Innovation Project Management
Description
ACTIONABLE TOOLS, PROCESSES, AND METRICS FOR SUCCESSFULLY MANAGING INNOVATION PROJECTS, WITH EXCLUSIVE INSIGHTS FROM WORLD-CLASS ORGANIZATIONS AROUND THE WORLD
The newly revised Second Edition of Innovation Project Management offers students and practicing professionals the tools, processes, and metrics needed to successfully manage innovation projects, providing value-based innovation project management metrics as well as guidance for how to establish a metrics management program.
The highly qualified author analyzes innovation from all sides; through this approach, Innovation Project Management breaks down traditional project management methods and explains why and how innovation projects should be managed differently.
The Second Edition includes exclusive insights from world-class organizations such as IBM, Hitachi, Repsol, Philips, Deloitte, IdeaScale, KAUST, and more. It includes six all new case studies, featuring a dive into brand management innovation from Lego. Each case study contains questions for discussion, and instructors have access to an Instructor's Manual via the book's companion website.
Specific ideas discussed in Innovation Project Management include:
* Continuous versus discontinuous innovation, incremental versus radical innovation, understanding innovation differences, and incremental innovation versus new product development
* Identifying core competencies using SWOT analysis and nondisclosure agreements, secrecy agreements, and confidentiality agreements
* Implications and issues for project managers and innovation personnel, active listening, pitching the innovation, and cognitive biases
* Measuring intangible assets, customer/stakeholder impact on value metrics, customer value management programs, and the relationship between project management and value
With its highly detailed and comprehensive coverage of the field, and with case studies from leading companies to show how concepts are applied in real-world situations, Innovation Project Management is a must-have title for practicing project managers, as well as students in project management, innovation, and entrepreneurship programs.
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HAROLD KERZNER, PhD is Senior Executive Director for Project Management at the International Institute for Learning, Inc. (IIL), a global learning solutions company offering professional training and consulting services worldwide. Dr. Kerzner's profound effect on the project management industry inspired IIL to establish, in coordination with PMI, the Kerzner International Project Manager of the Year Award, which is presented to a distinguished PMP® or global equivalent each year.
Content
Preface xv
1 Introduction to Innovation Project Management 1
Introduction 1
Definitions for Innovation 2
The Business Need 4
Innovation Literature 6
Project Management Literature 7
Innovation Benchmarking 8
Value: The Missing Link 10
Innovation Targeting 12
Timeline for Innovation Targeting 13
Innovation in Small Companies 14
Seven Critical Dimensions for Scaling Project Management Innovation 14
Implications and Issues for Project Managers and Innovation Personnel 16
2 Types of Innovation 19
Introduction 19
Continuous Versus Discontinuous Innovation 20
Incremental Versus Radical Innovation 21
Understanding Innovation Differences 22
Incremental Innovation Versus New Product Development 23
Product Development Innovation Categories 23
Closed and Open Innovation 25
Crowdsourcing 27
Co-Creation Innovation 29
Open Innovation in Action: Airbus and Co-creation Partnerships 35
Value (Or Value-Driven) Innovation 37
Agile Innovation 38
Agile Innovation in Action: Deloitte 40
Government Innovation 47
Financial Innovation 50
Healthcare Innovation 51
Brand Innovation 53
Sustainable Innovation 53
Humanitarian/Social Innovation 54
Social Innovation in Action: Hitachi 55
educational Innovation 57
Manufacturing Innovation 58
A Case Study 60
Nontechnical Innovation in Action 60
Other Categories of Innovation 62
Role of the Board of Directors 66
Finding an Innovation Project Sponsor 66
Implications and Issues for Project Managers and Innovation Personnel 67
3 Innovation and Strategic Planning 69
Introduction 69
Role of the Innovation Project Manager in Strategic Planning 70
Role of the Portfolio PMO 70
Business Impact Analysis 71
Innovation Maturity Models 71
Types of Strategies 73
Role of Innovation in Strategic Planning 74
Role of Marketing in Strategic Innovation Planning 75
Product Portfolio Analysis 76
Identifying Core Competencies Using SWOT Analysis 82
Innovation Project Management Competency Models in Action: eli Lilly 84
Marketing's Involvement with Innovation Project Managers 95
Product Life Cycles 97
Classification of R&D Projects 97
Research Versus Development 98
The Research and Development Ratio 99
Offensive Versus Defensive Innovation 100
Modeling the R&D Planning Function 101
Priority Setting 105
Contract R&D 107
Nondisclosure Agreements, Secrecy Agreements, and Confidentiality Agreements 108
Government Influence 108
Sources for Innovation Technology 109
Sources of Ideas 110
