1. Nurturing Bigthe Next ThingInnovatIon is a must-have.Doing it well, though,requires melding cutting-edgeconcepts withtraditional governance. by Sarah Fister Gale illustration by mike austin28 PM NETWORK MARCH 2013 WWW.PMI.ORG

2. MARCH 2013 PM NETWORK 29 3. Theres no shortage of surveysheralding the miracle of innovationfor organizations trying to remaincompetitive in a volatile global economy.As that uncertainty becomes the norm, thefocus on innovation is bound to grow. Merely coming up with the Next Big Thing isnt enough, however. Organizations must not only continuously push the envelope with big, bold ideasthey also have to follow through with projects that deliver the value of those ideas to the bottom line. To make their mark, organizations must find a way to marry the fundamentals of project governance that helped them get where they are with the breakthrough concepts that will get them where they need to be. The world is full of prototypes, but turning them into business solutions is very challenging, says Shihab Kuran, CEO and president of Petra Solar, a solar energy and clean-PHOTO BY mike roemer tech company in South Plainfield, New Jersey, USA. With- out proper project management, good ideas will never make it to market. That means slashing time-to-market without sacrificing quality, keeping up with the leading edge while staying out of the red and introducing more efficient processes without throwing existing projects off track.30 PM NETWORK MARCH 2013 WWW.PMI.ORG 4. The companies that areconsistently successfuldont treat innovation likeits an event. Its embedded in the business process, with dedicated resources and leadership.Paul Williams, PMP, Associated Bank, Green Bay, Wisconsin, USA MARCH 2013 PM NETWORK 31 5. The companies that are consistently successful dont treat innovation like In 2011, investment inits an event, says Paul Williams, PMP, vice president, technology infrastruc- research and development9.6ture project manager at Associated Bank in Green Bay, Wisconsin, USA. Itsprojects jumpedembedded in the business process, with dedicated resources and leadership.Innovating in Troubled TimesThe instinctive reaction to economic malaise is to hunker down and ride out thestorm. But forward-thinking companies see tough times as a prime opportunity percentSource: Global Innovation 1000,to invest in projects that will separate them from the packand give them aspot on the inside track as the recession eases.More than two-thirds68 percentof global executives agree that inno-Booz & Companyvation is now more important than it was prior to the recession, accordingto Wipro and Forbes Insights Growth Strategies for 2012 and Beyond. Andalmost a third of CEOs said they believe their biggest opportunities for growthlie in developing innovative new products and services, according to a 2012PwC survey.With the competition companies face in this global market, innovation isthe only game left in town, says Craig Symons, vice president and principalanalyst for the IT leadership practice at Forrester Research, Norwalk, Con-necticut, USA.Investment in research and development (R&D) projects jumped 9.6percent to an all-time high of US$603 billion globally in 2011, according tothe 2012 Booz & Company Global Innovation 1000 study. Three out of fourorganizations surveyed had increased their R&D spending from the previous With the competitioncompaniesface in thisglobal market,innovation isthe only game left in town. Craig Symons, Forrester Research, Norwalk,Connecticut, USA32 PM NETWORK MARCH 2013 WWW.PMI.ORG 6. year, with companies headquartered in India and Chinashowing a 27 percent surge, on average.Investment alone doesnt guarantee a win, however.What really matters is not the amount spent, buthow those R&D funds are invested in talent, process andtools, says Barry Jaruzelski, senior partner and head ofthe global engineered products and services practice atBooz & Company, Florham Park, New Jersey. The mostsuccessful companies have clearly defined innovationstrategies that tightly align with their business strate-gies.Yet this is where many organizations fall short. TheBooz & Company study found the biggest obstacle toinnovation was in translating ideas to actual projects.Almost half of respondents ranked themselves as eithermediocre or ineffective at idea generation and conver-sion. Contrast that with the 25 percent of companies thatconsidered themselves highly effective at those tasks: Theyoutperformed their peers on revenue, growth and profitability. In fact, successat idea conversion proved more important than idea generation to producingsuperior financial performance over time.Not Just Another Brilliant IdeaTo make the jump from a cutting-edge concept to a full-fledged project thatdelivers true innovation, companies must align their grand vision with thebusinessand the marketsneeds. When you have an innovation strategythat defines where innovation is needed, its easier to link projects to the goalsyou are trying to pursue, says Jean-Philippe Deschamps, emeritus professorof technology and innovation management at IMD business school in Laus-anne, Switzerland.At Associated Bank, the enterprise project office evaluates every proposalagainst a vision statement that centers around four principles: customer focus,innovation, partnering and value. That vision isnt just a statement on the wall,Mr. Williams says. It is part of every decision-making step we take.The most successful companiesHe points to a recent project proposal to implement a policy allowing have clearly defined innovationemployees to use personal smartphones for work tasks. The proposal included strategies that tightly align withinformation that would be at home on any IT project business case: cost, data their business strategies.security and key deliverables. The team went further, though, defining the inno-Barry Jaruzelski, Booz & Company,vative value proposition, which outlined the benefits of employees being able Florham Park, New Jersey, USAto use their own smartphones to stay connected, communicate about projectsaround the clock and solve customer problems during off-hours. The ROI comesfrom eliminating company-provided technology in favor of a bring your owndevice approach.The first slide of the project proposal included the vision statement and howthe projects innovative new approach incorporated both the customer-focusand innovation quadrants, Mr. Williams says. Understanding the value proposi-tion and how it aligned with business strategyin this case, meeting customerneeds more efficientlyhelped the team win support for the project.MARCH 2013 PM NETWORK 33 7. You need someone who can Such review strategies can also help companies identify innovative concepts that arent up to par. Project management isnt free, and some ideas dontcreate a structure to move andeserve to get past the prototype phase, says Mr. Williams.idea from concept to prototype The Associated Bank enterprise project office continually reviews the port- through the