Why the pattern hasn’t changed in 27 years, and why it won’t until we address what happens before deployment
THE REASON
Kroger didn’t have a technology problem; they had a readiness and contextual alignment problem. The robotics worked — but the business assumptions did not – (This is exactly the pattern you’ve documented since 1998.)
THE OUTCOME (AND WHY)
Kroger just announced a $2.6 billion write-down on automation.
Three robotic fulfillment centers. Closing in January. The reason? U.S. shoppers chose speed over savings. Instacart and DoorDash won with 30-minute delivery while Kroger’s robots were deployed in fulfillment centers outside cities — too far from customers.
The robots worked fine. The organizational context didn’t.
When I read Gaurav Sharma’s post about this yesterday, and saw Canda Rozier’s comment — “exacerbated (at the very least) by lack of readiness!” — I didn’t feel surprise. I felt exhaustion. Because I’ve been documenting this exact pattern for 27 years.
The 2008 White Paper That Could Have Been Written Today
In 2008, I wrote a white paper for the CATA Alliance titled “SAP Procurement for Public Sector.” The specific technology isn’t what matters. What matters is what I documented about why implementations fail.
Here’s what I wrote then:
“The fact that awareness of the high-rate of ERP/IT-based initiative failure to deliver the expected results is now entering mainstream consciousness, vendors and those associated with the recommendation and implementation of solutions find themselves in unfamiliar waters. Specifically, what do you do to overcome the growing cynicism within the end-user community?”
Replace “ERP” with “automation” or “AI” and “2008” with “2025.” The pattern is identical.
In that same white paper, I documented the failures that were already piling up:
Hershey Foods: $112 million and 30 months to admit failure on an SAP integration that broke their order fulfillment process
Hewlett-Packard: $400 million in lost revenue from a failed SAP rollout — and HP was an SAP integrator
Cadbury Schweppes: £12 million hit from a supply chain implementation that caused them to overproduce chocolate
FoxMeyer Drug: $500 million lawsuit after an SAP implementation contributed to the company’s bankruptcy
King County, Washington: $38 million SAP initiative that “blew up” — while SAP was still using them as a reference account
The technology worked. The organizational readiness didn’t.
67 Frameworks. Same 70% Failure Rate. Why?
Last month, I published an analysis that should disturb everyone in procurement leadership: Since 1999, consulting firms have published 67+ strategic frameworks for transformation success. McKinsey’s 7-S. Kotter’s 8 Steps. Prosci’s ADKAR. Gartner’s endless quadrants. Deloitte’s maturity models.
The transformation failure rate has stayed flat at 70-80% the entire time.
How is that possible? How can an industry produce 67 frameworks designed to improve success rates while the success rates don’t improve?
The answer is structural: We’ve built an entire industry around skipping Phase 0.
Vendors sell technology, not readiness
Consultants bill for implementation, not diagnosis
Executives get rewarded for announcing initiatives, not for asking “are we ready?”
Nobody gets promoted for saying “let’s slow down and measure readiness first”
The incentives are misaligned. And misaligned incentives produce predictable outcomes.
The Question Nobody Asked at Kroger
Kroger didn’t fail at automation. They failed at readiness — market readiness, location strategy, execution alignment.
The question they asked: “What should we build?”
The question they didn’t ask: “Are we ready to operate it successfully?”
More specifically, they didn’t ask:
Are our fulfillment center locations aligned with how customers actually behave?
Is the market ready for the value proposition we’re offering (savings) versus what competitors are offering (speed)?
Do we have the organizational alignment to execute this strategy across all stakeholders?
These are Phase 0 questions. They come before technology selection, before deployment, before the $2.6 billion commitment.
Kroger skipped Phase 0. And $2.6 billion is the tuition for that decision.
The Pattern I Documented in 1998
In 1998, I inherited a contract with the Department of National Defence that was at 51% delivery performance and about to be canceled. Everyone said the same thing: “Automate. Upgrade the system. Implement new technology.”
I said: “Wait. Let me ask some questions first.”
What I discovered had nothing to do with the technology:
Service technicians were sandbagging orders — holding them until the end of the month to manage their workload
Customs clearance was creating unpredictable delays
Courier coordination was misaligned with order timing
Dynamic pricing windows were being missed because nobody understood when orders actually arrived
The system wasn’t the problem. The organizational context was the problem.
We built an agent-based solution that connected all the players — suppliers, UPS, customs, buyers — into a coordinated system that addressed the real context.
Result: 51% delivery performance became 97.3%. Costs dropped 23%. The supplier base compressed from 23 to 3. And the company sold for $12 million in 2001.
Same pattern as Kroger. Opposite outcome. The difference was Phase 0.
Why Rohit Sathe’s Comment Matters
In the thread about Kroger, Rohit Sathe wrote something that deserves to be carved in stone:
“Transformation happens only when we change how we work, not when we ask technology to copy what we already do.”
This is the core insight that 27 years of documented failures keeps proving.