The Project Manager's Role in Developing Innovation Skills and Ideas in People 112
establishing a Project Selection Criteria 114
Project Selection Issues 115
economic evaluation of Projects 116
Role of the Project Manager in Project Selection 119
Project Selection and Politics 124
Project Readjustments 126
Project Termination 127
Implications and Issues for Project Managers and Innovation Personnel 127
4 Innovation Tools and Processes 129
Introduction 129
New Product Development 130
The Fuzzy Front end 131
Prioritizing Product Features 133
Line of Sight 134
Misalignment Issues 135
Risk Management 137
The Innovation Culture 140
Innovation Functional Units 145
Innovative Cultures and Corporate Leadership 145
Idea Generation 146
Spinoff Innovations 147
Understanding Reward Systems 148
Innovation Leadership in Action: Medtronic 149
IPM Skills Needed 152
Design Thinking 155
Brainstorming 157
Whiteboarding 163
Mind Maps 163
Active Listening 165
Pitching the Innovation 167
Cognitive Biases 167
Prototypes 168
Creativity and Innovation Fears 170
Innovation Governance 170
Corporate Innovation Governance Risks 171
Transformational Governance 174
Balanced Scorecard 175
Strategy Maps 176
Innovation Portfolio Management 177
Innovation Sponsorship 179
The Innovation Team 180
Virtual Versus Co-Located Innovation Teams 181
Artificial Intelligence and IPM 182
The Need for PM 2.0 and PM 3.0 184
Implications and Issues for Project Managers and Innovation Personnel 187
5 From Traditional to Innovation Project Management Thinking 191
Introduction 191
Information Warehouses 193
Innovation Planning Overview 197
Innovation Methodologies 200
Methodology Gates 202
Innovation Assumptions 202
Validating the Objectives 204
Differing Views of the Project 206
Life-Cycle Phases 206
Life-Cycle Costing 210
Work Breakdown Structure 211
Budgeting 212
Scheduling 212
Scope Change Control 213
Technology Readiness Levels 214
Lean Project Management: Kanban 216
Communication 217
enabling Innovation Success in Solution Design and Delivery in Healthcare Business 218
Innovation in Action: Dubai Customs and the Accelerated exploratory Lab 229
Innovation in Action: Merck KGaA, Darmstadt, Germany 234
Innovation in Action: Repsol 237
Staffing Innovation Projects 241
Implications and Issues for Project Managers and Innovation Personnel 243
6 Innovation Management Software 245
Introduction 245
Origin and Benefits of Innovation Software 246
Software Innovation in Action: IdeaScale 248
Software Innovation in Action: Hype Innovation 251
Software and Open Innovation 260
Implications and Issues for Project Managers and Innovation Personnel 261
7 Value-based Innovation Project Management Metrics 263
Introduction 263
Value Over the Years 265
Value and Leadership 266
Combining Benefits and Value 268
Recognizing the Need for Value Metrics 269
The Need for effective Measurement Techniques 271
Measuring Intangible Assets 276
Customer / Stakeholder Impact on Value Metrics 278
Customer Value Management Programs 279
The Relationship between Project Management and Value 282
Creating an Innovation Project Management Baseline 284
Selecting the Right Metrics 286
The Failure of Traditional Metrics and KPIs 288
The Need for Value Metrics 288
Creating Value Metrics 289
Industry examples of Innovation Value Metrics 295
Alignment to Strategic Business Objectives 296
Metrics for Innovation Governance 298
Innovation Metrics in Action: InnovationLabs 299
The Dark Side of Innovation Metrics 309
establishing a Metrics Management Program 310
Implications and Issues for Project Managers and Innovation Personnel 312
8 Business Models 315
Introduction 315
From Project Manager to Designer 317
Business Models and Value 318
Business Model Characteristics 318
Strategic Partnerships 319
Business Intelligence 319
Skills for the Business Model Innovator 320
Business Model enhancements 322
Types of Business Models 324
Business Models and Strategic Alliances 326
Identifying Business Model Threats 327
Business Model Failure 328
Business Models and Lawsuits 328
Implications and Issues for Project Managers and Innovation Personnel 330
9 Disruptive Innovation 333
Introduction 333
early Understanding of Disruption 334
Innovation and the Business Model Disruption 335
Categories of Disruptive Innovations 337
The Dark Side of Disruptive Innovation 338
Using Integrated Product/Project Teams 339
Disruptive Innovation in Action 341
Implications and Issues for Project Managers and Innovation Personnel 342
10 Innovation Roadblocks 345
Introduction 345
The Failure of Success 346
One Size Fits All 346
Insufficient Line of Sight 346
Failing to Search for Ideas 347
Sense of Urgency 347
Working with Prima Donnas 347
Lack of Collaboration 348
Politics 348
Project Workloads 348
Intellectual Property Rights 348
Not Understanding the Relationship between Creativity and Innovation 349
Too Many Assumptions 350
Innovation Funding 350
Cash Flow and Financial Uncertainty 350
Control, Control, and Control 350
Analysis-Paralysis 351
Innovation in Action: Naviair 351
Innovation in Action: Overcoming the Roadblocks 363
11 Defining Innovation Success and Failure 367
Introduction 367
