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long-guarded number-one position in market share and global leadership to General Mills, which then had 325% of the total market sales versus 312% for Kellogg In response, Kellogg s executives came up with a brilliant idea: instead of reading the handwriting on the wall, they decided to stick to their corporate objectives To ensure that they would not lose more market share (a factor that did not matter in the least to any of their customers), Kellogg s responded by adding more volume more cereal to each box, while keeping the same price and therefore keeping the mathematical number-one position in volume sales As could be expected, this move resulted in further erosion of profits.

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The harness phase is about using the results of previous analysis to gain approval for a project strategy shaped by the earlier iterative process and then preparing a detailed project base plan and contingency plans for implementation This process is outside the earlier iterative looping structure of Figure 41 Figure 41 is as used in the rst edition of this book and submitted for PRAM in terms of this looping iteration structure, but the PRAM Guide version of Figure 41 was altered to show feedback from the planning phase Moving tasks from one phase to another may not be particularly important and reordering tasks in the context of an iterative process may have little effect in practice, but the additional content of the harness phase as we de ne it is important.

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At this point, after several quarters of losses, the company decided to face the customer, instead of its self-serving objectives, and try to come up with a reason for customers to offer Kellogg s attention and money for its products They decided to innovate and add more value They introduced cereals with new flavors and additions, such as Special K Red Berries, and thus were able to charge nearly double the price of regular cereals Overall, the company s margins increased, and it experienced a 52% gain in net income for 2002 The lesson is this: if you weed out the self-serving objectives that mean nothing to customers and listen to what customers are telling you, commoditization can be challenged and new revenues achieved.

To defend himself, Stephen has chosen a path already trod by his own father, probably because he knows it to be an excuse to which his parents will resonate: Not only was the father too brilliant for those around him, but the son is, as well Accordingly, Stephen is convinced that his coworkers and supervisors are trying to undo him by stealing his ideas, by not paying him what he is worth, and by appraising his work as absurd schemes Such misread signals and unwillingness to consider the evidence are part of the paranoid pattern Stephen s solution is to counterattack by spending even more time on a scheme that would not only revolutionize the industry but also vindicate and avenge him against his critics Unfortunately, the reverse proves true Stephen s plan is rejected for overlooking certain simple facts of logic and efficiency.

Also important is the removal of feedback from the harness phase to the de ne phase, as this allows the shape phases to work at a relatively high strategic level This has important rami cations (developed in 12), as well as implications for s 5 to 11 In brief, the development of responses in order to achieve risk ef ciency and balance has to start at a strategic level, then progress to a tactical level, with a simple, possibly deterministic, approach to the most detailed plans required for implementation A fourth difference is that the PRAM Guide does not adequately re ect the recent shift in emphasis from project risk in the downside risk sense to project uncertainty, involving upside and downside issues.

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