Technology is an amplifier. It amplifies whatever organizational patterns already exist. If those patterns are aligned — if readiness has been measured and addressed — technology accelerates success. If those patterns are misaligned, technology accelerates failure.
Kroger’s robots amplified a location strategy that was already misaligned with customer behavior. The automation worked perfectly. It just worked perfectly in the wrong places.
The Industry Doesn’t Want to Hear This
Here’s the uncomfortable truth: The consulting and technology industry has a structural incentive to not solve this problem.
If readiness assessment became standard practice — if every organization measured alignment before deployment — the failure rate would drop. But so would the revenue from failed implementations, rescue projects, and “transformation 2.0” initiatives.
The industry makes money from the 70% that fail. Not from preventing the failures in the first place.
That’s why 67 frameworks haven’t moved the needle. They’re designed to be applied after the decision to deploy has already been made. They optimize the wrong phase of the process.
What Would Have Saved Kroger $2.6 Billion?
A readiness assessment before deployment. Specifically:
Market Readiness: Is the value proposition we’re offering (cost savings through automation) aligned with what customers actually want (speed and convenience)? Instacart and DoorDash had already answered this question. Kroger didn’t ask it.
Location Strategy Alignment: Are our fulfillment center locations positioned to serve customer behavior patterns? Deploying outside cities when customers want 30-minute delivery is a fundamental misalignment that no amount of robotic efficiency can overcome.
Organizational Execution Readiness: Do we have the cross-functional alignment to execute this strategy? Were operations, logistics, marketing, and strategy aligned on the same assumptions?
These questions cost a fraction of $2.6 billion to answer. But they require something the industry rarely provides: the discipline to pause before deploying.
The DND Story — Full Context
For those who want the complete picture of how Phase 0 thinking produced different results, I’ve shared the full story of the DND contract transformation in a recent video interview. It covers:
The specific diagnostic questions that revealed the real problems
How agent-based modeling identified dependencies that traditional analysis missed
The self-learning system architecture that enabled continuous optimization
Why the same approach that worked in 1998 is more relevant today than ever
The 2008 White Paper — History Repeating
For those who want to see that this pattern has been documented for nearly two decades, here’s the original 2008 white paper I wrote for the CATA Alliance.
Read the case studies. Read the failure patterns. Then look at Kroger’s announcement.
The technology changed. The vendors changed. The outcomes didn’t.
The Question for Procurement Leaders
Every procurement leader reading about Kroger’s $2.6 billion write-down should ask themselves one question:
What assumptions are we making about our own readiness that we haven’t validated?
Because the robots will work. The AI will work. The automation will work.
The question is whether your organization is ready to operate it successfully.
That’s Phase 0. And skipping it costs billions.
Jon Hansen has been documenting procurement transformation patterns since 1998. His work on the Hansen Fit Score methodology addresses the organizational readiness gap that underlies the documented 70-80% failure rate in technology implementations. The Procurement Insights archives contain over 3,500 posts spanning 2007-2025, providing institutional memory of what happened to “success stories” after the press releases stopped.
30
“HP is trying to build an application management business to rival IBM’s. What better case study in proving your R/3 and Netweaver capability than a good old dogfood eating session — show everyone how to merge two SAP systems and they will come to you the next time they make a merger or acquisition and want to do the same thing. Who would want to go to HP now for large-scale SAP integration? The CEO just publicly said HP can’t effectively manage such a project.”
Procurement Insights
Kroger’s $2.6 Billion Write-Down Proves What I Wrote in 2008: Technology Doesn’t Fail — Unready Organizations Fail at Technology
Posted on November 30, 2025
0
Why the pattern hasn’t changed in 27 years, and why it won’t until we address what happens before deployment
THE REASON
THE OUTCOME (AND WHY)
Kroger just announced a $2.6 billion write-down on automation.
Three robotic fulfillment centers. Closing in January. The reason? U.S. shoppers chose speed over savings. Instacart and DoorDash won with 30-minute delivery while Kroger’s robots were deployed in fulfillment centers outside cities — too far from customers.
The robots worked fine. The organizational context didn’t.
When I read Gaurav Sharma’s post about this yesterday, and saw Canda Rozier’s comment — “exacerbated (at the very least) by lack of readiness!” — I didn’t feel surprise. I felt exhaustion. Because I’ve been documenting this exact pattern for 27 years.
The 2008 White Paper That Could Have Been Written Today
In 2008, I wrote a white paper for the CATA Alliance titled “SAP Procurement for Public Sector.” The specific technology isn’t what matters. What matters is what I documented about why implementations fail.
Here’s what I wrote then:
Replace “ERP” with “automation” or “AI” and “2008” with “2025.” The pattern is identical.
In that same white paper, I documented the failures that were already piling up:
The technology worked. The organizational readiness didn’t.
67 Frameworks. Same 70% Failure Rate. Why?
Last month, I published an analysis that should disturb everyone in procurement leadership: Since 1999, consulting firms have published 67+ strategic frameworks for transformation success. McKinsey’s 7-S. Kotter’s 8 Steps. Prosci’s ADKAR. Gartner’s endless quadrants. Deloitte’s maturity models.
