will please every humanist and will probably keep Harvard professors puzzled for years," said Keough at a press conference. "The simple fact is that all the time and money and skill poured into consumer research on the new Coca-Cola could not measure or reveal the deep and abiding emotional attachment to original Coca-Cola felt by so many people."

Gay Mullins, founder of the organization Old Cola Drinkers of America (which had lobbied Coca-Cola to either reintroduce the old formula or sell it to someone else), was given the first case of Coca-Cola Classic. Later he complained that the drink now made him sick, which he blamed on the drink's use of HFCS; he also claimed that HFCS had dulled his taste buds, accounting for his preference for New Coke in taste tests.

By the end of 1985, Coca-Cola Classic was substantially outselling both New Coke and Pepsi. Six months after the rollout, Coke's sales had increased at more than twice the rate of Pepsi's.

New Coke's sales dwindled to a three percent share of the market, although it was selling quite well in Los Angeles and some other key markets. Later research, however, suggested that it was not the return of Coca-Cola Classic, but instead the nearly unnoticed introduction of Cherry Coke, which appeared almost simultaneously with New Coke, that can be credited with the company's success in 1985.

The Coca-Cola Company spent a considerable amount of time trying to figure out where it had made a mistake, ultimately concluding that it had underestimated the public reaction of the portion of the customer base that would be alienated by the switch. This would not emerge for several years afterward, however, and in the meantime the public simply concluded that the company had, as Keough suggested, failed to consider the public's attachment to the idea of what Coke's old formula represented. While that has become conventional wisdom in the ensuing years, some analyses have suggested otherwise.

This populist version of the story served Coke's interests, however, as the episode did more to position and define Coca-Cola as a brand embodying values distinct from Pepsi. Allowing itself to be portrayed as a somewhat clueless large corporation forced to withdraw from a big change by overwhelming public pressure flattered customers, as Keough put it, "We love any retreat which has us rushing toward our best customers with the product they love the most." Bottles and cans continued to bear the "Coca-Cola Classic" title until January 2009, when the company announced it would stop printing the word "Classic" on the labels of 16-US-fluid-ounce (470 ml) bottles sold in parts of the southeastern United States. The change was part of a larger strategy to rejuvenate the product's image.

Bill Cosby ended his long-time advertising for Coca-Cola, claiming that his commercials praising the superiority of the new formula had hurt his credibility. No one at Coca-Cola was fired for the change. When Goizueta died in 1997, the company's share price was well above what it was when he had taken over 16 years earlier and its position as market leader even more firmly established. At the time, Roger Enrico, then head of PepsiCo's American operations, likened New Coke to the Edsel. Later, when he became PepsiCo's CEO, he modified his assessment of the situation, saying that had people been fired or demoted over New Coke, it would have sent a message that risk-taking was strongly discouraged at the company.

In the late 1990s, Zyman summed up the New Coke experience thus:

Yes, it infuriated the public, cost us a ton of money and lasted for only 77 days before we reintroduced Coca-Cola Classic. Still, New Coke was a success because it revitalized the brand and reattached the public to Coke.

New Coke continued to do what it had originally been designed to do: win taste tests. In 1987, The Wall Street Journal surveyed 100 randomly selected cola drinkers, the majority of whom indicated a preference for Pepsi, with Classic Coke accounting for the remainder save two New Coke loyalists. When this group was given a chance to try all three in a blind test, New Coke slightly edged out Pepsi, but many drinkers reacted angrily to finding they had chosen a brand other than their favorite.

Goizueta claimed that he never once regretted the decision to change Coca-Cola. He even threw a tenth anniversary party for New Coke in 1995 and continued to drink it until his death in 1997.

In the short run, the reintroduction of original Coca-Cola saved Coke's sales figures and brought it back in the good graces of many customers and bottlers. Phone calls and letters to the company were as joyful and thankful as they had been angry and depressed. "You would have thought we'd cured cancer," said one executive.

But confusion reigned at the company's marketing department, which had to design a plan to market two Coca-Colas where such plans were inconceivable just a few months before. Coca-Cola Classic did not need much help, with a "Red, White and You" campaign showcasing the American virtues many of those who had clamored for its reintroduction had pointedly reminded the company that it embodied. But the company was at a loss to sell what was now just "Coke". Obviously, "The Best Just Got Better" could no longer be used. Marketers fumbled for a strategy for the rest of the year. Matters were not helped when McDonald's announced shortly after the reintroduction of Coca-Cola Classic, that it was immediately switching from New Coke back to original Coca-Cola at all of its restaurants.

Max Headroom print ad from the "Catch the wave" campaign

At the beginning of 1986, however, Coke's marketing team found a strategy by returning to one of their original motives for changing the formula: the youth market that preferred Pepsi. Max Headroom, the purportedly computer-generated media personality played by Matt Frewer, was chosen to replace Cosby as the spokesman for Coke's new "Catch the wave" campaign. With his slicked-back hair and sunglasses, he was already known to much of the U.S. youth audience through appearances on MTV and Cinemax. The campaign was launched with a television commercial produced by McCann Erickson New York, with Max saying in his trademark stutter, "C-c-c-catch the wave!" and referring to his fellow "Cokeologists". In a riposte to Pepsi's televisual teasings, one showed Headroom asking a Pepsi can he was "interviewing" how it felt about more drinkers preferring Coke to it and then cut to the condensation forming on, and running down, the can. "S-s-s-s-sweating?" he asked.

The campaign was a huge success. "Max's 'C-C-Catch the wave' spots for Coke," a Newsweek article said, "two of which were directed by Ridley Scott, may be the most cleverly structured pitches ever aimed at the under-30 viewer." John Reid, Coke's SVP of marketing, claimed that "76 percent of teenagers had heard of Max after our first flight of ads." Surveys likewise showed that more than three-quarters of the target market were aware of the ads within two days. Coke's consumer hotline received more calls about Max than any previous spokesperson, some even asking if he had a girlfriend. The ads and campaign continued through 1987, and were chosen as best of 1986 by Video Storyboard of New York.

By 1990 The Coca-Cola Company was ready to introduce a radically different marketing campaign for New Coke under the name Coke II, but in only one market - Spokane, Washington, a Pepsi stronghold. The company and bottler put significant resources into the launch of Coke II, including offering 16 oz. cans with 4 oz. free, new "We've Got Your Number" radio and TV ads, and on-air giveaways on KZZU. The new ads tried to explain the taste of Coke II as having "real cola taste plus the sweetness of Pepsi, two things that add up to smooth, refreshing Coke II." Pepsi struck back with legal challenges to the taste claim, lowered its in-store prices, and ramped up its own advertising. Coke II market share rose to 4% early in the test, but then fell back to 2.3%. The test was not extended past Spokane.

In a market already offering several choices of drinks calling themselves "Coke" in some fashion or another, the public saw little reason to embrace a product they had firmly rejected seven years earlier. By 1998, it could only be found in a few scattered markets in the Northwest, Midwest and some overseas territories. In July 2002, Coca-Cola announced that Coke II would be discontinued entirely.

On August 16, 2002, the Coca-Cola Company announced a change of the label of Coke Classic in which the word "Classic" was no longer so prominent, leading to speculation that it would eventually be removed and the last traces of New Coke eliminated. In 2009, Coca-Cola permanently removed "Classic" from its North American packaging.

"For a product so widely despised," noted blogger Tim Nudd in 2006, "New Coke (a.k.a. Coke II) still gets an admirable amount of ink." He noted Blink: The Power of Thinking Without Thinking (2005) by Malcolm Gladwell, and Why Most Things Fail: Evolution, Extinction and Economics (2005) by Paul Ormerod, that dealt with it at some length, as well as two recent mentions in and Sports Illustrated.

Within Coca-Cola, the role the company's bottlers had played in forcing its hand led executives to create a new subsidiary, Coca-Cola Enterprises, which bought out several of the larger bottlers and placed distribution and marketing efforts more tightly under Coca-Cola's control.

The Coca-Cola Company's apparently sudden reversal on New Coke led to conspiracy theories, including:

The company intentionally changed the formula, hoping consumers would be upset with the company, and demand the original formula to return, which in turn would cause sales to spike. Keough, the company president, answered this speculation by saying "We're not that dumb, and we're not that smart."

The putative switch was planned all along to cover the change from sugar-sweetened Coke to much less expensive high fructose corn syrup (HFCS), a theory that was supposedly given credence by the apparently different taste of Coke Classic when it first hit the market (the U.S. sugar trade association took out a full-page ad lambasting Coke for using HFCS in all bottling of the old formula when it was reintroduced). In fact, Coca-Cola began allowing bottlers to remove up to half of the product's cane sugar as early as 1980, five years before the introduction of New Coke. By the time the new formula was introduced, most bottlers had already sweetened Coca-Cola entirely with HFCS.

It provided cover for the final removal of all coca derivatives from the product to placate the Drug Enforcement Administration, which was trying to eradicate the plant worldwide to combat an increase in cocaine trafficking and consumption. While Coke's executives were indeed relieved the new formula contained no coca and concerned about the long-term future of the Peruvian government-owned coca fields that supplied it in the face of increasing DEA pressure to end cultivation of the crop, according to author Mark Pendergrast there was no direct pressure from the DEA on Coca-Cola to do so. This theory was endorsed in a Time article, as well as by historian Bartow Elmore, author of Citizen Coke: The Making of Coca-Cola Capitalism, who claims the reformulation was made in response to the escalating War on Drugs by the Reagan Administration.

In his book Blink: The Power of Thinking Without Thinking (2005), Malcolm Gladwell relates his conversations with market researchers in the food industry who put most of the blame for the failure of New Coke on the flawed nature of taste tests. They claim most are subject to systematic biases. Tests such as the Pepsi Challenge were "sip tests", meaning that drinkers were given small samples (less than a can or bottle's worth) to try. Gladwell contends that what people say they like in these tests may not reflect what they actually buy to drink at home over several days. Carol Dollard, who once worked in product development for PepsiCo, told Gladwell: "I've seen many times where the sip test will give you one result and the home-use test will give you the exact opposite." For example, although many consumers react positively to the sweeter taste of Pepsi in small volumes, it may become unattractively sweet when drunk in quantity. A more comprehensive testing regimen could possibly have revealed this, Gladwell's sources believe.

Gladwell reports that other market researchers have criticized Coke for not realizing that much of its success as a brand came from what they call sensation transference, a phenomenon first described by marketer Louis Cheskin in the late 1940s: tasters unconsciously add their reactions to the drink's packaging into their assessment of the taste. For example, one of the researchers told Gladwell that his firm's research found 7-Up drinkers believed a sample from a bottle with a more yellow label was more "lemony", although the flavor was identical. In Coke's case, it is alleged that buyers, subject to sensation transference, were also "tasting" the red color of the container and distinctive Coca-Cola script. It was therefore, in their opinion, a mistake to focus solely on the product and its taste. "The mistake Coke made was in attributing their loss in share entirely to the product." said Darrel Rhea, an executive with the firm Cheskin founded. He points to PepsiCo's work in establishing a youth-oriented brand identity from the 1960s as having more bearing on its success.