implementation. folio with an eye to dropping projects that arent adding valueregardless ofProject managers are familiarhow innovative they might seem. If something isnt going to deliver benefit with all of those steps. When and you cant fix it, you need to have the courage to kill it, Mr. Williams says.they are made responsible forOtherwise its just going to limp along, taking up valuable resources that couldthis movement, it increases thebe better used.likelihood of success.Although most of these decisions are made at the portfolio level, project Paul Williams, PMP managers have their own role to play in the innovation game. You need some- one who can create a structure to move an idea from concept to prototype through the implementation, Mr. Williams says. Project managers are familiarwith all of those steps. When they aremade responsible for this movement, itincreases the likelihood of success.An Allied ForceCompanies dont have to go it alone oninnovation. Ford Motor Company, forexample, is collaborating with Weyer-haeuser, a pulp and paper company, ona project to replace fiberglass or min-eral reinforcements. Working together,the companies came up with a plastic-composite material made with cellulosefibers from trees.By using this composite material,were in a position to decrease theenvironmental impact of building vehi-cles, while still creating durable vehiclecomponents, says John Viera, global PHOTO BY mike roemerdirector of sustainability and environ-mental matters at Ford, Detroit, Michi-gan, USA. The resulting componentsweigh about 10 percent less, can be pro-duced 20 percent to 40 percent faster,and require less energy to make thantheir fiberglass counterparts. Alliances can also help companies gain exposure to new ideas, says Mr. Kuran. The world is packed with great ideas, solutions and concepts, and you need to work within that ecosystem to identify and capture the best ones, he says. Partnering is a great way to improve your own innovative solutions and to learn from others in the industry.34 PM NETWORK MARCH 2013 WWW.PMI.ORG 8. Not Just Red TapeIn an uncertain economy, most organizations cant afford to blindly follow ahalf-baked idea. An innovation governance process may help organizationsfind the elusive balance between fostering creativity and demanding measur-able outcomes.Governance gets a bad reputation because people think its synonymouswith bureaucracy and red tape, Mr. Symons says. It should be a process thatmanages risk and ensures the company is making the right decisions for theGovernance getsright reasons. a bad reputationHe recommends implementing an innovation steering committee thatbecause people thinkevaluates proofs of concept and how they align with strategic goals of thebusiness. Based on that information, the committee determines which projectsits synonymous withshould take the next step to proposal.bureaucracy and redCompanies struggle with this phase because its hard to measure innova-tape. It should be ation, he says. True innovation has no roadmap, but that doesnt mean youprocess that managescant quantify the opportunity in terms of anticipated outcomes and prob- risk and ensures theabilities. company is makingFord, for example, assesses innovation it terms of whether projects can the right decisions forreasonably move the business strategy forward and whether they can quantify the right reasons.that business value. If they do, we mark those projects as successes, and we putCraig Symons, Forrester Research,resources and investment toward bringing them to market, Mr. Viera says. Norwalk, Connecticut, USAIf companies want to capitalize on the promise of innovation, they mustrely on stringent project and portfolio management processes to shepherd thebest innovations to market while also having the courage to cut loose thoseprojects that do not deliver demonstrable value, says Mr. Deschamps. Thatshow you create an innovative corporate culture. MARCH 2013 PM NETWORK 35 9. [case study]Putting on the Brakes When companies get sucked into new gadgets or interesting ways to manipu- late existing technology, they can lose sight of their broader business goals. To be truly innovative, you have to look beyond whats easy and focus on whats right, says Nick Pudar, vice president of plan- ning and business development at OnStar, a General Motors com- pany in Detroit, Michigan, USA. For OnStar, that means making sure every project creates a better experience, whether that is in the form of connectivity for remote diagnostics, in-vehicle security, entertainment, hands-free calling or in-vehicle navigation. Each of these services demand their own kinds of innovation, but ultimately they link back to the overarching business strategy of creating a great customer experience, he says. Mr. Pudar likens his companys innovation strategy to the way chess masters approach their game. They decide before they begin what their checkmate will be and work back from that point, unrav- eling all the moves necessary to get to that outcome, he says. By beginning with a specific goal, they dont get mired down in the photo courtesy of General Motors myriad possibilities in front of them. To make sure the OnStar team stays on target, a steering commit- tee performs regular reviews to assess not just whether the project is still a good idea, but if the cost-benefit scenario delivers acceptable value to the business. Through that lens, Mr. Pudar says, even brilliant ideas dont always measure up. His team launched a project in early 2012 to address drivers inherent compulsion to text. The resulting app would sense whether a phone was in a moving car and give drivers three options to respond to a text: n Send an automated message saying Im driving and will respond when I arrive n Send a text verbally n Open a hands-free phone line so the driver could call the sender back After approval from the steering committee, the project moved to the pro- totype phase, and the tech team built a working model. Once the prototype was complete, the committee reviewed the app and To be trulydetermined it would add value for customers. Yet the group also predicted thatinnovative, youin a short time, most smartphones would offer similar features. That made the have to lookproject economically unattractive, Mr. Pudar says. beyond whats For us to launch this project, we would have to write unique apps for every easy and focusoperating system, which would have been a tremendous effort and cost, he says. Relying on its portfolio review process, OnStar was able to identify mar- on whats right. ket risks that would make the project unsuccessful from a strategic business Nick Pudar, OnStar, Detroit, standpoint. So the organization shut it down and redirected the team to Michigan, USA other projects. There are so many projects we can do, and they all offer some level of value and innovation quotient, Mr. Pudar says. We know we cant do them all, so we focus on the ones that we think will be most impactful.36 PM NETWORK MARCH 2013 WWW.PMI.ORG