Innovation Project Management

By Harold Kerzner, Ph.D.

We are excited to bring you this blog post on Innovation Project Management, which is adapted from Dr. Harold Kerzner’s new book of the same title. Below, he explains why this topic is so important, the types of challenges that innovation project managers face, and much more.

The Project Management Institute (PMI) has recently celebrated 50 years of providing the world with project management competencies. In the early years, a large portion of the competencies were established to support the Department of Defense’s (DoD’s) requirements placed upon their contractors. Most of these projects were engineering oriented and headed up by project managers with engineering backgrounds. Project sponsors were assigned to make many of the business-related decisions whereas project managers focused heavily upon the technical decisions. In many instances, contractors were opposed to the acceptance of project management practices. They would accept them after the DoD made project management a requirement to be awarded a contract.

As seen by the contractors, the bulk of the contracts were traditional or operational activities with well-defined statements of work, minimal risks, and an agreed upon budget and schedule. Executives placed limited trust in the hands of the project managers for fear that project managers may end up making decisions that were reserved for the senior levels of management. To limit the decisions that project managers could make, senior management created a singular project management approach (a one-size-fits-all methodology) that all PMs had to follow. The singular methodology was based upon rigid policies and procedures. The evaluation of project management performance was based upon how well the PMs followed the methodology. In many companies, project management was not seen as a career path slot but was instead treated as a part-time activity one had to perform in addition to one’s normal duties.

Projects related to strategic planning or strategy development were placed in the hands of functional managers because executives trusted the functional managers more so than they trusted the project managers. Functional managers were given the freedom to use whatever approaches they wish on the strategic projects and most frequently did not follow traditional project management guidelines.

By the turn of the century, companies began to reevaluate whether functional managers were the right people to manage strategic projects, especially those involving innovation. The critical issue was with bonuses. Functional managers were receiving year-end bonuses based upon the firm’s profitability over a 12-month period. As such, functional managers were using their best resources on the short-term projects that would maximize their year-end bonuses and the long-term strategic projects that would provide the firm with a sustainable competitive advantage began to suffer due to staffing deficiencies. Short-term profits became more important than long-term growth.

Competitive factors were now forcing companies to realize that survival was predicated upon growth and innovation was a critical component. All companies desire growth. But without some innovations, the opportunities may be limited. And even if the firm does have a few successful innovations, failure can still occur if the company focuses on past successes without developing a culture for continuous and sustainable innovations. Today’s industry leaders can become tomorrow’s failures without constantly challenging results.

Recognizing the need for some changes in the way that strategic projects, especially those involving innovation, were being managed, the focus naturally turned to project management applications. But there was the critical issue as to whether the core competencies used by PMs for the management of traditional or operational projects would be applicable to innovation projects. Competencies for managing traditional or operational projects are reasonably well-defined in documents such as PMI’s A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) and IPMA’s Competency Baseline, Version 3.0. However, for innovation projects, there is no universal agreement on the content of the competencies. Many of the traditional project management competencies are also components of innovation project management competencies, but there are others related to the types of decisions that must be made based upon the company’s core competencies for managing operational work and the type of innovation project at hand.

Over the past two 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 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 management should work. This is the reason why project management and innovation are often not discussed in the same sentence.

Some of the challenges facing innovation project managers include:

• Inability to predict exactly when an innovation will occur
• Inability to identify what the cost of innovation will be
• Inability to predict how the enterprise environmental factors will change over the life of the project
• Working with just an idea or goal rather than a formal statement of work
• Working with strategic/business objectives rather than operational/traditional objectives
• Inability to predict changes in consumer tastes, needs and behaviors
• Inability to deal with extremely high levels of risk, uncertainty, complexity, ambiguity and variability
• Having to use a new flexible methodology or framework based upon investment life cycle phases rather than traditional waterfall life cycle phases
• A focus on metrics related to business benefits and value rather than the traditional time, cost and scope metrics

There are many more challenges that could have been included in this list, but it does show that what we traditionally teach as competencies in our project management courses must be revised when considering innovation projects.