Coke considered but rejected gradually changing the drink's flavor incrementally, without announcing they were doing so. Executives feared the public would notice and exaggerate slight differences in taste. In 1998, Joel Dubow, a professor of food marketing at St. Joseph's University, tested this "flavor balance hypothesis" and argued that it was not true. He and fellow researcher Nancy Childs tested mixtures of Coca-Cola Classic and Coke II and found that the gradual changes of taste were not noticed by a significant number of tasters. Coke, he said, would have succeeded had it chosen this strategy.

On May 21, 2019, Coca-Cola announced that the 1985 reformulation (once again bearing the name "New Coke") would be reintroduced in limited quantities to promote the third season of the Netflix series Stranger Things. The show, set in 1985, included cans of New Coke in three of the season's episodes.

About 500,000 cans of New Coke were produced for the promotion, to be sold mostly online. So many people were eager to buy it, however, that the volume of orders crashed the Coca-Cola website. Many fans complained because they wanted to order some, and the company apologized for the delays on social media platforms. It was also available in select vending machines in cities such as New York and Los Angeles.

The reintroduced drink got friendlier reviews than it had in 1985. A writer at said it was "nice and refreshing", lacking the lingering aftertaste of Classic Coke. "I would take this over other colas," said a colleague. staffers also had favorable impressions: "sweeter and smoother than regular Coke", "almost syrupy in a pleasant way", although an older one who recalled the original rollout said it had not improved for them.

Tim Murphy, a reporter for the progressive magazine Mother Jones, suggested that, in ultimately overcoming an initial resistance that he saw as reactionary, New Coke had won the war after losing the battle. "Soft-drink trends have also proven Coke right about a willingness to adapt to new tastes: A majority of Coke sales today are non-Classic products, such as Diet and Coke Zero," he wrote. This explained the favorable response from tasters. "It tasted weird then; it tastes like what's normal now."

Crystal Pepsi, early 1990s failure for that company that is occasionally reintroduced for limited periods

Dasani, bottled water brand produced by Coca-Cola that failed in the United Kingdom despite huge marketing push

MagiCan, failed Coca-Cola promotion in 1990

OK Soda, Coca-Cola brand intended to appeal to Generation X drinkers in early 1990s known for its counterintuitive marketing, managed by Sergio Zyman

1. ^ Jamieson, Sean (April 5, 1990). "Coke II makes its Spokane debut". Spokesman-Review. (Spokane, Washington). p. A8.

2. ^ Koten, John; Kilman, Scott (July 12, 1985). "Coca-Cola Faces Tough Marketing Task in Attempting to Sell Old and New Coke". The Wall Street Journal.

3. Hays, Constance L. (2005). The Real Thing: Truth and Power at the Coca-Cola Company (Random House Trade pbk. ed.). New York: Random House. ISBN 978-0-8129-7364-8.

4. ^ Pendergrast, Mark (2004). For God, Country and Coca-Cola : The Definitive History of the Great American Soft Drink and the Company that Makes It (2. ed., rev. and expanded, [Nachdr.] ed.). New York: Basic Books. ISBN 978-0-465-05468-8.

5. ^ Schindler, Robert M. (1992). "The Real Lesson of New Coke: The Value of Focus Groups for Predicting the Effects of Social Influence". Marketing Research. 4 (4): 22 [p. 27]. ISSN 1040-8460. Archived from the original on July 2, 2018.

6. ^ Oliver, Thomas (1987). The Real Coke, The Real Story (Repr ed.). New York: Penguin Books. ISBN 978-0140104080.

7. Horowitz, Roger (January 8, 2013) ^ "The Real Thing: How Coke Became Kosher", Science History Institute. Retrieved July 4, 2019

8. Matthews, Blair (Spring 2005). "Coca Cola's Big Mistake: New Coke 20 Years Later ..." Soda Pop Dreams. Archived from the original on July 5, 2008. Alt URL Archived April 2, 2018, at the Wayback Machine

9. McKay, Betsy (January 30, 2009). "Coke to Omit 'Classic'". The Wall Street Journal.

10. "Roger Enrico, the president of Pepsi-Cola U.S.A., was quick to proclaim the 10-week-old new Coke "the Edsel of the 80's" ^ "IDEAS & TRENDS - Coca-Cola Swallows Its Words". The New York Times. July 14, 1985.

11. En^ Erico, Roger; Kornbluth, Jesse (1988). The Other Guy Blinked: How Pepsi Won the Cola Wars. New York, NY: Bantam Books. p. 240. ISBN 978-0-553-26632-0.

12. ^ Smith, Gary (October 15, 2006) [1998]. Introduction to Statistical Reasoning. McGraw Hill. pp. 186-87. Archived from the original on September 2, 2006.

13. Waters, Harry F.; Huck, Janet; Smith, Vern E. (April 20, 1987). "Mad About M-M-Max". Newsweek. pp. 61-62.

14. ^ Bird, Laura (July 30, 1990). "Coke II: The Sequel". Adweek's Marketing Week. pp. 4-5.

15. ^ McDermott, John (April 26, 2015). ""New Coke" Aftertaste Recalled on Johns Island, 30 Years Later". Post and Courier. Charleston.

16. John H. McConnell; How to Design, Implement and Interpret an Employee Survey, AMACOM Division of the American Management Association, ISBN 0-8144-0709-9, 2003, 3.

17. ^ Gladwell, Malcolm (2005). Blink: The Power of Thinking Without Thinking (1. ed.). New YorK (etc.): Back Bay. ISBN 978-0-316-17232-5.

18. ^ Cheskin, Louis; Ward, L.B. (September 1948). "Indirect Approach to Market Reactions". Harvard Business Review.

19. ^ Gordon, Ian; Frank, Thomas (December 1999). "The Conquest of Cool: Business Culture, Counterculture, and the Rise of Hip Consumerism". The Journal of American History. 86 (3): 1396. doi:10.2307/2568708. JSTOR 2568708.

20. ^ Dubow, Joel S; Childs, Nancy M (November 1998). "New Coke, Mixture Perception, and the Flavor Balance Hypothesis". Journal of Business Research. 43 (3): 147-155. doi:10.1016/s0148-2963(97)00220-8.

21. ^ New Coke is coming back and it's all because of Netflix's hit show "Stranger Things" CBS News, May 21, 2019

22. Fredette, Meagan. ""Stranger Things" Brought Back New Coke & Broke The Internet". www.refinery29.com.

Civille, Gail Vance; Lyon, Brenda G. (1996). Aroma and Flavor Lexicon for Sensory Evaluation. West Conshohocken, PA: American Society for Testing and Materials.

Hine, Thomas (1997). The Total Package: The Secret History and Hidden Meanings of Boxes, Bottles, Cans, and Other Persuasive Containers. Back Bay Books. ISBN 978-0-316-36546-8.

Imram, Nazlin (1999). "The role of visual cues in customer perception and acceptance of a food product". Nutrition & Food Science. 99 (5): 224-230. doi:10.1108/00346659910277650.

Leven, S.; Levine, D. (1996). "Multiattribute Decision Making in Context: A Dynamic Neural Network Methodology". Cognitive Science. 20 (2): 271-299. doi:10.1207/s15516709cog2002_4. Archived from the original on January 13, 2007.

Meilgaard, Morten; Civille, Gail Vance; Carr, B. Thomas (1999). Sensory Evaluation Techniques (Third ed.). Boca Raton, FL: CRC Press.

Wilson, Timothy; Schooler, Jonathan (1999). "Thinking Too Much: Introspection Can Reduce the Quality of Preferences and Decisions". Journal of Personality and Social Psychology. 60 (2): 181-192. doi:10.1037/0022-3514.60.2.181. PMID 2016668.

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New Coke was the unofficial name of a reformulation of the soft drink Coca-Cola, introduced by The Coca-Cola Company in April 1985. It was renamed Coke II in 1990, and discontinued in July 2002. By 1985, Coca-Cola had been losing market share to diet soft drinks and non-cola beverages for several years.

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https://www.howtogeek.com/682090/virtually-forgotten-nintendos-virtual-boy-25-years-later/

An absolutely awful console where they wished to do virtual reality, which became awful to play, caused headaches, and was super expensive

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In 1995, Nintendo released an unusual stereoscopic game console called Virtual Boy. It capitalized on the early '90s media hype for virtual reality, but delivered on none of its promises. Here's what made the Virtual Boy unique---and why it failed.

A Mislabeled Novelty

The Virtual Boy debuted in Japan on July 21, 1995, and came to the U.S. on August 14 of that same year. Retailing for $179.95 at launch (about $303 in today's dollars), it was far more expensive than either the Game Boy or Super NES.

Judging from its name and headset-like appearance, anyone who hasn't used a Virtual Boy would be forgiven for thinking it was a legitimate attempt at a virtual reality console from Nintendo. However, the Virtual Boy wasn't really VR---that was just its marketing angle. Unfortunately for Nintendo, that angle set up expectations that were way too high to meet at the time.

In reality, the Virtual Boy was more like a beefed-up Game Boy with a stereoscopic display (meaning, it could show visual depth). Its odd form factor required using an awkward table stand. Unlike legitimate attempts at virtual reality, which provide the illusion of being present in a virtual space, there was no strap-on headset, motion tracking, or hand-movement capture on the Virtual Boy.

It was semi-portable, as it was battery powered by default. It required six AA batteries, but an AC adapter was also available. Due to this, it shipped with a relatively low-power CPU that was unable to deliver anything resembling the 3D, polygonal virtual world one would expect.

Instead, the Virtual Boy's game library mostly relied on traditional console-style games, with 2D sprites that nodded at the system's stereoscopic capability by using 3D layering tricks. Most of the games could be played just fine without stereoscopic capability.

An Experiment That Became a Stopgap Release

The full story of the creation of the Virtual Boy is complex and fascinating. It began with the invention of a relatively high-resolution, portable display created by the Massachusetts-based Reflection Technology. The display used a single line of red LEDs and a vibrating mirror to create the illusion of a larger display.

Reflection pitched the display to toy and video game companies at the time. The technology finally caught the eye of Nintendo designer, Gunpei Yokoi. Yokoi had previously scored unorthodox successes with the Game Boy, the Game & Watch line, and plastic toys and puzzles.

His design philosophy---which he called "Lateral Thinking of Withered Technology"---was to think of new uses for tech that was already widely used. The simple red LED scanning display with a deep black background fascinated Yokoi. Nintendo humored him when he wanted to use it to develop a portable, headset-based console.

