By Harold Kerzner, Ph.D. | Senior Executive Director for Project Management, IIL
Companies need growth for survival.
Companies cannot grow simply through cost reduction and reengineering efforts.
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 a firm with a sustainable competitive advantage and to differentiate themselves from their competitors. The question, of course, is “How do we manage innovation needs?”
INNOVATION AND PROJECT MANAGEMENT
For years, there has been a debate as to whether the words “innovation” and “project management” should be used in the same sentence. Some researchers argue that project management and innovation management should be treated as separate disciplines.
- An acceptance of significant risk, more so than in traditional project management
- A great deal of uncertainty
- A focus on strategic goals and possibly no business case exists
- Unknown constraints and assumptions that continuously change
- Decision making in an unfamiliar landscape
- A creative mindset
- Collaboration across all enterprise organizational boundaries
- Significant interfacing with customers in every market segment
- A different leadership style than with traditional project management
- A set of tools different than what is being taught in traditional project management courses
Some tools typically used when managing innovation include:
- Design thinking
- Decision-making flow charts
- Value proposition
- Business model thinking
- Wall of ideas with post-it notes
- Prototyping, perhaps continuously
Innovation management, in its purest form, is a combination of the management of innovation processes and change management. It refers to products, services, business processes, and accompanying transformational needs, whereby the organization must change the way they conduct their business. The change can be incremental or radical.
Project management practices generally follow the processes and domain areas identified in the Project Management Institute (PMI)® A Guide to the Project Management Body of Knowledge (PMBOK® Guide). Strategic innovation follows other processes such as strategizing, entrepreneurship, changing and investing [de Witt & Meyer, 2014].
But now, companies are realizing that innovation strategy is implemented through projects. Simply stated, we are managing our business as though it is a series of projects. Project management has become the delivery system for innovation activities, but the integration is complex and varies with the type of innovation project.
PROJECT MANAGEMENT IS A BUSINESS DELIVERY SYSTEM
Today’s project managers are seen more so as managing part of a business than managing just a project. Project managers are now treated as market problem-solvers and expected to be involved in business decisions as well as project decisions. End-to-end project management is now coming of age. In the past, project managers were actively involved mainly in just project execution with the responsibility of providing a deliverable or an outcome. Today, with end-to-end project management, the project manager is actively involved in all life-cycle phases including idea generation and product commercialization.
For decades, most project managers were trained in traditional project management practices and were ill-equipped to manage innovation projects. Today, attempts are being made to integrate all of this into a single profession, namely innovation project management (IPM).
PROJECT MANAGEMENT LITERATURE
There exists a plethora of literature on project management. Unfortunately, most of the literature focuses on linear project management models with the assumption that “one size fits all.” While this may hold true in some industries and for some projects, the concept of “one size fits all” does not apply to projects involving innovation. Innovation varies from industry to industry, and even companies within the same industry cannot come to an agreement on how innovation management should work.
The situation gets even worse when companies try to use traditional project management for business processes such as business model innovation, where you have the greatest degree of risk and uncertainty, where traditional risk management planning will not work, and where a great deal of flexibility is needed for decision making. Different project management approaches, many requiring a higher level of flexibility, will be dictated by the level of technology, the amount of product versus product changes, and whether the impact is expected to disrupt the markets.
Project managers need flexibility in their ability to select the appropriate tools for their projects and customize the processes to fit the needs of the projects. This holds true even for those projects that do not require innovation. The future will be flexible project management models such as those used in Agile and Scrum projects.
“Managers need to recognize the type of project at the start, resist institutional pressure to adapt traditional ‘rational’ approaches to all projects and apply an appropriate approach – one tailored for the type of project” [Lenfle & Loch, 2010]. Traditional project management does not distinguish between types of projects. Articles are appearing in literature that propose a methodology to classify projects to guide the design of a suitable project management model [Geraldi et al., 2011].
We have learned from Agile and Scrum that flexible project management approaches are necessary for many projects. This same thinking will be required for innovation projects. We will need different tools and different skill sets than most project managers currently use.
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About the Author
Harold Kerzner (M.S., Ph.D., Engineering, and M.B.A) is IIL’s Senior Executive Director for Project Management. He is a globally recognized expert on project management and strategic planning, and the author of many best-selling textbooks including Project Management: A Systems Approach to Planning, Scheduling, and Controlling and Project Management 2.0. Dr. Kerzner has previously taught project management and business administration at Baldwin-Wallace University, engineering at the University of Illinois and business administration at Utah State University. He obtained his industrial experience at Thiokol Corporation where he held both program management and project engineering responsibilities on a variety of NASA, Air Force, Army, Navy and internal R&D programs.
Drucker, P. F. (2008). The Essential Drucker. Reissue Edition, Harper Business, New York.
Witt, B. de, & Meyer, R. (2014). Strategy: An international perspective, Cengage Learning EMEA, Andover.
Lenfle, M. & Loch, C. (2010). Lost roots: How project management came to emphasize control over flexibility novelty, California Management Review, 53 (1), 32 – 55.
Geraldi, J. G., Maylor, H. & Williams, T. (2011). Now, let’s make it really complex (complicated): A systematic review of the complexities of projects. International
Journal of Operations & Production Management, 31 (9), 966 – 990.
PMBOK and PMI are registered marks of the Project Management Institute, Inc.