In 1992, Oxford Health Plans started to build a complex new computer system for processing claims and payments. From the start, the project was hampered by unforeseen problems and delays. As the company fell further behind schedule and budget, it struggled, vainly, to stem an ever rising flood of paperwork. When, on October 27, 1997, Oxford disclosed that its system and its accounts were in disarray, the company’s stock price dropped 63%, destroying more than $3 billion in shareholder value in a single day.
A version of this article appeared in the July 2003 issue of Harvard Business Review.