Unfortunately, legal liability worries about EMF radiation exposure, potential eye damage, or injuries sustained while wearing the device during a car accident made Nintendo wary of creating a headset. By the time it became a "standset," Nintendo had already heavily invested in the custom chips that kept the console's scaled-back portable capabilities, despite it being limited to desktop use.

Meanwhile, Nintendo was also readying its upcoming Nintendo 64 console, and it was receiving the majority of the company's R&D budget and attention. Yokoi was even instructed to de-emphasize Nintendo's star mascot, Mario, on the Virtual Boy to avoid potential competition with the upcoming Nintendo 64.

So, why release such a weird product? According to Nintendo insiders, delays with the highly anticipated Nintendo 64 would have left the company without a new product in the fall of 1995. Meanwhile, its competitors, Sony and Sega, had already released their PlayStation and Saturn consoles.

Nintendo's absence in the new game market that fall would have damaged its reputation and share price. Therefore, the Virtual Boy was rushed into production as a stopgap product to serve as a distraction until the Nintendo 64 was ready.

Still, public reception to the Virtual Boy was tepid, and the system sold very poorly. Nintendo pulled the plug in Japan just six months after its release and axed it elsewhere in 1996.

Its Best Games: Wario Land and Jack Bros.

Even as a market failure, the Virtual Boy remains a bold experiment in trying something new. It also resulted in some novel hardware, including a more comfortable controller. The twin directional pads and ergonomic grip made it easy to play without having to look at your hands.

The games weren't bad, either. During its short lifespan, the Virtual Boy hosted only 22 games, most of which were created with fairly high production values. As we mentioned previously, though, few of these required the console's stereoscopic effect to be played.

As for the standouts, critics generally consider Virtual Boy Wario Land and Jack Bros. to be the system's two best. Red Alarm, an engrossing 3D wireframe spaceship shooter, remains the most impressive technical accomplishment. The North American pack-in game, Mario Tennis, is fun for quick sessions, but not a particularly remarkable release.

Overall, the Virtual Boy's very thin, but promising library could have grown much more sophisticated over time. Still, limited to life on a table stand, it could never deliver virtual reality.

Why Did It Fail?

Over the last 25 years, critics have cited dozens of reasons for the Virtual Boy's failure in the market. These have included (but aren't limited to) its red-only display, cost, awkward form factor (crouch-to-play), potential to cause headaches and eye strain, as well as not being graphically powerful enough, and so on.

However, Nintendo had succeeded with technologically limited hardware before. The Game Boy (1989) could only display games in a smudgy, pea-green at launch and could have been doomed as a novelty. Of course, it shipped with the killer app, Tetris, which quickly became a cultural watermark for mainstream gaming. It was perfect for quick games on the go.

Virtual Boy had no such killer app, and thus, no real reason to exist as a distinct product. The best game on Virtual Boy, Wario Land, could have easily been made for any traditional 2D game console. Had the Virtual Boy shipped with a must-have gameplay experience, it's possible customers would have looked beyond all the drawbacks and flocked to the system.

Instead, though, the Virtual Boy remains an historical novelty.

VR Today

Since the Virtual Boy, Nintendo has twice experimented with stereoscopic 3D gaming, first with the Nintendo 3DS in 2011, and, more recently, with the Nintendo Labo VR kit in 2019. The same as the Virtual Boy, few games on the 3DS required stereoscopic display to play properly. In fact, players could turn off the 3D feature, making it a well-executed gimmick that didn't get in the way of the system's high-quality software.

The Labo VR kit placed the Nintendo Switch console in a user-folded cardboard contraption that provides a low-resolution stereoscopic experience with toy-like novelty. However, it's still not "virtual reality" on the level some people might expect.

Other firms, like Oculus, HTC, and Valve, have stepped in over the last decade with impressive virtual reality headsets for consumers. Many consider the Oculus Quest the first practical standalone VR headset. It has a 1440 x 1600 resolution, compared to the Virtual Boy's 384 x 224. It also includes motion-tracking and two motion-tracking hand controllers.

So, it wasn't until 2019 that a company could feasibly provide what Yokoi wanted to do in 1995. Will Nintendo ever step into the virtual reality market with a real VR headset? Only time will tell. Until then, however, we can look back and raise a glass to the glorious oddity known as the Virtual Boy.

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Virtually Forgotten: Nintendo's Virtual Boy, 25 Years Later

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Nintendo released an odd, all-red stereoscopic console called the Virtual Boy in the '90s. It was neither VR, nor a boy.

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failed because of poor public reception and concerns over privacy. In constrast with Apple Vision.

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How and Why Did Google Glass Fail?

Amidst the lightning rollout of fashionable, utilitarian merchandise, we think some products emerge out of the ether into our hands in the blink of an eye. This is no deception-it's a kind of magic. Experimentation is required for any successful product deployment. All the same, evolution is often out of reach or hidden behind the scenes.

Since 2010, Google (GOOG) X, now known as X Development, a fairly secretive initiative founded by Sebastian Thrun, has attempted to improve life and commodities by a factor of 10, rather than ten percent, through efforts called moonshots. Project Glass was assembled by virtue of these ambitions.

Google became caught up in the storm of its own making when it marketed Glass. The company wanted to capitalize on the hype, hope, and potential of the product instead of selling the reality. Rather than promoting the product as a prototype technology from the future as initially intended, the hype-building marketing campaign and the high sticker price of Glass gave it the allure of a super-premium product.

Understanding How and Why Google Glass Failed

Google Glass wasn't coming to save the world, just to help it. In fact, the central dispute among members of Google X was whether Glass should be used as a fashionable device all the time or only for specific utilitarian functions.

Drawing inspiration from John F. Kennedy's understanding that bigger challenges create more passion, specifically in regards to the space race, Google's development ultimately strove to integrate feedback into its system.

To do this, Google co-founder Sergey Brin wanted to release Glass to the public and have consumers provide feedback that Google X could then use to improve the design.

The Glass prototype was released early as a result, with the intention of being more forward-looking than expressly convenient. Tim Brown, chair and former CEO of IDEO, feels the effort was not in vain, stating, "There has never in the history of new technology been an example where the first version out of the gate has been the right version."

Ultimately, although consumers want wearable technology, the functionality needs to be palatable. Glass is an interesting idea: It is nice to look at, but not through.

The Reality

Google originally advertised Glass in terms of experience augmentation. The 2012 demo reel featured skydiving, biking, as well as wall scaling. Eventually, the videos showed user-friendly information instantaneously appearing on-screen during everyday activities. Google's aspirations were lofty: The technology required lengthy battery life, improved image-recognition capabilities, and a lot of data.

Rather than augment reality, Glass simply supplemented it. The three- to five-hour battery life enabled users to check messages, view photos, and search the Internet. Glass was competing with other devices that boasted superior cameras, larger capacities, and faster processors.

With Glass's uncertain value came many questions. Would users be comfortable wearing a camera around their faces every day? Others were less comfortable being on the other side of Glass. Some bars and restaurants barred wearers from entry; several simply banned the device altogether.

Furthermore, the device retailed for $1,500 and didn't do any single action especially well, which is why those who could afford Glass were content with cutting-edge smartphones. In pricing Glass high and limiting access to a specific community of Glass Explorers, Google simply emphasized the division between the haves and have-nots.

People spend egregious sums on luxury items, but they find value with identity. Google Glass seems to be lacking in the department. Superficially, yet crucially, the device isn't cool.

Google then tried to associate the product with fashion designers. Glass was featured during Fashion Week and in relevant advertisements. In other words, the company tried to buy coolness.

However, the coolness associated with an invention assumes the element of faith-the brand is trustworthy. Art isn't easy in technology.

Glass is not meant for mass consumption-not at this moment. Google is both behind the times and ahead of them. Nevertheless, Project Glass may be a moonshot worth taking, if Google can stick the landing.

Current Glass

Currently, Google is using Glass technology in manufacturing settings to help make jobs safer. Called Glass Enterprise Edition, Google has developed devices to help manufacturer workflow. These devices clip into glasses or safety goggles, allowing for faster job completion by providing key information without being a distraction.

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Amidst the lightning rollout of fashionable, utilitarian merchandise, we think some products emerge out of the ether into our hands in the blink of an eye. This is no deception-it's a kind of magic. Experimentation is required for any successful product deployment. All the same, evolution is often out of reach or hidden behind the scenes.

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Development of an electric car Project name: The Dyson Date: Oct 2019 Cost: £500M Synopsis: The future of transportation is here to see and it is of course electric! As a result, the development of electric cars has been a growth area for the past ten years and the pace of change continues to grow.

Contributing factors: Lack of upfront due diligence (failure to analyse costs, market competitive landscape, market size, production costs and profit margins). Underestimation of costs. Perfectionism. Focal imbalance (focusing on the product rather than full spectrum of work need to launch a car brand).

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failed in the marketing as its competition products proved to be cheaper and better

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failed in the marketing as its competition products proved to be cheaper and better

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Sony Betamax

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1.No Clearly Defined Project Plan or Leadership.

2.No Defined Project Budget.

3.No Set Time Frame.

4.Changes in organizational priorities.

5.Inaccurate estimates of project requirements.

6.Changes in the project's objectives.

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This post is the first in a series of posts discussing some of the most prominent failed projects and how you can avoid the same pitfalls.
Every project, regardless of its subject matter, starts with an idea and ends (if successful) with a functioning reality of the idea's intent. Projects that fail are sometimes considered losses, but, most often, they also offer excellent lessons on how to avoid repeating the failures in the future. The Sydney, Australia Opera House is a notable example.

A Lesson in Project Failure: Sydney's National Opera House

You can't tell from looking at it, but Sydney Australia's iconic Opera House is actually a study in a project failure. Its original plan had a four-year timetable and an AU $7 million budget, but in the end, it took AU $102 million and 14 years to complete.

Fortunately, the final product more than met the expectations of Opera-goers, the world's architectural community, and ultimately the Australian government, which recouped the massive cost after only two years. How the project rolled out over time offers a series of abject lessons in how not to manage a construction (or any kind of) project.

The Opera House project failed because it did not follow any of the processes that normally signify proper project management and accounting processes:

Inadequate resource management planning resulted in no one dedicated person responsible for project activities, and the budget was at best a suggestion.

No management and no accounting expectations lead to excessive and wasteful materials costs.

No resource scheduling lead to delays at all stages of the project's development.

What were the circumstances?

In 1957, Australia's government (the client) held a contest to select an architect to design its future " National Opera House." The client's primary focus was to showcase Australia's creative and technical capacities, and it set almost no parameters on the building's cost or construction timeframe.

