In 2003, the top managers of Levi Strauss decided to replace the IT system. At that time, the company was a multinational structure with operations in 110 countries. The risks seemed to be small: The proposed budget was less than $5 million. But very quickly all hell broke loose. One major customer, Walmart, required that the system interface with its supply chain management system, created additional hurdles. Insufficient procedures for financial reporting and internal controls nearly forced Levi Strauss to restate quarterly and annual results. During the switchover, it was unable to fill orders and had to close its three U.S. distribution centers for a week. In the second quarter of 2008, the company took a $192.5 million charge against earnings to compensate for the botched project. $5 million project that leads to an almost $200 million loss is a classic “black swan.”

The term “Black Swan” was coined by Nicholas Nassim Taleb to describe high-impact events that are rare and unpredictable but in retrospect seem not so improbable. Indeed, what happened at Levi Strauss occurs all too often, and on a much larger scale. IT projects are now so big, and they touch so many aspects of an organization, that they pose a singular new risk. Mismanaged IT projects routinely cost the jobs of top managers. They have sunk whole corporations. Even cities and nations are in peril. The CEOs of companies undertaking significant IT projects should be acutely aware of the risks. It will be no surprise if a large, established company fails in the coming years because of an out-of-control IT project. In fact, the data suggest that one or more will. (Why Your IT Project May Be Riskier Than You Think by Bent Flyvbjerg and Alexander Budzier, Harvard Business Review, September 2011 Issue.)

Looking to a lower level, in the IT realm, especially in the software zone, projects fail. Even good projects fail in time due to poor maintenance or impossible sustainability.

According to ZDNet, the following facts are present nowadays:

Moreover, the trends is that more and more IT projects fail; no matter their budgetary dimensions or complexity. From the budgetary point of view, in 2011, University of Oxford conducted the largest global study ever (at the time) of IT initiatives.

Their experts examined 1,471 projects, comparing their budgets and estimated performance benefits with the actual costs and results. Most incurred high expenses (the average cost was $167 million, the largest $33 billion) and many were expected to take several years.

The findings were surprising: the average overrun was 27%. Fully one in six of the projects they studied were “black swan”, with a cost overrun of 200%, on average, and a schedule overrun of almost 70%. This highlights the true pitfall of digital initiatives: It’s not that they’re particularly prone to high cost overruns on average, as management consultants and academic studies have previously suggested. It’s that an unusually large proportion of them incur massive overages; there are a disproportionate number of “black swans.” It is no doubt that by focusing on averages instead of the more damaging outliers, most managers and consultants have missed the real problem.

Based on a large number of projects our experts performed, AXIOBIT has developed some outlines for approaching digital projects. They are:


  1. Consider every digital project an innovation initiative;
  2. Apply the innovation processing methodology such as design thinking;
  3. Design the business processes, rules and decisions that affect the projects and decide the development;
  4. Use agile PM to build the prototype;
  5. Build  high-fidelity prototypes;
  6. Test it with real users and persona.
  7. Make all the required and rational corrections and get approvals;
  8. Decide on the opportunity (even no start is a valuable decision)
  9. Development & implementation stage;
  10. Use waterfall PM methodology for the development stage.

Applying these principles, there is a set of benefits:

Some thoughts about Black Swan:

Black Swan logic makes what you don’t know far more relevant than what you do know. Consider that many Black Swans can be caused and exacerbated by their being unexpected. A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the practice of explaining widespread failure to predict them as simple folly in hindsight.

Of Lebanese – or, as he preferred, of Levantine – descended but working in New York, Nicholas Nassim Taleb was an option trader and quantitative analyst. Mistrusting the “bell-curve” models used by many financial institutions to mitigate risk, firstly, he wrote a book called Fooled by Randomness about the delusions of control and reliability under which labor much of Wall Street, many other businesses – and, indeed, individual human beings. Then it was The Black Swan!

And here it is the black swan and its effects!