Background

Some of Apple's successes include the Macintosh computer, iPod, iPhone, iPad, Apple Watch, Apple TV, HomePod, Software, electric vehicles, and Apple Energy. But there is also a dark side of unsuccessful consumer products that were launched during the 1990s, such as digital cameras, portable CD audio players, speakers, video consoles, and TV appliances. The unsuccessful consumer products were not the result of an innovation failure but from unrealistic market forecasts.

Successful innovations increase market share and stock prices, while unsuccessful products have the opposite effect. Apple was highly successful with the Macintosh computer from 1984 to 1991. From 1991 to 1997 Apple struggled financially due to limited innovation. Apple returned to profitability between 1997 and 2007. In 2007, Apple's innovations in mobile devices were a major part of its astounding success.

Innovation often creates legal issues over the ownership and control of intellectual property. The growth of the Internet created a problem of piracy in the music industry. Steve Jobs commented on Apple's success in the music business, stating that “Over one million songs have now been legally purchased and downloaded around the globe, representing a major force against music piracy and the future of music distribution as we move from CDs to the Internet.”

Apple used and continues to use several different types of innovation. Some products use incremental innovation, such as updated versions of cell phones, whereas other products appear as radical innovation. Apple also uses both open and closed innovation. For open innovation activities, Apple has created a set of Apple Developer Tools to make it easier for the creation of products to be aligned to Apple's needs.

Apple also created innovations in its business model, which was designed to improve its relationship with its customers. Apple created a retail program that used the online store concept and physical store locations. Despite initial media speculation that Apple's store concept would fail, its stores were highly successful, bypassing the sales numbers of competing nearby stores, and within three years reached US$1 billion in annual sales, becoming the fastest retailer in history to do so. Over the years, Apple has expanded the number of retail locations and its geographical coverage, with 499 stores across 22 countries worldwide as of December 2017. Strong product sales have placed Apple among the top-tier retail stores, with sales over $16 billion globally in 2011.

Apple created an innovation culture that gave people the opportunity to be creative. Unlike other cultures where executives assign people to innovation projects and then sit back waiting for results to appear, Steve Jobs became an active participant in many of the projects. Numerous Apple employees have stated that projects without Jobs's involvement often took longer than projects with it.

At Apple, employees are specialists who are not exposed to functions outside their area of expertise. Jobs saw this as a means of having “best-in-class” employees in every role. Apple is also known for strictly enforcing single-person accountability. Each project has a “directly responsible individual,” or “DRI” in Apple jargon. In traditional project management, project managers often share the accountability for project success and failure with the functional managers that assign resources to the project.

To recognize the best of its employees, Apple created the Apple Fellows program, which awards individuals who make extraordinary technical or leadership contributions to personal computing while at the company. This is becoming a common practice among companies that have a stream of innovations. Disney created a similar society called “Imagineering Legends” to recognize innovation excellence.¹

Conclusion

Continuous successful innovation is possible if the firm has a tolerance for some failures and recognition that the marketplace may not like some of the products. Also, the company's business model may change, as happened with the opening of Apple stores.

Background

Many of Facebook's innovations come from open source innovation, crowdsourcing and the use of platforms. Facebook launched the Facebook Platform on May 24, 2007, providing a framework for software developers and other volunteers to create applications that interact with core Facebook features. A markup language called Facebook Markup Language was introduced simultaneously; it is used to customize the “look and feel” of applications that developers create. Using the Platform, Facebook launched several new applications, including Gifts, which allows users to send virtual gifts to each other, Marketplace, allowing users to post free classified ads, Facebook events, giving users a means to inform their friends about upcoming events, Video, which lets users share homemade videos with one another, and a social network game, where users can use their connections to friends to help them advance in games they are playing. Many of the popular early social network games would eventually combine capabilities. For instance, one of the early games to reach the top application spot, Green Patch, combined virtual Gifts with Event notifications to friends and contributions to charities through Causes.

Third-party companies provide application metrics, and several blogs arose in response to the clamor for Facebook applications. On July 4, 2007, Altura Ventures announced the “Altura 1 Facebook Investment Fund,” becoming the world's first Facebook-only venture capital firm.

Applications that have been created on the Platform include chess, which allows users to play games with their friends. In such games, a user's moves are saved on the website allowing the next move to be made at any time rather than immediately after the previous move.