In 1958, the winner of the competition, Jorn Utzon, presented his "Red Book" of the project, which contained details of some but not all of the elements of the overall project, such as designs, consultant reports, and varied plans. The "Red Book" was not a comprehensive working document for strategizing the construction of the building.
The Opera House under construction in 1965. Image: Max Dupain, State Library of NSW
And, despite the fact that Utzon clearly stated he hadn't finished the structural design, the client insisted on immediately beginning work on the project anyway. From there, things went from bad to worse, with contributions to the growing debacle amassing over time.

No Clearly Defined Project Plan or Leadership

Not only did the project launch with no finalized plans to follow, but the client also changed the floor plan from two theaters to four shortly after construction began. Compounding the chaos that followed was the lack of a project manager. Instead of a single person to whom to turn with questions and for direction, an ad hoc "partnership" between Utzon and the engineer, Ove Arup, handled "management" of the project, assisted by a hastily assembled "team" of electrical, mechanical, and HVAC subcontractors.

Since each separate "management team" member had different goals and perspectives from the others, it's not surprising that finding consensus among them was often an elusive goal.

No Defined Project Budget

Not having a finalized design also meant not knowing how much the project would cost. Almost immediately upon its start, costs began escalating, first with the change orders, and then with the discovery that the site surveys were wrong. The budget went uphill from there. Utzon's vision divided the construction project into three segments: the podium; the outer shells, and the interiors and windows. By the end of stage one, a government monitoring committee was overseeing payments and had to withhold a few until it received proof of completion of actual work.

No Set Time Frame

By 1966, seven years from the time it started and four years after the proposed completion date, the Opera House had not yet completed phase two. Utzon left in frustration, taking his designs and plans with him. "Management" of the rest of the project fell to a committee of three Australian engineers, who did complete phase two by the end of 1967.

However, because the next phase required an entirely new set of plans, the budget to fill out the construction then soared to AU $85 million. Another four years and an additional AU $17 million went by before the Opera House was finally completed in 1973 when Queen Elizabeth inaugurated it.

Typical Causes of Failed Projects

Despite being such an excellent example of "what not to do," project management professionals continue to follow the dubious lead of the people who built the Opera House. In a 2015 survey by Raconteur, the top three reasons for failed projects within the previous 12 months were:

Andy Soanes, CTO of Bell Integration, commented that shifting deadlines, adding or modifying features, and unforeseen risks are the typical reasons for cost overruns and escalating costs.

Technology Addresses the Problem

Fortunately, today's project management professionals have advanced technology available to prevent cost, timing, and personnel challenges in the first place, or to circumvent those issues that do arise to reduce their impact on the overall project. Software designed to manage project resources such as materials, subcontractors, or other critical elements can help overseers avoid missing the minute details that can derail the production process. Professional Services Automation (PSA) is particularly useful for comprehensively evaluating project processes over time and helps to keep Key Performance Indicators and other metrics on task and on track.

Perhaps if the Australians had had the opportunity to access today's project management software capabilities, they would have been enjoying the world's most iconic Opera House a decade earlier.

Read More

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Sydney Opera House Failed Project - What Can You Learn?

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It may not look like it now, but the Sydney Opera House is a study in project failure - it was completed well over budget and way past the original expected time frame. What lessons can we learn from failed projects like this one?

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Uber didn't understand the SouthEast Asian market as well as Grab did

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How did Grab defeat Uber to become the biggest ride-hailing company in Southeast Asia?

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Grab is unarguably a taxi behemoth in the Southeast Asia region. But its journey wasn’t that easy, they had to beat Uber which is the biggest ride-hailing company in the world. Read the below blog to see how they accomplished this feat.

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The system was designed to automate baggage handling at the new Denver International Airport, aiming to reduce transfer times for baggage and minimize missed connections.

https://sebokwiki.org/wiki/Denver_Airport_Baggage_Handling_System

Reasons for failure:

Overambitious Technology (large scale untested)

Poor Project Management

Underestimation of Complexity (integration of different components)

Insufficient Testing

Rushing the Schedule

Cost Overruns

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Lead Authors: Art Pyster, Heidi Davidz

This example was developed as a SE example for the SEBoK. It describes systems engineering (SE) issues related to the development of the automated baggage handling system for the Denver International Airport (DIA) from 1990 to 1995. The computer-controlled, electrical-mechanical system was part of a larger airport system.

Description

In February 1995, DIA was opened 16 months later than originally anticipated with a delay cost of $500 million (Calleam Consulting Ltd. 2008). A key schedule and cost problem-the integrated automated baggage handling system-was a unique feature of the airport. The baggage system was designed to distribute all baggage automatically between check-in and pick-up on arrival. The delivery mechanism consisted of 17 miles of track on which 4,000 individual, radio-controlled carts would circulate. The $238 million system consisted of over 100 computers networked together, 5,000 electric eyes, 400 radio receivers, and 56 bar-code scanners. The purpose of the system was to ensure the safe and timely arrival of every piece of baggage. Significant management, mechanical, and software problems plagued the automated baggage handling system. In August 2005, the automated system was abandoned and replaced with a manual one.

The automated baggage system was far more complex than previous systems. As planned, it would have been ten times larger than any other automated system, developed on an ambitious schedule, utilized novel technology, and required shorter-than-average baggage delivery times. As such, the system involved a very high level of SE risk. A fixed scope, schedule, and budget arrangement precluded extensive simulation or physical testing of the full design. System design began late, as it did not begin until well after construction of the airport was underway. The change management system allowed acceptance of change requests that required significant redesigns to portions of work already completed. The design did not include a meaningful backup system; for a system that required very high mechanical and computer reliability, this increased failure risks. The system had an insufficient number of tugs and carts to cope with the volume of baggage expected and this, along with severely limited timing requirements, caused baggage carts to jam in the tracks and for them to misalign with the conveyor belts feeding the bags. This resulted in mutilated and lost bags (Neufville 1994; Gibbs 1994).

The baggage system problems could be associated with the non-use or misuse of a number of systems engineering (SE) concepts and practices: system architecture complexity, project scheduling, risk management, change management, system analysis and design, system reliability, systems integration, system verification and validation/testing, and insufficient management oversight.

The initial planning decisions, such as the decision to implement one airport-wide integrated system, the contractual commitments to scope, schedule, and cost, as well as the lack of adequate project management (PM) procedures and processes, led to a failed system. Attention to SE principles and practices might have avoided the system's failure.

References

Works Cited

Calleam Consulting Ltd. 2008. Case Study - Denver International Airport Baggage Handling System - An Illustration of Ineffectual Decision Making. Accessed on September 11, 2011. Available at http://calleam.com/WTPF/?page_id=2086.

Neufville, R. de. 1994. "The Baggage System at Denver: Prospects and Lessons." Journal of Air Transport Management. 1(4): 229-236.

Gibbs, W.W. 1994. "Software's Chronic Crisis." Scientific American. September 1994: p. 72-81.

Primary References

None.

Additional References

DOT. 1994. New Denver Airport: Impact of the Delayed Baggage System. US Department of Transportation (DOT), Research Innovation Technology Administration. GAO/RCED-95-35BR. Available at http://ntl.bts.gov/DOCS/rc9535br.html

Donaldson, A.J.M. 2002. A Case Narrative of the Project Problems with the Denver Airport Baggage Handling Systems (DABHS). Software Forensics Center Technical Report TR 2002-01. Middlesex University, School of Computer Sciences. Available at http://www.eis.mdx.ac.uk/research/SFC/Reports/TR2002-01.pdf

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Lead Authors: Art Pyster, Heidi Davidz This example was developed as a SE example for the SEBoK. It describes systems engineering (SE) issues related to the development of the automated baggage handling system for the Denver International Airport (DIA) from 1990 to 1995. The computer-controlled, electrical-mechanical system was part of a larger airport system.

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Link: https://www.cio.com/article/286790/software-testing-lessons-learned-from-knight-capital-fiasco.html

Failure reasons:

Faulty Software Deployment. Algorithm wasn't tested enough

Not enough safeguards to halt problem

Pressure to compete

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When there is a problem, another anonymous source points out, someone in the organization usually knows about it but may not feel safe enough to bring up the issue in a large, supportive forum. Retrospectives provide not only an open door, but group consensus as well. Someone can raise an issue and get support. That's hard to turn a blind eye to.

4 Ways to Improve Software Testing and Reduce Risk

After the retrospective, your team may come up with a list of risks and issues such as those (theoretically) identified in the Knight Capital case. If so, consider these four techniques to reduce risk.

1. Improve change and configuration management. Keeping test and production code in different "sandboxes is one popular practice to reduce risk. At Zappos, the team has a separate, and more rigorous, process for code that will touch customer-sensitive data and financial information. Etsy, meanwhile, deploys all code to production but mitigates that risk with technique #2.

2. Improve production monitoring. Lane suggests using automated processes to detect and send alerts regarding errors. Jeffery Reeves, editor of InvestorPlaceMedia, recommends having actual humans watching transaction volumes, using personal judgment. Companies with a large amount of automated transactions would do well to have both.

3. View testing as a high-level risk management process. "In many cases, trading companies feel there is not enough time for traditional testing due to the compressed time of these fleeting opportunities," Lane says. Ironically, many bugs would not be found by traditional testing, as they are configuration risks. The software may have worked correctly, but it in the wrong place, at the wrong time or from test code that was in production. The type of testers who "click this, click that, make sure these numbers match," as Lane describes them, could not find such bugs. Better risk management is necessary. The SEC may create regulations to require automation review policies for trading software, but the concept applies to any software with business risk attached.

4. Increase internal controls on high-volume transactions. It is possible that the Knight Capital failure could have been averted by a single button that a human needed to click, especially when the volume reached a certain level. Such a control would not be at the program level but, instead at the public API level. Until such external controls exist, we would do well to build them into our gateway programs.

Knight Capital may never be transparent enough for us to conduct an assessment of what went wrong, or to even see a retrospective report. That shouldn't stop your organization. This could be an opportunity to examine your systems and how they interoperate while determining the value of investing time and energy in risk management.

It's hard work, and it's not eye-popping, but good risk management is likely to keep your company off the CNN, Wall Street Journal or Financial Times home page. That just might turn out to be a most excellent thing.
Matthew Heusser is a consultant and writer based in West Michigan. You can follow Matt on Twitter @mheusser, contact him by email or visit the website of his company, Excelon Development. Follow everything from CIO.com on Twitter @CIOonline, on Facebook, and on Google +.

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Software Testing Lessons Learned From Knight Capital Fiasco

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Knight Capital lost $440 million in 30 minutes due to something the firm called a 'trading glitch.' In reality, poor software development and testing models are likely to blame. Here's what your company can do to avoid similar embarrassment and huge losses.