The Business Side of Traditional Project Success 368
Defining Project Success: The early Years 370
Redefining Project Success: Approaching the Twenty-First Century 371
Degrees of Success and Failure 372
Defining Success at the Beginning of the Project 374
The Role of Marketing in Defining Innovation Success 374
The Business Side of Innovation Success 377
Prioritization of the Success Factors 379
Innovation Project Success and Core Competencies 380
Innovation Project Success and Business Models 381
Causes of Innovation Project Failure 381
Identifying the Success and Failure Criteria 384
Post-Failure Success Analysis 385
Sensemaking 386
The Need for New Metrics 387
Learning from Failure 387
The Failure of Success 388
Conclusion 390
Implications and Issues for Project Managers and Innovation Personnel 390
12 Innovation in Action 393
Introduction 393
Innovation in Action: Apple 393
Innovation in Action: Facebook 395
Innovation in Action: IBM 396
Innovation in Action: Texas Instruments 399
Innovation in Action: 3M 401
Innovation in Action: Motorola 403
Innovation Project Management: The Case of KAUST Smart 404
Key Characteristic of KAUST Smart Projects (What makes KAUST Smart Projects Unique) 405
Recent and Ongoing Project examples 408
Innovation in Action: Samsung 410
Agile Innovation in Action: Integrated Computer Solutions, Inc 411
Innovation in Action: COMAU 418
Innovation in Action: Tokio Marine and Nichido Systems 425
Innovation in Action: GeA 427
Innovation Management at GeA - The Strategic Parts 432
Innovation in Action: Wärtsilä energy Solutions 435
Critical Issues 437
13 Case Studies 439
Disney (A): Innovation Project Management Skills at Disney 439
Disney (B): Creating Innovation: Disney's Haunted Mansion 449
Disney (C): Impact Of Culture On Global Innovation Opportunities 464
Disney (D): The Partnership Side Of Global Business Model Innovation 482
Case Study: Boeing 787 Dreamliner: Managing Innovation Risks with a New Business Model 494
Case Study: The Sydney Australia Opera House 501
Case Study: Ampore Faucet Company: Managing Different Views on Innovation 508
Case Study: The Innovation Sponsors 510
Case Study: The Rise, Fall, and Resurrection of Iridium: When an Innovation Business Model Fails 512
Case Study: Zane Corporation: Selecting an Innovation Framework 540
Case Study: Redstone Inc.: Understanding Innovation Cultures 544
Case Study: The Government Think Tank: The Failure of Crowdsourcing 546
Case Study: Lego: Brand Management Innovation 548
Index 565
Introduction to Innovation Project Management
- Learning Objectives for Project Managers and Innovation Personnel
- To understand the differences between traditional and innovation project management
- To understand that there are new skills, responsibilities, and expectations for managing innovation activities
- To understand the strategic/business importance of innovation
- To understand the importance of measuring innovation business value
INTRODUCTION
"The future is a direction, not a destination."
- Edwin Catmull
Over the past three decades, there has been a great deal of literature published on innovation and innovation management. Converting a creative idea into reality requires projects and some form of project management. Unfortunately, innovation projects may not be able to be managed effectively using the traditional project management philosophy we teach in our project management courses. Innovation varies from industry to industry, and even companies within the same industry cannot come to an agreement on how innovation project management should work. Part of the disagreement comes from the fact that there are several forms of innovation, each one with different characteristics and possibly requiring different tools.
It is inevitable that, over the next several years, professional organizations such as the Project Management Institute (PMI) will recognize the need to begin setting some standards for innovation project management and possibly partner with organizations, such as the Product Development and Management Association (PDMA), which offers a certification program related to innovation. There may also appear an Innovation Project Management Manifesto like the Agile Manifesto. The greatest innovation in the next decade may be the recognition and advancement of innovation project management as a specialized project management career path position.
There are differences between traditional and innovation project management. People have avoided using the words "innovation" and "project management" in the same sentence because of these differences. Even some organizations that offer certification in innovation practices do not use the words "project management." There is limited research on examining the link between innovation and project management.
Innovation is often unstructured and requires people to utilize those portions of the brain that focus on free thinking, creativity, brainstorming, and alternative analyses. Project management, on the other hand, is very structured, with a well-defined scope, and often with a very low tolerance for any creativity or brainstorming that is believed to be out of scope.