By November 3, 2007, seven thousand applications had been developed on the Facebook Platform, with another hundred created every day. By the second annual developers conference on July 23, 2008, the number of applications had grown to 33,000, and the number of registered developers had exceeded 400,000. Facebook was also creating applications in multiple languages.

Mark Zuckerberg said that his team from Facebook is developing a Facebook search engine. “Facebook is pretty well placed to respond to people's questions. At some point, we will. We have a team that is working on it,” said Mark Zuckerberg. For him, the traditional search engines return too many results that do not necessarily respond to questions. “The search engines really need to evolve a set of answers: 'I have a specific question, answer this question for me.'”

Conclusion

Facebook appears to have successfully managed open source innovation and developed strategic partnerships with application providers given the fact that it has more than 400,000 providers.

Background

According to the Incumbents Strike Back—19^th C-Suite study from IBM Institute for Business Value, in order for organizations to compete in today's rapid-fire world, they are pressured to bring high-quality, differentiated products and services to market quickly. But the push to “get something out there” can lead to experiences that aren't relevant to real customer needs. If you miss the mark, you may not get a second chance. Traditionally, designers and developers have had to operate within isolated functional areas. By building multidisciplinary teams and combining a design thinking approach with agile methodologies, you can release efficiently and increase the likelihood that a customer's first impression will be a good one.

Across a growing number of industries, solution discussions are becoming centered on customer experience as opposed to the traditional product focused lens.

Jim Boland, IBM's Project Management Global Center of Excellence Leader, is clear that IBM's project managers need to be front and center in these discussions. Their role is expanding, and the need to continuously adapt is the new norm. The traditional way of thinking—understanding your deliverables, your time to deliver and the budget you have—although still critical, may not be sufficient to ensure success.

Collaboration and agility need to sit comfortably with proven practices such as scope and financial management.

If you think about this statement, it presents quite a challenge—we are asking our project managers to be flexible enough to continuously listen and collaborate to our customers changing needs and adapt the solution accordingly, while in parallel continue managing the deliverables (including scope, time, and budget). Augmenting traditional project management skills with skills such as collaboration, agility, design thinking, and resilience become paramount.

Establishing a high level of trust throughout the journey is critical, not just trust across teams and stakeholders, but, trust in the process and the journey itself.

IBM has implemented a set of tools, techniques, learnings, and methods to enable their project managers and set them up for success in this new environment. An example of this was the establishment of academies within IBM such as the agile and design thinking academies, supported by IBM's global on-demand learning platform, YourLearning, enabling a personalized learning journey for everyone in the company.

IBM is also taking this to our clients through the establishment of the IBM Garage, which is a new way of working where IBM experts, including project managers, co-create with clients in a customizable space. It's a place where you can experiment with big ideas, acquire new expertise and build new enterprise-grade solutions with modern and emerging technologies.

Case Study #1

This IBM case study, provided by Galen K. Smith, Cognitive Supply Chain Accelerator and IBM-certified executive project manager at IBM, demonstrates how innovation can and should be a part of project management. In this case, the project team chose to follow some of the agile and design thinking principles mentioned already, orchestrated by project managers in leadership roles facilitating the learning and implementation throughout the project life cycle.

Requirements-gathering started with user interviews, which resulted in the identification of three personas—supply chain specialist/buyer, operational commodity manager, and supply chain leaders. These personas defined the user groups that would participate in determining the deliverables for the minimum viable product (MVP) and first release. It was these three personas that the team focused on to understand their user experience and pain points and how to deliver a better user experience and achieve the business objective.

With the user groups defined, the next step was a design thinking workshop with key members of the project team—product owner, UX (user experience) designer, business lead, and executive sponsor attending along with 13 actual users from each of the personas. The facilitator was an Agile project manager who led them through a day of design thinking practices designed to fully understand the current situation for each persona and their pain points along with ideation of ideas for a better UX. These ideas were prioritized, and the team moved into storyboarding, which applies the ideas into a new to-be scenario. The day ended with attendees creating their own paper prototype that envisioned how the UI (user interface) would look and feel, what data is needed and how to show it, and how the screens interact to deliver their vision of the desired user experience.