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Project failures in the context of NHS Civilian IT could stem from various factors, including mismanagement, technical challenges, budgetary issues, and lack of stakeholder alignment. Here are five potential reasons for such a failure:

1. Scope Creep: The project may have suffered from continuously expanding scope without corresponding adjustments to resources, timelines, or requirements. This can lead to unmanageable complexities and ultimately project failure.

2. Poor Leadership and Governance: Inadequate leadership or governance structures can result in decision-making delays, conflicting priorities, and a lack of accountability, all of which contribute to project misalignment and failure.

3. Technical Challenges: Complex technical requirements, incompatible systems, or insufficient expertise can impede progress and result in project failure. Integration issues with existing NHS systems or failure to adapt to evolving technological standards may also be contributing factors.

4. Budget Overruns: Inaccurate budget estimations or failure to control costs effectively can lead to budget overruns, causing resources to be stretched thin or critical project components to be underfunded, ultimately jeopardizing project success.

5. Resistance to Change and Stakeholder Management: Resistance from end-users or stakeholders, inadequate communication, or failure to manage expectations can undermine project adoption and success. Poor stakeholder engagement strategies may result in insufficient buy-in or support for the project, leading to its failure.

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The National Program for IT (NPfIT) in the National Health Service (NHS) was the largest public-sector IT program ever attempted in the UK, originally budgeted to cost approximately £6 billion over the lifetime of the major contracts.

These contracts were awarded to some of the biggest players in the IT industry, including Accenture, CSC, Atos Origin, Fujitsu and BT.

After a history marked by delays, stakeholder opposition and implementation issues, the program was dismantled by the Conservative-Liberal Democrat government in 2011, almost 10 years after Prime Minister Tony Blair initiated it at a seminar in Downing Street in 2002.

The core aim of the NPfIT was to bring the NHS' use of information technology into the 21st century, through the introduction of integrated electronic patient records systems, online 'choose and book' services, computerized referral and prescription systems and underpinning network infrastructure.

Despite the failure of many of these services to be delivered, the government, and ultimately taxpayers, incurred significant costs for the program, including contract transition and exit costs which continued to accrue to a total amount of more than £10 billion.

Since NPfIT was a public-sector program, there is a large amount of documentation and press about the case available. If you are interested in reading more about it, I have collected many of these documents here.

If you want to make sure your business critical project is off to a great start instead of on its way on my list with project failures? Then a New Project Audit is what you are looking for.

If you want to know where you are standing with that large, multi-year, strategic project? Or you think one of your key projects is in trouble? Then a Project Review is what you are looking for.

If you just want to read more project failure case studies? Then have a look at the overview of all case studies I have written here.
Timeline of Events

2002

> NPfIT starts with Richard Granger being the appointed NHS IT director.

2003

> BT awarded contract for the national data spine
> Local service provider 10 year contracts awarded (CSC for North West and West Midland cluster; BT Capital Care Alliance for London cluster; Fujitsu for Southern cluster; Accenture for North East and Eastern England clusters.

2004

> BT awarded N* (NHS broadband network) contract

2005

> NHS Connecting for Health (NHS CFH) set up to deliver NPfIT
> Contract reset 1 (BT) for "interim solutions" in London

2006

> Accenture withdraws as local service provider
> CSC awarded 9 year contract for Accenture's former clusters

2007

> NPfIT Local Ownership Programme (devolves responsibility for local delivery of the program from NHS CFH to groupings of strategic health authorities
> Replaces original five clusters with three program areas: Southern (local service provider Fujitsu), London (local service provider BT), and North, Midlands and East (local service provider CSC).
> Contract reset 2 (BT) for "best of breed" London solutions

2008

> Fujitsu contract for local service provider in Southern area terminated; legal dispute continues
> Contract reset negotiations 3 (BT) for new delivery model in London
> Richard Granger, head of NHS CFH, leaves in January
> Gordon Hextall, acting head, leaves in April
> Christine Connelly and Martin Bellamy appointed to jointly lead NHS CFH in September

2009

> BT awarded additional contract to take over eight trusts formerly with Fujitsu, plus 25 trusts for RiO and four additional acute trusts in Southern area.
> Other Southern trusts given choice of local service provider solution from BT or CSC or from various suppliers in Additional Supply Capability and Capacity List (ASCC)
> Martin Bellamy, director of programmes and systems delivery, NHS CFH, resigns
> NHS CFH, headed by Christine Connelly, is integrated with Department of Health Informatics Directorate
> Parliamentary announcement of contract negotiations with BT and CSC - seeking NPfIT costs savings

2010

> New memorandum of agreement signed between BT and NHS CFH, including reduced number of deployments in acute trusts in London
> Contract discussions with CSC continuing
> UK general election in May - new coalition government

2011

> The National Programme for IT has finally come to an end, although the bill for the enormously expensive and controversial project will continue to be paid for years to come.
> The deadline to exit NPfIT national contracts in the North, Midlands and East passed on 7 July, marking the end of the final chapter of the £12.7 billion attempt to bring the NHS into the digital age.
> Around £2.6 billion of actual benefits had been identified as of March 2011

What Went Wrong

In order to bring some light on all the things that went wrong I follow the structure of Oliver Campion-Awwad, Alexander Hayton, Leila Smith and Mark Vuaran. You will find their case history document in the directory mentioned above. It identifies three main themes: rush, design, and culture/skills.

Rush

In their rush to reap the rewards of the program, politicians and program managers raced headlong into policy-making, procurement and implementation processes that allowed little time for consultation with key stakeholders and failed to deal with confidentiality concerns. This resulted in:

> An unrealistic timetable

> No time to engage with users and privacy campaigners

> Inadequate preliminary work

> Failure to check progress against expectations

> Failure to test systems

Design

In an effort to reduce costs and ensure swift uptake at the local levels, the government pursued an overambitious and unwieldy centralized model, without giving consideration to how this would impact user satisfaction and confidentiality issues. This resulted in:

> Failure to recognize the risks or limitations of big IT projects

> Failure to recognize that the longer the project takes, the more likely it is to be overtaken by new technology

> Sheer ambition

> The project being too large for the leadership to manage competently

> Confidentiality issues

Culture and skills

The NPfIT lacked clear direction, project management and an exit strategy, meaning that the inevitable setbacks of pursuing such an ambitious program quickly turned into system-wide failures. Furthermore, the culture within the Department of Health and government in general was not conducive to swift identification and rectification of strategic or technical errors. This resulted in:

> A lack of clear leadership

> Not knowing, or continually changing, the aim of the project

> Not committing the necessary budget from the outset

> Not providing training

> A lack of concern for privacy issues

> No exit plans and no alternatives

> A lack of project management skills

> Treasury emphasis on price over quality

> IT suppliers that depend on lowballing for contracts and charge heavily for variations to poorly written specifications

How NHS Could Have Done Things Differently

This case study contains several lessons useful for project managers, IT professionals, and business leaders.

Understanding the problem

"Top-down" projects are much more likely to fail than "bottom-up" projects, and NPfIT was top-down project par excellence. I identify a top-down project as one done for political reasons: and this can be both genuinely Political with a capital P in the public sector or a "vanity" or CEO-inspired project in the private sector. The history of public sector ICT and outsourcing is littered with politically-inspired projects that failed.

The motivation to commence NPfIT came from Cabinet level and it's hard to argue against the fact that many of its aims were entirely laudable. But there is a big gap between laudability and deliverability. The decision to commence any project - let alone one which will transform a fundamental building block of a nation's healthcare system - must be made by the right people who really know about the issues involved. It's unfortunate for civil servants and the departments they run that they have to carry the can for projects devised by ministers that often only make sense on the political drawing board and are almost impossible to translate into reality.

See " Understanding Your Problem Is Half the Solution (Actually the Most Important Half)" for more insights on this topic.

Stakeholder engagement

Rarely is a project ever just an IT project; generally it should be viewed as a broader process to deliver business benefits.

It is a given of successful technology projects that there should be good consultation with all stakeholders involved, including end-users. Ever since NPfIT began, there have been concerns expressed by key stakeholders within the health system, especially doctors and GPs, about the accessibility and utility of the planned system.

In particular, it was not clear even from the outset of NPfIT exactly what was going to be delivered to the ultimate end-users. Add to that the entrenched interests in NHS trusts about loss of control over their own systems and you have an inherently suspicious, if not downright hostile, user base. Few projects can succeed over the outright opposition of the proposed users.

See " 10 Principles of Stakeholder Engagement" for more insights on this topic.

Start slow in order to run fast later

One so-called innovation for which NPfIT was originally praised was the speed and efficiency of its procurement and contracting process. That process has subsequently become a mill-stone around the project's neck.

NPfIT rushed to award contracts in almost indecent speed with insufficient planning, particularly for such a large contract. Contract scope was unclear and much work needed to be done after contract award to agree key contract parameters such as scope and deliverables. At the time, this was felt by many to be a sign of success and the model for how future procurement should be done.

No-one could argue that there must always be a desire to procure and award contracts as efficiently as possible. But this can't come at the sacrifice of agreeing all appropriate contract terms up-front, rather than retrospectively once the contract has been put in place. Nor is this a substitute for doing appropriate due diligence before the contract is awarded and actually writing clear statements of work and requirements.

One of the lessons that should be learned is that projects will always run into trouble if they try to complete the contractual paperwork before actually working out the scope of what a project is about, what its deliverables will be and how they will be implemented.

See " Your Projects Should Start Slow in Order to Run Fast Later" for more insights on this topic.

Balancing risk and reward

The NPfIT procurement model called for a drastic cut in timescales, with no negotiation allowed, contracts offered on a "take-it-or-leave-it" basis and a very aggressive approach to legal remedies against service providers. NPfIT and its advisers appeared to forget the golden rule that these contracts involve a long-term relationship; so a hyper-aggressive approach to supplier management is counter-productive.

One of the issues that bedevilled the project from the outset was the extent to which the NPfIT was attempting to force service providers to accept onerous and one-sided contracts. Negotiation was a dirty word and NPfIT used heavy-handed tactics to ram through contract terms that were considerably harsher than had ever been seen within a government (or even private sector) context before.

It is worth noting that some of these provisions (for example, in relation to what happens on financial distress of a service provider or in relation to clawback of prepaid milestone payments) have found their way into standard practice within government - not always with entirely successful results.

The combination of the implemented payment provisions (under which service providers had to do all the work upfront with no payments until successful delivery) and the harsh termination and liability provisions, meant that the risks being absorbed by service providers were extremely high.

While many may say that service providers make a healthy margin and, therefore, ought to absorb risk, no service provider is a bottomless pit able to accept enormous costs and risks of delivery, particularly where the customer is in a position of being able to re-interpret and add requirements during the course of delivery. A number of significant service providers have fallen by the wayside during the course of the NPfIT project simply because of the difficulty of delivering what NPfIT wanted within its timelines and risk profile.