There are several types of innovation, ranging from small, incremental changes to a product to totally new products and processes that are the result of a breakthrough in technology that disrupts the market. Incremental innovation may follow some of the standard project management processes. Radical or disruptive innovation may require playing by a different set of rules. All assumptions must be challenged, even if they appear in a business case. Innovation requires the identification of the right problems and thinking about elegant solutions. All of these factors may require that the organizational culture change.
DEFINITIONS FOR INNOVATION
"If you want something new, you have to stop doing something old."
- Peter Drucker
"Innovation = Ideas + Execution + Adoption"
- Jag Randhawa, The Bright Idea Box: A Proven System to Drive Employee Engagement and Innovation
There are conflicting views on what innovation means. Some people argue that innovation is standing in the future (rather than the present) and helping others see it. Another view of innovation (to paraphrase Martha Graham) states that innovation teams, and innovators, are not ahead of their time in what they see. They are in real time, and the rest of the world hasn't caught up to them yet because they are still focusing on the past.
There is no universally agreed-on definition for innovation, but two common definitions are:
- Innovation is the transformation of knowledge or intellectual property into commercialization.
- Innovation is not necessarily invention; it can be the creation of something new, as in a new application. Innovation is finding a new or better solution to market needs in a manner that creates long-term shareholder value. Externally, it is seen by customers as improved quality, durability, service, and/or price. Internally, it appears as positive changes in efficiency, productivity, quality, competitiveness, and market share.
To understand the difficulty in defining innovation, we will look first at the reasons for performing innovation:
- To produce new products or services with long-term profitable growth potential
- To produce long-term profitable improvements to existing products and services
- To produce scientific knowledge that can lead to new opportunities, better ways to conduct business (i.e., process improvements and new business models), or improved problem solving
There are many forms of process or operational innovation. Process innovation is needed to run the business. Capturing and implementing best practices, whether project management or business related, is a form of process innovation. Process innovation can also include changing some of the key operations such as in manufacturing to reduce cost, add business value, or speed up time-to-market. Process innovation overcomes the misbelief that innovation occurs only with technical solutions for designing a new product.
Strategic innovation is needed to grow the business. The output from strategic innovation can create sustainable business value in the form of:
- New products
- Enhancements in brand value
- Additional services
- Efficiencies and/or improved productivities
- Improvements in quality
- Reduction in time-to-market
- An increase in competitiveness
- An increase in market share
- New processes
- New technologies
- Reduction in labor or material costs
- Reduction in energy consumption
- Conformance to regulations
- New platforms
- New strategic partnerships or acquisitions
The long-term benefits of innovations include an increase in market share, greater competitiveness, greater shareholder satisfaction, and so on. Many of these outputs are not the traditional, tangible deliverables or outcomes that most project managers are accustomed to seeing. These outputs can be more business related and intangible. Therefore, deliverables may take on a new meaning during innovation.
There are several types of innovation that can be used for these products, services, and processes, each with unique requirements and different life-cycle phases. Therefore, there is no single path to innovation, making it impossible to establish a uniform approach for all types of innovation projects.
Today, academia is differentiating between R&D and innovation. R&D departments are usually needed for breakthrough innovations that generally involve new technologies. If the R&D group develops a new technology or a new way of doing something that is substantially different from the way it was done before, then it could be turned over to the innovation team to find applications.
THE BUSINESS NEED
"Vulnerability is the birthplace of innovation, creativity, and change."
- Brene Brown
"Normal is where innovation goes to die."
- Richie Norton, The Power of Starting Something Stupid: How to Crush Fear, Make Dreams Happen, and Live without Regret
Global business is susceptible to changes in technology, demographics, a turbulent political climate, industrial maturity, unexpected events, and other factors that can affect competitiveness. Taking advantage of these changes will be challenging. Companies need growth for long-term survival. Companies cannot grow simply through cost reduction and reengineering efforts that are more aligned to a short-term solution. Also, companies are recognizing that brand loyalty accompanied by a higher level of quality does not always equate to customer retention unless supported by some innovations.
According to management guru Peter Drucker, there are only two sources for growth: marketing and innovation (Drucker 2008). Innovation is often viewed as the Holy Grail of business and the primary driver for growth. Innovation forces companies to adapt to an ever-changing environment and to be able to take advantage of opportunities as they arise. Companies are also aware that their competitors will eventually come to market with new products and services that will make some existing products and services obsolete, causing the competitive environment to change. Continuous innovation is needed, regardless of current economic conditions, to provide firms with a sustainable competitive advantage and to differentiate themselves from their competitors.
The more competitive the business environment, the greater the investment needed for successful innovation. Companies with limited resources can take on strategic business partners and focus on co-creation. Co-creation innovation project management can result in faster time-to-market, less risk exposure, greater customer satisfaction, a greater focus on value creation,...