This approach was run in an open environment that fostered engagement by all, ignored rank, and ensured every attendee's input was heard. The workshop included creativity exercises that targeted opening the creative side of the brain, which, along with the method of collaboration and inclusion, resulted in elevating the overall creativity of the work. This creativity provided dramatically more innovative results, as seen in the wealth of ideas portrayed in the paper prototype designs.

The project managers involved played the roles of product owner, business analyst, and user SME lead and continued this innovative atmosphere after the workshop by infusing creativity, experimentation, user engagement, and feedback in the regular calls with users (twice/week), management (monthly), and the executive sponsor (weekly). With the support of the executive sponsor and management team, the project managers cultivated a cultural change in the organization and sustained it with fun events that focused on users. These events included running innovation jams, Ideation blogs, sser engagement games surrounding tool learning and utilization, celebrating experiments, and recognizing folks who contributed the ideas for new function when it gets deployed.

“How is this managing innovation?” asks Smith who summarises by stating that ideas generate innovation, and ideas flow strongly only when users feel their ideas are being heard and executed. Many avenues were opened to bring in ideas both initially and on an ongoing basis and the project leaders—product owner (PM), user lead SME (PM), and business lead—purposely communicated back to all users where the ideas came from and when they were deployed to ensure users could see how their ideas influenced the design and deliverables of the project.

Case Study #2

In this case study, Gary Bettesworth, a CICS (customer information control system) project manager at IBM, explains how a similar approach was so successful in transforming a traditional software development process.

CICS transaction server (TS) is a powerful mixed language application server, which runs on the IBM Z platform. It is used extensively in the finance and retail sectors for business-critical services, providing online transaction management and connectivity. It can process incredibly high workloads in a scalable and secure environment.

This software, which celebrates its 50th anniversary in 2019, was developed using a traditional waterfall process for most of its life. However, the waterfall development process and long development lifecycles can sometimes be slow and inflexible.

In addition, customer demands to be more agile and to consume software faster, due to the need to respond to constantly changing and competitive marketplaces, driven by technological innovation, required a transformation of the team's software development and management process.

Over the last 10 years, the project team have been on a journey culminating in the use of project management and delivery process and tools, which support the concepts of Agile, DevOps, and Enterprise Design Thinking.

According to Bettesworth, the Enterprise Design Thinking method helps the team validate that they are building the right software by implementing activities like as-is and to-be scenario mapping, empathy mapping and interviews, to fully engage with users and understand their personas and needs. This combined with agile practices (time-boxed iterations, frequent code delivery and feedback, code demonstrations/playbacks, small multidisciplined subteams, story points and burndown charts, prioritized backlogs) and supporting Agile tooling has completely changed the culture of the CICS TS project team. The whole project team is empowered and self-directed, which supports innovation during the software development process, with project management taking on a servant leadership role to help and guide where necessary. Plans are no longer fixed, with adjustments or pivots being made regularly based on stakeholder feedback and a continuous assessment of the market. Changes to the delivery process are also made by project team members continuously throughout the project.

Innovation has also been essential to enable the team to modernize all its tooling and create a DevOps end-to-end automation pipeline built in a modular manor. This continuous integration pipeline enables code to be rapidly built, deployed and tested as soon as it has been developed. The ability to quickly build and test software has been essential to frequently deliver new capability to project stakeholders. Live dashboards enable code delivery and project status to be viewed by internal stakeholders, including the project manager and are used as the basis for project status meetings.

These are just two out of thousands of examples of projects being run across IBM where project managers are changing their approach to how they launch, manage and close projects.

Case Study #3

Carlos Carnelós, IBM's Technical Support Services Delivery Transformation Lead in Latin America, and who has been working in the area of IT Automation for the past four years, states that innovation lies in the project deliverables, the technologies deployed and the newer ways we are doing business. In his experience, project management techniques are becoming a mix of traditional and Agile and use design thinking as a methodology for defining scope and prioritizing what and when functions get delivered.

Conclusion

In summary, Jim Boland's opinion is that good project managers are equal parts project managers, consultants, change agents, and innovators. As the term hybrid job becomes more and more standard practice in the future, our project managers will have to mix their traditional PM skills with new age skills such as design thinking, data analytics, and so on. This statement holds through for many job roles and it's just as important for employees who are not project managers to learn project management skills. Innovation will be a constant in this new hybrid world.