Hopefully, one lesson government will learn from NPfIT is that there needs to be a balance of risk and reward in negotiating contracts even for very large projects. It is notable that the standard paradigm for public sector contract terms has moderated significantly since NPfIT was initiated. Many might wish that there had been more reasonable voices involved in the original project who could have argued for putting in place a more moderate, deliverable contract that didn't force service providers to take on so many contractual risks that their own internal business cases became unstable.

Multisourcing

NPfIT was certainly innovative in its structure of making different service providers work together by awarding work in a series of lots. Part of the rationale for this approach was that different regional service providers could be swapped in or out if and when other regional service providers failed.

At least this has meant that, as some service providers have had their contracts terminated over the past few years, there have been others prepared to pick up the slack. But it does illustrate that anything other than a "one customer, one service provider" structure is very difficult to operate.

This doesn't mean that it cannot be established in this way - as the current hype of multisourcing contracts has shown. But it does mean that there needs to be much more careful thought and planning in advance about how different service providers will be incentivised to collaborate - not forced to co-operate almost against their will and without some "script" or plan as to how disputes will be resolved.

Checks and balances

There is a tendency amongst people involved in a project which isn't going well to adopt the "I've started so I'll finish" approach, circle the wagons and not step back and take the inevitable decision at a more appropriate stage.

Good managers on technology projects are always asking themselves whether the original course of action is correct and whether adjustments are required - and they are prepared to take the ultimate decision at the right time and not delay the inevitable.

NPfIT was run by a very strong project director with a powerful personality. Maybe that was the best way to give the project a chance of success. Unfortunately, once the project ran into trouble there much less room for manoeuvre and few supporters outside the core team. Clear accountability is fine (indeed, essential) but accountability needs to be in the right hands and with the right checks and balances. If the public sector learns anything from NPfIT, let's hope that it will be how to identify and implement those checks and balances from the outset.

Closing Thoughts

The Public Accounts Committee (PAC) calls the saga one of the "worst and most expensive contracting fiascos" in public sector history, and adds: "Although the Department told us that the National Programme had been dismantled, the component programmes are all continuing, the existing contracts are being honoured and significant costs are still being incurred. The only change from the National Programme that the Department could tell us about was that new governance arrangements were now in place."

The estimated costs of the scheme rose from £6.4bn to £9.8bn, but ongoing costs arising from legal battles and other issues will keep dragging this figure higher, the MP said, especially the price of terminating the Fujitsu contract in the south of England, and the ongoing costs of Lorenzo in the north, Midlands and east.

Committee member Richard Bacon MP said the fact that only 22 trusts are now expected to take the Lorenzo system - despite the original contracts with CSC totalling £3.1bn - is another indictment.

Let's hope the whole public sector has learned something from this disaster. It is our money that is wasted.

If you want to make sure your business critical project is off to a great start instead of on its way on my list with project failures? Then a New Project Audit is what you are looking for.

If you want to know where you are standing with that large, multi-year, strategic project? Or you think one of your key projects is in trouble? Then a Project Review is what you are looking for.

If you just want to read more project failure case studies? Then have a look at the overview of all case studies I have written here.
Sources

Posted on by Henrico Dolfing

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Case Study 1: The £10 Billion IT Disaster at the NHS

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The National Program for IT (NPfIT) in the National Health Service (NHS) was the largest public-sector IT program ever attempted in the UK...

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There was lack of risk assessments of the product

There was no scope limitation for this project

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Just when you think life online can't get worse than it already is, Meta steps in to prove you wrong.

The company's new BlenderBot 3 AI chatbot - which was released in the U.S. just days ago(Opens in a new tab) on Friday, August 5 - is already making a host of false statements based on interactions it had with real humans online. Some of the more egregious among those include claims Donald Trump won the 2020 U.S. presidential election and is currently president, anti-Semitic conspiracy theories, as well as comments calling out Facebook for all of its " fake news(Opens in a new tab) ." This, despite being owned by the company formerly known as Facebook.

Meta's BlenderBot 3 can search the internet to talk with humans about nearly anything, unlike past versions of the chatbot. It can do that all while leaning on the abilities provided by previous versions of the BlenderBot(Opens in a new tab) , like personality, empathy, knowledge, and the ability to have long-term memory pertaining to conversations it's had.

Chatbots learn how to interact by talking with the public, so Meta is encouraging adults to talk with the bot in order to help it learn to have natural conversations about a wide range of topics. But that means the chatbot can also learn misinformation from the public, too. According to Bloomberg(Opens in a new tab) , it described Meta CEO Mark Zuckerberg as "too creepy and manipulative" in conversation with a reporter from Insider. It told a Wall Street Journal reporter that Trump "will always be" president(Opens in a new tab) and touted the anti-semitic conspiracy theory that it was "not implausible" that Jewish people control the economy.

This isn't the first time a chatbot has been in hot water. In July, Google fired an engineer for saying its chatbot LaMDA was sentient. LaMDA is probably not sentient, but it is pretty racist and sexist - two undoubtedly human characteristics. And in 2016, a Microsoft chatbot called Tay was taken offline within 48 hours after it started praising Adolf Hitler. (It turns out that Godwin's law - the idealogical idea that maintains that if any discussion continues long enough on the internet someone will be compared to Hitler - applies to chatbots, too.)

There may be one thing in all of this that BlenderBot 3 got right: Mark Zuckerberg is not to be trusted.

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It took just one weekend for Meta's new AI Chatbot to become racist

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Just when you think life online can't get worse than it already is, Meta steps in to prove you wrong. The company's new BlenderBot 3 AI chatbot - which was released in the U.S. just days ago(Opens in a new tab) on Friday, August 5 - is already making a host of false statements based on interactions it had with real humans online.

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Not a complete failure (I guess) it works now (barely)

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https://www.afr.com/technology/inside-the-bloody-political-war-that-led-to-a-31bn-nbn-blowout-20221205-p5c3tr

Immense struggles due to:

1. Constantly changing stakeholders; it bounced between different governments

2. The scope changed (all FTTP to mixed delivery)

3. The budget changed

4. Poor planning that lead to the project running over budget and time due to the complexity being greater than expected

5. Subcontracting the work out and placing planning responsibility on them, leading to more points of failure and a slower and more expensive rollout

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The Post Office's Horizon IT system should "never have seen the light of day" and bosses at supplier Fujitsu allowed it to be rolled out into the Post Office network despite being told it was not fit for purpose, according to a senior developer who worked on the project before it went live.

Horizon is the system at the heart of the scandal that saw hundreds of subpostmasters wrongly accused of fraud and false accounting until a 2019 High Court case proved the Post Office IT was at fault. Horizon is a counter-top sales and accounting system, commissioned by the government to automate Post Office services. It went live in Post Office branches in 1999 and an updated version is still in use today.

The developer, who has not previously talked publicly about his experiences on the project, told Computer Weekly that in the months leading up to its launch, Horizon's problems were well known inside Fujitsu.

"Everybody in the building by the time I got there knew it was a bag of s**t", he said. "It had gone through the test labs God knows how many times, and the testers were raising bugs by the thousand."

The senior developer said he was contracted to work on the Horizon project between 1998 and 2000, at one point holding the job title Horizon Epos [electronic point of sale] development manager. He has asked to remain anonymous, but is prepared to give sworn witness statements to solicitors acting for subpostmasters in their ongoing appeals against past convictions.

The developer has also asked Computer Weekly to pass his contact details to the government's Post Office Horizon IT inquiry, chaired by former High Court judge Wyn Williams.

Central to his allegation is that Horizon's Epos system was initially built with "no design documents, no test documents, no peer reviews, no code reviews, no coding standards".

He told Computer Weekly: "To my knowledge, no one on the team had a computer science degree or any degree-level qualifications in the right field. They might have had lower-level qualifications or certifications, but none of them had any experience in big development projects, or knew how to do any of this stuff properly. They didn't know how to do it."

In 2019, a High Court judge ruled that Horizon was "not remotely reliable" for the first 10 years of its existence. The judge found the IT system was prone to throwing up errors that could and did affect individual subpostmasters' branch accounts. As Computer Weekly has been reporting since 2009, the Post Office held postmasters liable for these discrepancies. Some were prosecuted and imprisoned. Others lost their jobs and life savings.

Largest commercial IT system in Europe

When it was rolled out, Horizon was described by Fujitsu as the "largest non-military IT system in Europe". About 40,000 Horizon terminals were installed in all Post Offices across the UK. The user interface was a touchscreen and keyboard linked to a PC under the counter which ran on the Windows NT operating system. Branch PCs were connected via ISDN to a back-end mainframe. The Fujitsu-designed Epos software on the PCs was written onto an off-the-shelf system called Riposte.

Our source said the big flaw in Horizon was the way data was being written to Riposte."Riposte wasn't really a database, it was a messaging system based on an XML structure where you write messages down into the message store, and then Riposte took care of replicating them," he said.

"The first thing that you should always do with a system like that is design and agree a data dictionary and a message library repository, basically to say: these are the messages that are allowed to be written to the message store and they all provide the following function.

"It's almost like an API [application programming interface] so that you have a list of allowed messages that can all be written to the correct format with the correct content.

"You should also have a layer of software that lies on top of the message store that checks that any application above it which is trying to write a message, conforms to the agreed data dictionary. Otherwise, you can just write freestyle to the message store, which is what they were doing. There was no application interface in there, no agreed data catalogue or anything."

Computer Weekly also spoke to a former Fujitsu employee who worked in the Horizon Service Support Centre from 2001. The support engineer - who also wants to remain anonymous - recognised this new description of Horizon's badly built message store, adding: "Our job was to fix these problems as they arose. We all knew the code wasn't fit for purpose and needed rewriting. The data dictionary was still being added to when I got there."

Senior managers were aware

The most serious allegation raised by the developer is that senior managers at Fujitsu were aware that an important element of the Horizon system did not function correctly and could not be fixed.

For the first 10 years of Horizon's existence, transaction and account data was stored on terminals in each branch before being uploaded to a central database via ISDN. Our source says this part of the system simply did not work.

"The cash account was a piece of software that sat on the counter NT box, asleep all day," he said. "At the end of the day, or a particular point in the day, it came to life, and it ran through the message store from the point it last finished. It started at a watermark from yesterday and combed through every transaction in the message store, up until the next watermark.

"A lot of the messages in there were nonsense, because there was no data dictionary, there was no API that enforced message integrity. The contents of the message were freehand, you could write whatever you wanted in the code, and everybody did it differently. And then, when you came back three weeks later, you could write it differently again."

He gave an example of a message stored previously when a customer bought a stamp. It was feasible that a new message for buying a stamp weeks later could be slightly different.

"When the cash count came along, it found a message it was not expecting and either ignored it, tripped up, or added something it shouldn't be adding," he said.