Competencies are the roles, knowledge, skills, personal characteristics and attributes that someone must have to fulfill a position. Most companies, especially large firms, have operational core competencies used by PMs when managing traditional projects that are burdened with formal procedures that often make it difficult to react quickly to take advantage of opportunities that can lead to a sustainable competitive advantage. These companies are generally risk averse and perform as market followers rather than leaders.

If a company wants an entrepreneurial environment, then there must exist some degree of autonomy and flexibility in the operational core competencies that impact innovation activities for both product and process improvements. Typical core competencies for an entrepreneurial environment include:

• Inventiveness
• Understanding business strategy
• Understanding value propositions
• Having a business orientation
• Having knowledge about markets and customer behavior
• Working with high degrees of risk, uncertainty and complexity
• Managing diverse cross-functional teams
• Team building skills
• Coordination and control over activities
• Design thinking
• Emotional intelligence
• Brainstorming
• Rapid prototype development
• Innovation leadership

Some of these competencies may apply to both innovation and traditional projects. Competencies can vary from company to company in the way that the characteristics of the competencies are integrated together and the relationship to the firm’s business model. Competencies are also dependent on the type of projects and corporate leadership.

Unlike traditional leadership, innovation leadership must include allowing for autonomy accompanied by the acceptance and support of risky ventures often in reaction to technological changes in the marketplace. Autonomy is usually measured by the speed by which the firm’s cross-functional activities are integrated to take advantage of opportunities for delivering innovative products. For entrepreneurship to work, there must be a corporate culture that supports risk-taking and experimentation without fear of reprisal if the results are not what was expected.

The success of an innovation corporate culture is measured by:

• The number of new products created
• The number of new products created that were first to market
• The speed by which commercialization took place

If continuous and sustainable innovation is to occur, then innovation leadership and traditional project management must be married together and with a clear understanding of each other’s roles. Innovation defines what we would like to do, and project management determines if it can be done. The marriage also may require that both parties learn new skills and create a corporate culture that supports idea management practices.

Understanding each other’s roles is the first step in making a company more innovative. This requires that the project managers and other innovation personnel understand what they do not do now but must do for long-term successful innovation. This also includes understanding the interfacing with marketing personnel and customers.

Innovation project management is now a strategic competency necessary for the growth, and possibly survival, of the firm. Properly trained innovation project managers can be expected to make presentations to those people that reside on the top floor of the building as well as members of the board of directors.

The Innovation Project Management book was written with the intent of providing project personnel with the additional competencies needed to manage innovation projects. The book also discusses the corporate governance needed to create the appropriate culture for innovation to occur.

Get your copy today! Use code KERZNERBLOG for $20 off.

The book is broken down as follows:

• Chapter 1: Discusses why innovation and project management are often not discussed together and some of the links that are needed to bridge innovation, project management and business strategy.
• Chapter 2: Discusses the different types of innovation. This is essential because each type of innovation may require a different form of project management.
• Chapter 3: Discusses how business strategy may determine the type of innovation required and links together project management with the different types of innovation.
• Chapter 4: Discusses the new tools that traditional project managers need to learn in order to manage innovation projects. Many of these tools are not discussed in traditional project management programs.
• Chapter 5: Discusses why some of the processes used in traditional project management activities may not work within innovation projects without some degree of modification.
• Chapter 6: Discusses the growth in innovation management software that project managers are now using in the front end of projects for idea management, alternative analyses and decision making.
• Chapter 7: Discusses the new metrics, such as benefits realization and value metrics, that project managers and innovation personnel are using for the monitoring and controlling of innovation projects.
• Chapter 8: Discusses innovations related to business models rather than products and services.
• Chapter 9: Discussed how disruptive innovation requirements may need a completely new form of project management and the need to interface closely with the consumer marketplace.
• Chapter 10: Discusses the roadblocks affecting the working relationship between project management and innovation.
• Chapter 11: Discusses how some projects, including innovation activities, have degrees of success and failure rather than complete success and failure as defined by the triple constraints.
• Chapter 12: Discusses the innovation culture that several companies have developed as well as the functional units they created to support innovation creation.
• Chapter 13: Case studies that discuss issues with innovation.