Background

Most people seem to believe that innovation project management begins with the development of a project management methodology. Furthermore, they often make the fatal mistake of believing that the development of a project management methodology is the solution to all their ailments for traditional and innovation projects. While this may be true in some circumstances, companies that appear to be excellent in project management realize that people execute methodologies and that the best practices in innovation and traditional project management might be achieved quicker if the focus initially is on the people rather than the tools. Therefore, the focus should be on the culture.

One way to become good at project management is to develop a success pyramid. Every company has their own approach as to what should be included in a success pyramid. Texas Instruments recognized the importance of focusing on people as a way to accelerate innovation project success. Texas Instruments developed a success pyramid for managing global innovation projects. The success pyramid is shown in Figure 12-1.

A spokesperson at Texas Instruments describes the development and use of the success pyramid for managing global projects at Texas Instruments:

By the late 1990s, the business organization for sensors and controls had migrated from localized teams to global teams. I was responsible for managing 5–6 project managers who were in turn managing global teams for NPD (new product development). These teams typically consisted of 6–12 members from North America, Europe, and Asia. Although we were operating in a global business environment, there were many new and unique difficulties that the teams faced. We developed the success pyramid to help these project managers in this task.

Although the message in the pyramid is quite simple, the use of this tool can be very powerful. It is based on the principle of building a pyramid from the bottom to the top. The bottom layer of building blocks is the foundation and is called “understanding and trust.” The message here is that for a global team to function well, there must be a common bond. The team members must have trust in one another, and it is up to the project manager to make sure that this bond is established. Within the building blocks at this level, we provided additional details and examples to help the project managers. It is common that some team members may not have ever met prior to the beginning of a project, so this task of building trust is definitely a challenge.

The second level is called sanctioned direction. This level includes the team charter and mission as well as the formal goals and objectives. Since these are virtual teams that often have little direct face time, the message at this level is for the project manager to secure the approval and support from all the regional managers involved in the project. This step is crucial in avoiding conflicts of priorities from team members at distant locations.

The third level of the pyramid is called accountability. This level emphasizes the importance of including the values and beliefs from all team members. On global teams, there can be quite a lot of variation in this area. By allowing a voice from all team members, not only can project planning be more complete but also everyone can directly buy into the plan. Project managers using a method of distributed leadership in this phase usually do very well. The secret is to get people to transition from attitude of obligation to a willingness of accepting responsibility.

The next level, called logistics, is where the team lives for the duration of the project and conducts the day-to-day work. This level includes all of the daily, weekly, and monthly communications and is based on an agreement of the type of development process that will be followed. At Texas Instruments, we we have a formal process for NPD projects, and this is usually used for this type of project. The power of the pyramid is that this level of detailed work can go very smoothly, provided there is a solid foundation below it.

Following the execution of the lower levels in the pyramid, we can expect to get good results, as shown in the fifth level. This is driven in the two areas of internal and external customers. Internal customers may include management or may include business center sites that have financial ownership of the overall project.

Finally, the top level of the pyramid shows the overall goal and is labeled “team success.” Our experience has shown that a global team that is successful on a one- to two-year project is often elevated to a higher level of confidence and capability. This success breeds added enthusiasm and positions the team members for bigger and more challenging assignments. The ability of managers to tap into this higher level of capability provides competitive advantage and leverages our ability to achieve success.

Conclusion

At Texas Instruments, the emphasis on culture not only benefited their innovation initiatives but also resulted in best practices that supported other initiatives. It is unfortunate that more companies do not realize the importance of this approach.

Background

Companies that are highly successful at innovation use innovation as the driver for sustained corporate growth. 3M Corporation is prime example of innovation in action. Most researchers agree that 3M's success emanates from their corporate culture that fosters an innovation mindset. As stated by Irving Buchen (2000):

3M announced that all employees were free to spend up to 15 minutes each working day on whatever ideas they wanted to work on. The only restriction was that it could not be at the expense of their regular assignments. They did not have to secure approval for their project. They did not have to tell anyone what they were working on. They could bunch their l-minute segments if they needed more solid blocks of time. They did not have to produce anything to justify or pay back the time taken. What was the result? There was electricity in the air. Employees came earlier and stayed later to extend their innovation time. Many walked around with a weird smile of mischief and even fun across their face; some even began to giggle. But they were also enormously productive. Scotch tape came out of this ferment; so did Post-its. Perhaps equally as important, morale was given an enormous lift; general productivity was higher; teams seemed to be closer and working better together; the relationships between middle-level managers of different divisions seemed to improve. In short, it was a win-win situation. The innovative gains were matched by a new spirit that changed the entire culture.

