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:

1. Innovation is the transformation of knowledge or intellectual property into commercialization.
2. 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,...