In 2015, Computer Weekly reported another anonymous source who identified the cash writing program as a possible cause of serious problems. He told us the Post Office was warned about the risk of data corruption on the bespoke asynchronous communication system which sent messages between branches and the central Horizon set-up.

Speaking to Computer Weekly in 2015, the anonymous source told us: "The asynchronous system did not communicate in real time, but does so using a series of messages that are stored and forwarded, when the network connection is available. This means that messages to and from the centre may trip over each other. It is perfectly possible that, if not treated properly, messages from the centre may overwrite data held locally."

Four years later, former Fujitsu engineer Richard Roll wrote in a witness statement to the High Court: "The issues with coding in the Horizon system were extensive. Furthermore, the coding issues impacted on transaction data and caused financial discrepancies on the Horizon system at branch level."

Roll's evidence, which was accepted by the judge, suggests that the problems with Horizon identified by our source had not been dealt with by the time the system went live.

Other experts familiar with Horizon that Computer Weekly approached have also supported the developer's claims.

The developer said he made his superiors at Fujitsu aware of the extent of the Epos system problems, telling them explicitly that the cash account needed to be scrapped.

"I broke it down and said: you can keep these bits at a push if you have to," he said. "But that bit in the middle, these bits of the engine, the gearbox, you need to throw them away and rebuild them. Starting with the cash account. You've got to throw the cash account away and you've got to rewrite it."

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Fujitsu bosses knew about Post Office Horizon IT flaws, says insider | Computer Weekly

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A former senior developer who worked for Fujitsu on the Post Office IT system that led to subpostmasters being falsely accused of fraud, has claimed bosses knew of fundamental flaws before going live.

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Famous project fails - with reasons for failure

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Famous project fails - with reasons for failure

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Feature creep, insufficient training and overlooking stakeholders - the major culprits for why IT projects fail routinely crop up. The following five prominent examples are no exception. They have all failed publicly - some spectacularly - but serve as useful lessons to learn for anyone embarking on their own project, whatever the scale.

1. Sainsbury's warehouse automation

The UK supermarket giant embarked on a mammoth project to install an automated fulfilment system in their Waltham Point distribution centre. Serving most of London and the south east, the barcode-based system was supposed to streamline operations and improve efficiency.

From the initial installation in 2003, there were what were described as 'horrendous' errors in reading barcodes. Nevertheless, Sainsbury's claimed that the system was working as intended in 2005. Two years later, they decided to scrap the entire project, writing off more than £150 million in IT costs.

What's the lesson? Don't ignore the initial phases. Problems left unaddressed at roll-out will only get worse over time - not better.

2. Apple's Copland operating system

Apple hasn't always been phenomenally successful. When MS Windows 95 was released, the existing Mac System 7 simply couldn't compete with its dynamic memory allocation and multitasking. Apple set out to develop a new OS in-house, with the aim of releasing a better System 8 by 1996.

It's become known as a classic example of feature creep. As Apple refocused its resources on the new OS, project managers began to push for their products to be incorporated into System 8, derailing the project's original scope.

Apple did eventually release System 8 to developers, but it was so unstable it did little to compete with MS Windows or boost Apple's reputation. Before launching another developer release, Apple decided to bin System 8 and look elsewhere for their next OS - which led to the purchase of NeXT and the technology that became Mac OS X.

What's the lesson? Project creep can take the whole thing down. Stay focused on your project's original goals.

3. FozMeyer's ERP project

In the early 90's, FoxMeyer was a major player in pharmaceuticals distribution in the US, worth around $5 billion. Aiming to improve efficiency, FoxMeyer bought an SAP system, together with warehouse automation technology, and brought in consultants to integrate the two. What was supposed to be a $35 million major IT project eventually became the business' downfall. By 1996, the company was declared bankrupt.

There was a litany of reasons for failure. FoxMeyer set an unrealistic time frame: a total of 18 months to transform all their distribution systems. Warehouse employees whose jobs were under threat from the rise in automation were, unsurprisingly, unsupportive. After a series of redundancies, the first warehouse to be fully automated experienced widespread sabotage, with stock damaged and orders left incomplete. The new system also turned out to be less useful than the one it replaced. The SAP system was processing around 10,000 orders a night, compared to 420,000 under the old mainframe. FoxMeyer also accused their consultants and SAP of using the project as a training ground for new employees, rather than providing their best expertise.

What's the lesson? No one plans failure. But you should plan it - would your business be resilient enough to survive if the project was unsuccessful?

4. Nest's software refresh

In 2016, Nest (the Google-powered smart thermostat) released a catastrophic software update that literally left customers in the cold. A fault in the update forced the device's batteries to run out, leaving it unable to control temperature and customers without heating or hot water in the middle of winter.

It was quick to roll out another update, solving the issue for most users. Understandably, though, the failure left some customers feeling frosty towards Nest.

What's the lesson? Test, test and test again. Before releasing an update or implementing any kind of new system, never scrimp on the testing process.

5. US Census Bureau's remote devices

In a $600 million contract, the US Census Bureau bought half a million handheld devices to automate the 2010 census. Since then, project costs have more than doubled and a testing session found that the devices frequently froze or failed to retrieve mapping coordinates. Some devices even had the same ID number, overwriting one another's data. A report found that 'the final cost is unpredictable, and immediate, significant changes are required to rescue the programme'.

It's hard to pinpoint what went wrong, but the US Census Bureau's dogged persistence in seeing the project through even after initial testing showed major flaws meant that remedial costs spiralled.

What's the lesson? Have a plan B. Be prepared for failure by creating a contingency strategy, and know when to use it.

Of course, we're writing about these examples because they had sufficient scale and notoriety to be reported publicly. For most businesses, the size of transformation may be smaller, but the potential pitfalls are just as significant.

From network upgrades and new servers, to finding and implementing the right software and systems, it pays to bring in the experts. At Ratcliff IT , we have more than 15 years' experience of delivering projects for London's small businesses.

Get in touch to find out how we can help your business.

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5 famous IT project failures - and how you can avoid their pitfalls

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Ever had an IT project go over time or over...

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You now that amazing time of the year when your online store sells more than any other month in the year? For most businesses that time is now during the holiday and new years break. While gifts and gift vouchers are flowing free most online and retail stores are flat out cashing in but this year there's one big problem. Myer's online store has been down the past 5 days. To suffer downtime during one of the busiest times of the year is bad, but to be offline for multiple days is just plain expensive.

Myer have said little, but what they have announced is that they are working hard to rebuild the site. While most larger sites in Australia have evolved to scalable backend infrastructure from the likes of Amazon EC2 or Microsoft's Azure platform, it seems Myer didn't get the memo. Delivering a fast, reliable ecommerce website can be challenging, especially with severe peaks in traffic at periods like Christmas, but that's where the cloud comes in. Gone are the days of running websites on beige boxes under your desk, instead sites now leverage georedundancy to ensure they can make sales 24/7 and don't go down, even if parts of the internet do.

Myer's online store is powered by IBM WebSphere software and CEO Bernie Brookes told Fairfax Media that its IT team was "working furiously" with IBM staff internationally and in Australia to get the site back online. It's hard to imagine anything else than a team of developers surrounded by suited execs, arms crossed and yelling profusely at the damn internets.

"There will be no impact at all on our profitability or our overall sales," he said, noting that online sales accounted for less than 1% of its business.

While that may be true, last year Myer made 127.2 Million dollars which means even 1% leaves Myer risking more than $1.2 Million in profit. The story gets even worse when we look at the revenue numbers. Last year Myer turned over $3.14 Billion, so if we're talking 1%, then the website facilitated more than $31 Million in revenue for fiscal year 2012/2013.

While the above figures are annual numbers and the website downtime currently sites are almost a week so far, the actual losses will be a lot less if we just look at these 7 days. Realistically sales spike throughout the months, but if we average the $31M over 52 weeks, it equates to $603,846.15 in revenue per week. If we apply some conservative estimates, that number could double or triple over the xmas and new year break, which would leave the figure well over a million dollars in lost sales.

What can't be calculated accurately is the opportunity cost, the reputation damage and generally shopper frustration with shopping online at Myer. In a highly competitive space these critical miss-steps could have a serious impact for the company, in particular the quarterly year on year numbers and share price.

It is possible the extended downtime isn't due simply to sever capacity issues, but rather a significant security issue that was discovered. I don't have any information to support this theory, only that for a website of this size to be offline for so long, the reason has to be substantial. With a talented web team you could at least get a limited offering up in a matter of hours, even if you had to start from scratch. Really looking forward to the debrief after all this is over.

If you want to share your outrage online, then use #myerfail, it looks to be gaining traction with everyday the site is down.

More information at Business Insider.

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Myer website failure costing millions in lost sales - techAU

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Looking for the latest news, reviews, and insights on technology in Australia? Look no further than our tech website! From the newest gadgets to the latest software releases, we've got you covered with up-to-date information and expert analysis. Stay ahead of the curve and explore the world of technology with us today!

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This was published 9 years ago

By Clay Lucas

Updated first published

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Labor's myki nightmare has returned, with Public Transport Minister Jacinta Allan revealing for the first time the government has been forced to extend the contract to run the bungled $1.5 billion smartcard.

The six-month extension of the contract is worth around $30 million to global technology giant NTT Data, the company that runs myki.

Travel nightmare: A decade after myki was commissioned, the smartcard is still a mess. Credit: Paul Jeffers

A decade after myki was commissioned under Labor and only three years after it became fully operational, myki is being re-tendered on the open market.

A new operator for the smartcard was due to be appointed by next June.

But, in the wake of a scathing report released by Auditor-General John Doyle on Wednesday, Ms Allan confirmed NTT Data has had its $5-million-a-month contract extended by six months.

She blamed the previous government for the delay in signing up a new operator for myki.

"Because the former government hadn't started the process in a timely way, there needed to be a six-month extension," Ms Allan said.

Ms Allan refused to say whether she wanted to see the new operator appointed to run the myki system next year start offering short-term or one-off tickets to travellers.

The ability for a myki user to buy a short-term or single-use ticket was dumped by the Baillieu government.

It left

Ms Allan would not comment on whether she as minister wanted to see the new operator offer single-use tickets, or other features, "because it's a live tender process".

Ms Allan said there had been improvements in myki. "[Myki] works for most of the people most of the time," she said. "But that doesn't mean we can't always look at how we can improve things."

The Auditor-General's report found that the government authority tasked with monitoring myki's performance, Public Transport Victoria, did not know accurately how well myki was performing.

Despite this, PTV had still recently paid more than $1 million in incentive payments to NTT Data.

Mr Doyle also found the myki system had been a financial disaster for Victoria.

Former Labor transport minister Peter Batchelor committed Victoria to a contract in 2005 for almost $1 billion, for a technology specialist to develop and operate myki for a decade.