Companies such as Google and Hewlett-Packard have programs similar to 3M's 15 percent time program. 3M's program was initiated in 1948 and has since generated many of the company's best-selling products, 22,800 patents, and annual sales of over $20 billion.

There are several distinguishing characteristics of the 3M culture, beginning with employee encouragement for innovation. Employees are encouraged to follow their instincts and take advantage of opportunities. 3M provides forums for employees to see what others are doing, to get ideas for new products, and to find solutions to existing problems. The culture thrives on open communication and the sharing of information. Employees are also encouraged to talk with customers about their needs and to visit 3M's Innovation Centers.

Strategic direction is another characteristic of the 3M culture. Employees are encouraged to think about the future but not at the expense of sacrificing current earnings. Using the “Thirty Percent Rule,” 30 percent of each division's revenues must come from products introduced in the last four years. This is tracked almost religiously and forms the basis for employee bonuses.

Funding sources are available to employees to further develop their ideas. Seed money for initial exploration of ideas can come from the business units. If the funding requests are denied, employees can request corporate funding.

Rewards and recognition are part of 3M's innovative culture. A common problem facing many companies is that scientists and technical experts believe that the “grass is greener” in management than in a technical environment. 3M created a dual ladder system whereby technical personnel can have the same compensation and benefits as corporate management by remaining on a technical ladder. By staying on the technical ladder, people are guaranteed their former job even if their research project fails.

Similar to Disney and Apple, 3M created the Carlton Society, named after former company president Richard P. Carlton, which recognizes the achievements of 3M scientists who develop innovative new products and contribute to the innovation culture.

One of the most significant benefits of the 3M culture is in recruiting. Workers with specialized skills are sought after by most companies and the culture at 3M, which offers a significant amount of “freedom” for innovation, helps them attract talented employees.

Conclusion

3M's success set the standard that others have copied on how to involve the entire organization into innovational thinking. All employees must be made aware of the notion that they can contribute to innovation and their ideas will be heard.

Background

In previous chapters, we discussed the importance of getting to close to the customers to understand their needs. In most companies, innovation research is simply asking customers what their needs might be now and in the future. Motorola carries their research much further. Motorola conducts “deep” customer research using their design research and innovation teams to articulate not only how users work with Motorola's products but also how customers run their business processes and what their needs will be in the future. Motorola also observes how customers use their products.

Motorola's research goes beyond simply understanding how the product is being used. It also includes an understanding of why the product is essential to the customer's business success and how the product fits into the customer's business model. This allows Motorola to perform targeted innovation. Customer knowledge is not based on just the end user's requirements. Understanding the business aspects of a product solution can give industrial design groups the opportunity to drive product development direction.

Motorola's generative research is driven by customer and partner interviews as well as observational research. As stated by Graham Marshall:

Based on the first round of customer visits and generative research, the team identifies specific customers to revisit during the product definition phase. At this time the researcher will bring sample models that demonstrate form, features, and functionality. The product definition phase helps the team clearly define and test the right product fit before there is a commitment to development.

We use model toolkits and storyboards to communicate potential design directions with our customers. We can better see the complexity of the customer's needs by posing specific questions: “What information do you need to display? How much information do you need to key in? How well lighted is your space? Is the product used in the storeroom or the storefront, or both? How far do you need to carry or move the product or the device to complete a transaction?”

Motorola also performs validation to ensure that the focus is on a customer solution. As stated by Marshall:

During the course of the development program, the Innovation and Design team needs to validate the integrity of the gathered information, product direction, and development trade-offs. This ensures that, as product development progresses, the design remains targeted on the customer's needs.

Conclusion

By understanding the customer's business and maintaining close customer contact, Motorola has demonstrated the benefits that can be derived from innovative customer-focused solutions. Simply stated, Motorola has evolved into a targeted business solution provider.

Three Tips for Managing Successful Innovation Projects

Technology is driving change across major industries around the globe at a faster pace than ever before. In response, businesses must develop a point of view on emerging trends and intentionally invest in innovation to remain competitive. New technology often introduces new risks to an organization. To mitigate these risks, the Zurich North America (ZNA) PMO recommends these three tips for managing innovation projects.

