PLM as a myth?

Although I have a PLM-twisted brain, I try to read in my free time books and articles that have no direct link with PLM. My main interest goes to people. How do they behave and decide in a society, in a company? What makes them decide to change an existing business?

I am currently reading the book from Yuval Noah Harari, called Sapiens: A Brief History of Humankind. I still have to finish the book but got intrigued by the following text when he tried to explain why homo sapiens was able to motivate and mobilize larger groups than a tribe:

How did Homo sapiens manage to a critical threshold, eventually founding cities comprising tens of thousands of inhabitants and empires ruling hundreds of millions? The secret was probably the appearance of fiction. Large numbers of strangers can cooperate successfully by believing in common myths.

Here my PLM-twisted brain woke up. What if we could create a  digital PLM myth? Currently, a lot of the PLM arguments are about functions and features, technical capabilities and perceived Return On Investment (ROI). For a digital transformation ROI is hard to estimate as the future state is not known and stable. What if the future state is a myth?  I will think about it when I finish the book and write the myth 🙂

Meanwhile, the rest of this blog post will be a reprint of a post I wrote almost five years ago in a similar context. PLM (old and new) are concepts against our evolution history. Enjoy and discover.

Our brain blocks PLM acceptance (Aug 2012)

The brain has become popular in the Netherlands in the past two years. Brain scientists have been publishing books sharing their interpretations on various topics of human behavior and the brain.

The common theme of all: The brain is influencing your perceptions, thoughts, and decisions without you even being aware of it.

< added this post: in April 2013 Daniel Kahneman published his book Thinking Fast and Slow I referred in my post from May 2014 to this book – PLM is doomed, unless …>

Some even go that far by claiming certain patterns in the brain can be a proof if you have a certain disorder. It can be for better or for worse.

“It was not me that committed this crime; it was my brain and more…”

Anyway, this post will be full of quotes as I am not the brain expert, still giving the brain an important role (even in PLM)

“My brain? That´s my second favorite organ” – Woody Allen

It is good to be aware of the influence of the brain. I wrote about this several times in the past, when discussing PLM vendor/implementer selection or when even deciding for PLM. Many of my posts are related to the human side of justifying and implementing PLM.

As implementing PLM for me primary is a business change instead of a combination of IT-tools to implement, it might be clear that understanding the inhibitors for PLM change are important to me.

In the PLM communities, we still have a hard job to agree between each other what is the meaning of PLM and where it differs from ERP. See for example this post, and in particular, the comments on LinkedIn (if you are a member of this group): PLM is a business process, not a (software) tool

Moreover, why it is difficult for companies to implement PLM beside ERP (and not as an extension of ERP) – search for PLM and ERP and you find zillions of thoughts and answers (mine too).

The brain plays a major role in the Why PLM we have ERP battle (blame the brain). A week ago I read an older publication from Charles Roxburgh (published in May 2003 by McKinsey) called: Hidden flaws in strategy subtitle: Can insights from behavioral economics explain why good executives back bad strategies.

COULD read, hear and download the full article when you are a registered user. Unfortunate the link has been broken now>

The article has been written long before the financial and global crises were on the agenda and Mr. Roxburgh describes 8 hidden flaws that influence our strategic decision making (and PLM is a strategy).  Note all quotes below are from his publication.

Flaw 1: Overconfidence

We often make decisions with too much confidence and optimism as the brain makes us feel overconfident and over-optimistic about our own capabilities.

Flaw 2: Mental accounting

Avoiding mental accounting traps should be easier if you adhere to a basic rule: that every pound (or dollar or euro) is worth exactly that, whatever the category. In this way, you will make sure that all investments are judged on consistent criteria and be wary of spending that has been reclassified. Be particularly skeptical of any investment labeled “strategic.”

Here I would relate to the difference in IT-spending and budget when you compare ERP and PLM. ERP spending is normal (or strategic) where PLM spending is not understood.

Flaw 3: The status quo bias

People would rather leave things as they are. One explanation for the status quo bias is an aversion to loss—people are more concerned about the risk of loss than they are excited by the prospect of gain.

Another reason why adopting and implementing PLM in an organization is more difficult than for example just automating what we already do.

Flaw 4: Anchoring

Anchoring can be dangerous—particularly when it is a question of becoming anchored to the past

PLM has been anchored with being complex and expensive. Autodesk is trying to change the anchoring. Other PLM-like companies stop talking about PLM due to the anchoring and name what they do differently: 3DExperience, Business Process Automation, …..

Flaw 5: The sunk-cost effect

A familiar problem with investments is called the sunk-cost effect, otherwise known as “throwing good money after bad.” When large projects overrun their schedules and budgets, the original economic case no longer holds, but companies still keep investing to complete them.

I have described several cases in the past anonymously; where companies kept on investing and customizing their ERP environment to achieve PLM goals. Although it never reached the level of acceptance and quality a PLM system could offer, stopping these projects was impossible.

Flaw 6: The herding instinct

This desire to conform to the behavior and opinions of others is a fundamental human trait and an accepted principle of psychology.

Warren Buffett put his finger on this flaw when he wrote, “Failing conventionally is the route to go; as a group, lemmings may have a rotten image, but no individual lemming has ever received bad press.”

A quote in a quote but so true. Innovative thinking, introducing PLM in a company requires a change. Who needs to be convinced? If you do not have consensus (which usually happens as PLM is vague) you battle against the other lemmings.

Flaw 7: Misestimating future hedonistic states

Social scientists have shown that when people undergo major changes in circumstances, their lives typically are neither as bad nor as good as they had expected—another case of how bad we are at estimating. People adjust surprisingly quickly, and their level of pleasure (hedonistic state) ends up, broadly, where it was before

A typical situation every PLM implementation faces: users complaining they cannot work as efficient anymore due to the new system and their work will be a mess if we continue like this. Implementers start to customize quickly, and we are trapped. Let these people ‘suffer’ with the right guidance and motivation for some months (but this is sometimes not the business model the PLM implementer pushes as they need services as income)

Flaw 8: False consensus

People tend to overestimate the extent to which others share their views, beliefs, and experiences—the false-consensus effect. Research shows many causes, including these:

• confirmation bias, the tendency to seek out opinions and facts that support our own beliefs and hypotheses

• selective recall, the habit of remembering only facts and experiences that reinforce our assumptions

• biased evaluation, the quick acceptance of evidence that supports our hypotheses, while contradictory evidence is subjected to rigorous evaluation and almost certain rejection; we often, for example, impute hostile motives to critics or question their competence

• group-think, the pressure to agree with others in team-based cultures

Although positioned as number 8 by Mr. Roxburgh, I would almost put it on the top when referring to PLM and PLM selection processes. So often a PLM decision has not been made in an objective manner, and PLM selection paths are driven to come to the conclusion we already knew. (Or is this my confirmation bias too )

Conclusion

As scientists describe, and as Mr. Roxburgh describes our strategic thinking is influenced by the brain, and you should be aware of that. PLM is a business strategy and when rethinking your PLM strategy tomorrow, be prepared to avoid these flaws mentioned in this post today.