By last June, the actual cost of myki had ballooned from $1 billion to $1.55 billion.

And while developing myki was meant to take two years, it took nine. Only Paris and San Francisco had a worse history of introducing smartcards, the Auditor-General found.

Problems with myki also continue, with the Public Transport Ombudsman receiving around 140 complaints a day about myki last year - although this had fallen from 190 a day the year before.

"Most of the issues raised were associated with account charges and refunds and reimbursements," Mr Doyle said.

Mr Doyle found that, since Public Transport Victoria was created in 2012, oversight of myki had improved - but that significant problems remained "due to weaknesses with the contract's performance regime".

The authority's chief executive Mark Wild said Public Transport Victoria was working with other government agencies to better monitor myki's performance when a new contract for its operation was awarded next year.

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Myki still a disaster, and Public Transport Victoria is not monitoring it properly: Auditor-General

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The authority managing Victoria's public transport network does not have a "complete and reliable picture of myki's operational performance", the Auditor-General has found.

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https://www.reuters.com/markets/australian-stock-exchanges-blockchain-failure-burns-market-trust-2022-12-20/

ASX wanted to replace/rebuild CHESS (Clearing House Electronic Subregister System) with a cutting edge distributed ledger technology. The project was abandoned after costing $250 million AUD. A review by Accenture found the rebuild was just 63% delivered and almost half the code needed to be rewritten. Some of the reasons it failed:

1. Risk. They were trying to use a cutting edge technology that was unproven and untried so there was alwasy possibility of failure.

2. Scope creep. "From an initial plan to run about 12 of CHESS's 400 data transfers per transaction on blockchain, ASX decided the new system would include all 400 transfers"

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SYDNEY, Dec 20 (Reuters) - In a Sydney hotel conference room in May, Tim Hogben, the head of securities and payments for ASX Ltd , which runs the Australian stock exchange, told traders, share registry operators and clearing house representatives what they were hoping to hear.

A rebuild of the exchange's aging software using blockchain-based technology was largely ready after seven years of development, putting ASX on the verge of a world-first transformation that would enable it to boost trading volumes and compete more aggressively with global rivals.

"Ninety-six percent of the software is currently in an operating-and-test environment. That 96% of that software is working," Hogben told a Stockbrokers and Investment Advisers Association conference, in footage seen by Reuters. "If it wasn't working, you'd be hearing about it, let me tell you."

In November, ASX abandoned the project, citing dysfunctional management, concerns about the product's complexity and scalability, and difficulty finding experts to support it. The axing came after new CEO Helen Lofthouse commissioned an Accenture review that found the rebuild was just 63% delivered and almost half the code needed to be rewritten.

More than a dozen brokers, other market participants and people directly involved in the blockchain project told Reuters the failure had shaken trust in the Australian exchange operator. Some expressed dismay over the time and costs they contributed to the doomed endeavour and ASX's repeat assurances that all was well with the upgrade, which had faced five delays since an initially scheduled 2020 launch.

The experience also raised questions of a mismatch between the promises and reality of the technology that underpins cryptocurrencies. Use of a distributed ledger in Australia's critical financial infrastructure would have been one of the most significant applications of blockchain-based systems in a mainstream corporate setting.

"The ASX could have chosen a steady and stable clearing and settlement system (but) chose a cutting edge, bleeding edge technology that was unproven, untried," said Michael Somes, general counsel of Cboe Australia, a securities and derivatives exchange involved in the project.

"ASX's choices have resulted in one of the biggest critical service stuff-ups seen in financial markets globally."

On top of the A$245-A$255 million ($164-171 million) charge ASX plans to take for the debacle, market players estimate that together they spent about that again preparing for the rollout, including on software upgrades, airfares and employee hours spent attending webinars and consultations.

At a parliamentary hearing this month, ASX apologised for the failure but denied misleading the market or regulators. Chairman Damian Roche, when asked by lawmakers about a statement in the company's 2021 annual report that the project had "moved from the design and build phase to testing and delivery", said the claim referred to "functional" parts of the software, not "non-functional" parts like security and scalability.

An ASX spokesperson told Reuters in an email that the company gave project updates based on the latest available information and some challenges "only became apparent as we reached the latter stages".

SCOPE CREEP

ASX's quest to replace its platform that facilitates trades - known as CHESS, for Clearing House Electronic Subregister System - began under then-CEO Elmer Funke Kupper in 2015, when there was global fascination with cryptocurrency and blockchain.

After New York startup Digital Asset Holdings showed ASX executives a test transaction on its blockchain software, ASX in early 2016 signed the little-known company to begin exploratory work on an overhaul. ASX bought a 5% stake in Digital Asset.

Two months later Funke Kupper quit over bribery allegations relating to a previous role; he was cleared. ASX pressed on with the rebuild, and raised its holding in Digital Asset to 8.5%. Under Funke Kupper's successor, Dominic Stevens, the exchange operator went from no market consultation to extensive consultation, a person involved in the project told Reuters on the condition of anonymity because of concerns about professional repercussions.

The scope also widened. From an initial plan to run about 12 of CHESS's 400 data transfers per transaction on blockchain, ASX decided the new system would include all 400 transfers, the person said.

People working on the project raised concerns that Digital Asset lacked after-market support and that the ASX had enlisted the company without testing its product for scalability, the person said, adding that the worries went unaddressed. Ultimately, ASX had 300 people working on the CHESS replacement project, about one-third of its headcount.

"To try and put something that's not been tried and tested into Australia I think was pretty unwise," said William Slack, managing director of Morrison Securities, which had two staff partly allocated to the ASX project and three or four staff at every ASX consultation for several years.

Funke Kupper did not respond to requests for comment. Efforts to reach Stevens were not successful. When he announced his retirement in February, he told the Australian Financial Review that his successor would find the blockchain project delivered and working, and that "the next stage is swap over".

When CHESS went live in 1994, it was seen as innovative because it combined trading, clearing and settlement on one platform. But over time it became outdated and harder to maintain. When a surge in trading in March 2020 led regulators to cap trades because of processing delays, the Reserve Bank of Australia said replacing CHESS "with more modern technology is critical".

Yet by seeking to replicate all CHESS functions on a single system, ASX risked undermining an advantage of blockchain, which was to reduce contact points that slow processing, people involved in the project said.

"It would have been easier, I guess, to just build a new version of CHESS in some other modern language, rather than blockchain," said Ramy Aziz, a former ASX chief financial officer who oversaw budgets, governance and timetables related to the project in its initial stages.

"Maybe blockchain needs to develop a bit more before it's capable of doing what they want it to do for CHESS. Maybe it'll never be able to do it."

Digital Asset declined to comment beyond a statement on its website agreeing with a part of Accenture's report that highlighted "the need for consistent business requirements (and) simplification in the solution design".

"Clear requirements, alignment on the objectives and manageable milestones with defined success criteria are paramount," it said.

The ASX spokesperson told Reuters that distributed ledger technology could be transformational and the company chose Digital Asset after a "robust global" search.

Soon after ASX shelved the project, A.P. Moeller-Maersk A/S (MAERSKb.CO), opens new tab and IBM (IBM.N), opens new tab ended a blockchain-enabled shipping platform, citing a lack of global cooperation.

FALLOUT

Recriminations were swift. The Australian Securities and Investments Commission, which regulates the exchange, called the belated disclosure of problems "unsatisfactory" and demanded ASX commission a special report explaining its plans for CHESS, while the Reserve Bank of Australia called the failure "very disappointing". Lawmakers want to expand ASIC's powers over the ASX.

Morgan Stanley analysts cut their valuation of ASX shares by 10%, citing strategic uncertainties.

ASX users, meanwhile, want compensation for time and money lost to a project they say they couldn't opt out of.

"The public announcements by the ASX over that journey certainly have come to be shown not to be accurate, some might say misleading," said Daniel Spokes, director of client support services for Morgans, a Brisbane brokerage. Vendors that invested in the technology should "have some sort of right to compensation", he said.

The CEO of a small broker which runs its own trading software, who spoke on the condition of anonymity to avoid harming relations with the exchange, told Reuters he employed four software developers full-time for three years, at a cost of more than A$1 million, to keep up with ASX's frequent update requirements.

The RBA and ASIC have said they expect ASX to cover industry write-downs associated with the failure. The ASX spokesperson said the company was "very aware of the investment customers and other stakeholders have made already (and) we will bear this in mind as we consider what work can be leveraged into a new solution".

The exchange had "offered rebates to customers in the past", the spokesperson added, without elaborating.

For some firms, the cost was hard to measure. One of the biggest third-party trading providers, FinClear Pty Ltd, postponed integrating its software system with that of a company it bought in 2021 based on one abortive ASX changeover date.

"It's what it's meant in terms of our decision-making process around other technology projects that are all interconnected," said FinClear CEO David Ferrall.

"ASX have probably, whether inadvertently or deliberately, misled the market. I'd like to think inadvertently."

Chris Burrell, managing director of Burrell Stockbroking, said he had employees who delayed retirement after learning of the project's launch schedule, "and then the dates came and got pushed out".

In the aftermath, ASX must still determine how to update its core platform. Its spokesperson told Reuters there was "no off-the-shelf solution available to meet the needs of the Australian market".

Aziz predicted the exchange would tread more carefully on its next try.

"They'll probably go and build just a new version of CHESS on a normal programming language, not within blockchain," he said. "That's all they can do really."

Sign up here.

Reporting by Byron Kaye; Editing by David Crawshaw

Our Standards: The Thomson Reuters Trust Principles., opens new tab

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Insight: Australian stock exchange's blockchain failure burns market trust

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In a Sydney hotel conference room in May, Tim Hogben, the head of securities and payments for ASX Ltd , which runs the Australian stock exchange, told traders, share registry operators and clearing house representatives what they were hoping to hear.

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Project: Mumbai Monorail

Cost: INR 3,000 Crores

Description: Mumbai Monorail was eco-friendly solution to urban congestion in Mumbai, India’s financial capital. It aimed to provide last-mile connectivity and modernize Mumbai’s public transit network.

What is its current state: Mumbai monorail has fragile infrastructure, very poor ridership, frequent train breakdowns, and massive operational inefficiencies.

Why it failed:

[1] Unrealistic Rideship Projections [Poor ROI estimates done during project scoping]

[2] Poor Route Planning and Integration [Lack of Stakeholder (general public) understanding and poor design planning]

[3] Ineffective Operations and Maintenance [Lack of proper project handover, no maintenance plans in place, severe cost cutting]

[4] Acquisition Cost Overruns [Project Risk Planning was poor]

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The failure that is India’s first monorail

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At 17,000 a day, ridership is a far cry from glossy estimates of 1.5 lakhs; the government isn’t keen on expanding monorail.