Background

UNICEF Kid Power is the world's first Wearable-for-Good®, named one of Time magazine's 25 Best Inventions in 2016,² and one of the largest education technology programs serving high-need elementary schools in the United States. Kid Power uniquely taps into kids' intrinsic desire to help others by using wearable technology to convert their physical activity to real-life impact. By getting active with a UNICEF Kid Power Band, kids earn points and unlock funding from partners, which UNICEF uses to deliver packets of therapeutic food for severely malnourished children. The more kids move, the more points they earn, the more children they help.

Launched in 2014 in the United States, UNICEF Kid Power aims to inspire an entire generation of American children to grow up as healthy and globally aware citizens, getting active to help end severe malnutrition around the world. During the first three years of Kid Power, the venture's startup phase, May 2014 to May 2017, Kid Power scaled from a pilot in 7 classrooms in a single city to almost 7,000 classrooms in 1,600 cities and towns in 49 states across the United States. In doing so, Kid Power engaged hundreds of thousands of kids who collectively walked over 100 billion steps to unlock enough funding for UNICEF to deliver enough therapeutic food packets to help save the lives of 52,000 severely malnourished children.

During the startup phase of Kid Power, the innovation program grew from a simple app connected to off-the-shelf step counters being tested in seven classrooms, to a nationwide technology program consisting of proprietary hardware, a scalable mobile app and web front-end, and a rich library of standards-aligned classroom content, all of which were designed to be effective in high-need classrooms with no computers, in schools with no wifi, for students who didn't have access to a smartphone at home.

To scale up from 7 classrooms to 7,000, the program dramatically evolved from a city-based implementation driven with a single institutional stakeholder (i.e., the city administration consisting of the mayor's office and the Department of Education) to a grassroots movement with thousands of individual educators. During the project, the Kid Power team grew from 2 individuals in New York to a distributed team consisting of 10 employees, 10 contractors, and 3 agencies. To execute the project, the team implemented a version of scaled Agile, which combined Scrum methodology with short and medium time frames to allow fast-moving product development and marketing teams to work in a synchronized manner with slower-moving educator outreach and school implementation teams.

Stakeholders

The primary stakeholders for the project (the startup phase of UNICEF Kid Power) were elementary school educators and their students in high-need schools in the United States. By May 2017, Kid Power had scaled up to serve 7,000 educators from 1,600 cities and towns across 49 states, reaching students from a wide range of racial and ethnic backgrounds in both urban and rural communities.

The secondary stakeholders for the project were UNICEF USA management team and board, as well as internal marketing and engagement teams.

Creating an Innovation Culture

Conclusion

Innovation is not restricted to just the private sector. Innovation can also exist for humanitarian purposes and to benefit the world population as a whole.

Background

Samsung and other companies have adopted a value innovation approach, as discussed in Chapter 2, which allowed them to create a corporate culture for becoming an innovation leader rather than an innovation copier and follower. Some characteristics of Samsung's culture includes:

• Innovation-oriented sponsorship and governance from the top of the organizational hierarchy downward
• Line of sight about the executives' vision and the company's strategy and strategic objectives for all employees to see
• Use of open innovation practices as well as seeking out innovation ideas internally
• Establishing strategy and innovation centers as well as open innovation centers for better knowledge management
• Recognizing that knowledge management supports core competencies for storage and reuse of knowledge from R&D activities
• Recognizing that globalization in a turbulent environment requires nontraditional systems
• Maintaining customer-focused product innovations
• A willingness to accept innovation risk-taking
• Flattening of the organizational hierarchy
• Development of speed-focused innovation strategies and execution
• Decisions are being made quicker than before
• A reduction in cycle time from months and years to weeks
• Low-cost manufacturing

Conclusion

These characteristics have allowed Samsung to develop superior core competencies. The results of Samsung's value-driven culture have led to innovations in products, technology, marketing, cost reduction, and global management.³

