Black Swan in Project Management

A famous example of a black swan in project management is Levi Strauss’s $5 million SAP implementation effort that led to a $200 million loss for the company. According to Flyvbjerg and Budzier (2011), the switchover led to declines in orders, and the company had to close distribution centers in the United States, which resulted in massive losses. In IT projects, black swans are relatively common since the IT infrastructure is deeply integrated into companies’ operations.

Certain risk management steps could have been taken by Levi Strauss to discover the scenario and prevent the situation. Firstly, the company should have assessed the impact of the switchover on its operations and orders before starting the implementation (Hajikazemi et al., 2016). This would have helped to identify the scenario. Secondly, Levi Strauss should have used risk strategies to mitigate the effect of the switchover by instituting alternative order channels or changing project timing to lose fewer orders (Hajikazemi et al., 2016). Finally, the company could have monitored the costs continue to discover the scenario early on and stop the switchover or alter the implementation plan for reduced impact (Hajikazemi et al., 2016). These steps would have allowed the company to discover, prevent, and mitigate the scenario.

In terms of recovery actions, the most important step that the company should have taken was stopping the implementation early on when the first impacts became apparent. After that, the company would have been able to review the plan and implement the new infrastructure differently, with fewer service interruptions. In this way, it would have been able to avoid the tremendous losses that came with the project.

References

Flyvbjerg, B., & Budzier, A. (2011). Why your IT project might be riskier than you think. Harvard Business Review. Web.

Hajikazemi, S., Ekambaram, A., Andersen, B., & Zidane, Y. J. (2016). The black swan: Knowing the unknown in projects. Procedia – Social and Behavioral Sciences, 226, 184-192.

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StudyCorgi. 2022. "Black Swan in Project Management." January 8, 2022. https://studycorgi.com/black-swan-in-project-management/.

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