The transformation failure rate has stayed flat at 70-80% the entire time.
How is that possible? How can an industry produce 67 frameworks designed to improve success rates while the success rates don’t improve?
The answer is structural: We’ve built an entire industry around skipping Phase 0.
The incentives are misaligned. And misaligned incentives produce predictable outcomes.
The Question Nobody Asked at Kroger
Kroger didn’t fail at automation. They failed at readiness — market readiness, location strategy, execution alignment.
The question they asked: “What should we build?”
The question they didn’t ask: “Are we ready to operate it successfully?”
More specifically, they didn’t ask:
These are Phase 0 questions. They come before technology selection, before deployment, before the $2.6 billion commitment.
Kroger skipped Phase 0. And $2.6 billion is the tuition for that decision.
The Pattern I Documented in 1998
In 1998, I inherited a contract with the Department of National Defence that was at 51% delivery performance and about to be canceled. Everyone said the same thing: “Automate. Upgrade the system. Implement new technology.”
I said: “Wait. Let me ask some questions first.”
What I discovered had nothing to do with the technology:
The system wasn’t the problem. The organizational context was the problem.
We built an agent-based solution that connected all the players — suppliers, UPS, customs, buyers — into a coordinated system that addressed the real context.
Result: 51% delivery performance became 97.3%. Costs dropped 23%. The supplier base compressed from 23 to 3. And the company sold for $12 million in 2001.
Same pattern as Kroger. Opposite outcome. The difference was Phase 0.
Why Rohit Sathe’s Comment Matters
In the thread about Kroger, Rohit Sathe wrote something that deserves to be carved in stone:
This is the core insight that 27 years of documented failures keeps proving.
Technology is an amplifier. It amplifies whatever organizational patterns already exist. If those patterns are aligned — if readiness has been measured and addressed — technology accelerates success. If those patterns are misaligned, technology accelerates failure.
Kroger’s robots amplified a location strategy that was already misaligned with customer behavior. The automation worked perfectly. It just worked perfectly in the wrong places.
The Industry Doesn’t Want to Hear This
Here’s the uncomfortable truth: The consulting and technology industry has a structural incentive to not solve this problem.
If readiness assessment became standard practice — if every organization measured alignment before deployment — the failure rate would drop. But so would the revenue from failed implementations, rescue projects, and “transformation 2.0” initiatives.
The industry makes money from the 70% that fail. Not from preventing the failures in the first place.
That’s why 67 frameworks haven’t moved the needle. They’re designed to be applied after the decision to deploy has already been made. They optimize the wrong phase of the process.
What Would Have Saved Kroger $2.6 Billion?
A readiness assessment before deployment. Specifically:
Market Readiness: Is the value proposition we’re offering (cost savings through automation) aligned with what customers actually want (speed and convenience)? Instacart and DoorDash had already answered this question. Kroger didn’t ask it.
Location Strategy Alignment: Are our fulfillment center locations positioned to serve customer behavior patterns? Deploying outside cities when customers want 30-minute delivery is a fundamental misalignment that no amount of robotic efficiency can overcome.
Organizational Execution Readiness: Do we have the cross-functional alignment to execute this strategy? Were operations, logistics, marketing, and strategy aligned on the same assumptions?
These questions cost a fraction of $2.6 billion to answer. But they require something the industry rarely provides: the discipline to pause before deploying.
The DND Story — Full Context
For those who want the complete picture of how Phase 0 thinking produced different results, I’ve shared the full story of the DND contract transformation in a recent video interview. It covers:
The 2008 White Paper — History Repeating
For those who want to see that this pattern has been documented for nearly two decades, here’s the original 2008 white paper I wrote for the CATA Alliance.
Read the case studies. Read the failure patterns. Then look at Kroger’s announcement.
The technology changed. The vendors changed. The outcomes didn’t.
The Question for Procurement Leaders
Every procurement leader reading about Kroger’s $2.6 billion write-down should ask themselves one question:
What assumptions are we making about our own readiness that we haven’t validated?
Because the robots will work. The AI will work. The automation will work.
The question is whether your organization is ready to operate it successfully.
That’s Phase 0. And skipping it costs billions.
Jon Hansen has been documenting procurement transformation patterns since 1998. His work on the Hansen Fit Score methodology addresses the organizational readiness gap that underlies the documented 70-80% failure rate in technology implementations. The Procurement Insights archives contain over 3,500 posts spanning 2007-2025, providing institutional memory of what happened to “success stories” after the press releases stopped.
30
“HP is trying to build an application management business to rival IBM’s. What better case study in proving your R/3 and Netweaver capability than a good old dogfood eating session — show everyone how to merge two SAP systems and they will come to you the next time they make a merger or acquisition and want to do the same thing. Who would want to go to HP now for large-scale SAP integration? The CEO just publicly said HP can’t effectively manage such a project.”
— James Governor, RedMonk Analyst, 2004
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