Background

The challenges we face today, and the ones we will be facing in the coming months and years, are due to the exponential pace of technological change that is rapidly transforming our societies and competitive landscapes. As someone that has been involved in the practice and management of technology innovation for over 30 years, I have seen the pace of technological change increase from the steady linear growth in the 1980s to the exponential acceleration in the 2000s, to today's nearly vertical pitch where major open-sourced breakthroughs are compounding each new weekly advance, leading to new products and services and even entirely new markets at a clip that is difficult to comprehend. To ensure their continued existence with the hope of remaining competitive, successful organizations are changing their approach to innovation management to include Agile concepts. Those that desire to shape the pace of change to their advantage are going further, implementing the holistic “Agile Innovation Master Plan”—a framework created by world-renowned author and innovation thought-leader Langdon Morris of InnovationLabs—which was designed to provide a comprehensive yet extremely Agile approach to managing innovation strategy, portfolio, process, culture, and infrastructure. It is my belief that implementing the Agile Innovation Master Plan is not only a good idea for innovative organizations —it may be the only way to ensure their survival.

Five Key Tracks

The Five Key Tracks (Morris 2017, 12), as defined in the Agile Innovation Master Plan, are derived from five simple questions: Why innovate? What to innovate? How to innovate? Who innovates? Where? Answering these simple questions reveals the foundational framework components related to strategy, portfolio, process, culture, and infrastructure, and it is these five components that are utilized in the creation and implementation of a “system for innovation.” Langdon Morris captures the importance:

To innovate consistently, you have to make a distinction between luck and innovation. Either you have a reliable system for innovation that delivers consistent results, or you hope that your people luck into good ideas. Those are the only two options. Which do you prefer?

Since you are reading this, it likely means you desire such a system for your organization. However, it is important to keep in mind that we are discussing a framework for innovation success and understanding the importance of each track —and how the tracks feed and inform each other—is paramount. How you implement each track may be quite different than our experience, but the order of implementation of each track was crucial for our success. The first step, however, is understanding the Agile innovation sprint.

The Agile Innovation Sprint

The Agile innovation sprint uses complex thinking, design thinking, and other creative efforts in an iterative sequence of six stages for the implementation of The Agile Innovation Master Plan. The intriguing aspect of this approach is that the same methods you will use for your innovation process are utilized for its implementation, which results in an acceleration of learning in preparation for your innovation efforts. Similar to Agile software development, where small features are immediately usable as they are implemented, the agile innovation sprints produce usable features and capabilities that further accelerate implementation. In other words, the more tracks you implement, the faster you implement subsequent tracks, while gaining mastery of important concepts and methodologies along the way such that when all five key tracks are complete, you will already have a high level of efficiency in your innovation program. The diagram in Figure 12-2 highlights the general concept. The stages are understanding, divergent thinking, convergent thinking, simulation and prototyping, validation and the innospective. These stages serve to break down the design and implementation of each track into smaller pieces that—when complete—are functionally usable in your innovation efforts.

Part 1. Understanding the Five Parts

You will note that the order of importance of the five key tracks is quite different in terms of understanding them than it is for implementing them (at least it was for us), and the reason for this is quite simple: You must be organizationally prepared to achieve success in your innovation program, and one key prerequisite is having a common language of innovation. This is shown in Figure 12-3.

The point being made is that once understanding is achieved, the implementation—which begins with building a culture that supports innovation— becomes much more likely to achieve success as everyone will be swimming in the same direction. Of course, learning is what innovation is all about, but the goal is to let you learn from the lessons we learned after our time spent in discovery, development and testing of this framework during our implementation. By following this approach, you will be able to accelerate your learning curve across your organization, rapidly moving up the levels of the pyramid of mastery” (Morris 2017, p. 320) (Figure 12-4).

It is important to note that our company did not start from scratch: Our CEO understood both the need and the value of innovation for years prior to my arrival, and in fact led efforts that achieved some tangible benefits for both ICS and our customers. However, without a system in place, there was no means of ensuring consistent outcomes. Some of the infrastructure was there along with some creative geniuses, but they were lacking just about everything else: an organizational culture to support innovation, a link between strategy and innovation intent, an innovation leader and innovation “champions”, and a rigorous process that could produce results in a repeatable, consistent manner. In other words, like so many companies that have a desire—but no system—it is easy to get stuck at lower maturity level. As we implemented our own Agile Innovation Master Plan, we rapidly moved from maturity level 2 to a mastery level in less than a year—and it all started with understanding—a word you will hear repeatedly due to its importance as the first stage in the Agile innovation sprint (Morris 2017, 128).

Understanding the Strategy Track

Most successful organizations will have strategic objectives that support their raison d'être—their purpose or reason for their existence—and it is the link (Morris 2017, 25) between strategy and innovation that determines your organization's ability to achieve its objectives while continuously adapting to the frenetic pace of societal and technological change and the resulting uncertainties they introduce (Morris 2018).

Whether you are innovating on behalf of your organization or on behalf of your customers (or both, as is the case for our organization), understanding why you are innovating (strategic intent) is necessary before you can determine what to innovate (portfolio) to achieve the desired outcomes. In effect, aligning ideas for innovation to at least one (or more) of your strategic objectives is a risk and opportunity mitigation strategy: If you focus only on ideas that are aligned with your strategic intent, you will not waste your efforts on ineffective expenditure of time and resources.

Each of the strategic objectives of your organization (or your customer's objectives, if innovating on their behalf) will likely have a weighting—and if they don't, they should. In other words, some strategic objectives will be more important than others. For example, one of our DoD customers lists four strategic objectives on its website. One of them—optimize and reduce costs—will certainly have a higher priority (or weighting) in peacetime than during a time of war (where cost optimization is less of a concern due to mission requirements). Conversely, it may have an even higher weighting than normal if budget constraints are enacted. There are logical and obvious conclusions that can be drawn from this understanding:

• The strategic objectives themselves can change.
• The weightings of each objective are not necessarily equally balanced.
• The weightings can change dynamically, depending on conditions or events.

The first point will seem obvious to organizations that are mature in their approach to innovation, as the “understanding” stage of an Agile innovation sprint requires that management frequently reconsider changes in the technology landscape, competitive landscape, market conditions, and tacit (or hidden) customer needs, which are necessary to remove uncertainty about the strategic direction of the organization and which can result in changes to the strategic objectives in response. This is a logical outflow of the “unpacking” of conditions that identify pain points, problem statements, and trends and opportunities to be addressed by the organization (Morris 2017, 176). However, all of the above considerations have an extremely important role to play in balancing your innovation portfolio and they underscore the importance of agility in adapting to the pace of change.

While your organization may already be structured to do so with its strategic objectives, it is imperative that your innovation portfolio management capabilities be designed such that the entire innovation portfolio can be realigned—or “pivoted”—any time the portfolio evaluation factors and/or their weightings change, to be sure that your innovation efforts remain in direct support of current strategic objectives and weightings.

Understanding the Portfolio Track

A properly balanced innovation portfolio helps an organization align its innovation efforts with its strategic objectives while balancing risk. The kind of risk to be balanced can come in many forms—one such example being in terms of time—over the near, medium, and long-term according to the types of innovation being pursued. Fundamentally it is a strategy for managing risk such that the entire portfolio as a whole can achieve a desired return even when an individual project fails (and they will, or you aren't taking enough risk to explore the world of potentials, nor are you likely learning anything new).

In this section, both ideas and projects are referenced. However, there are times when you can treat the portfolio of ideas separately from the portfolio of active projects, and times when they need to be treated together. These are important considerations when you get to the implementation phase, but for our purposes, here the important part is understanding that there can be a distinction between the two.

There are a variety of methods to balance a portfolio and maintain an acceptable risk profile:

• Scoring each idea or project's orientation toward the strategic objective weightings
• Scoring each idea or project according to the type of innovation it represents, such as incremental, business model, breakthrough, or new venture
• Scoring each idea or project using risk and/or reward factors aligned to your strategic intent
• If technology-related, scoring the idea or project by its technology classification such as AI, Machine Learning, Cloud, etc., depending on strategic focus in each area
• Any combination of methods

One of the standard methods referenced in the Agile Innovation Master Plan is a risk/reward evaluation, which is a very useful method that can apply to any organization. Consider the following example reward factors:

• Benefit to customers
• Revenue potential
• Competitive advantage
• Enhances our digital presence
• Enhances our brand

Similar to strategic objective weightings, the desired reward factors (or opportunity factors) can be assigned a weighting by management (a level of strategic importance on a scale of values), and then each idea or project can be rated for closeness of fit (again, on a scale) by interested parties⁴ at the time of its introduction. On the opposite end, risk factors (financial risk, technology risk, market risk, or other risks recognized by your organization) can be managed in an identical manner: Weightings are applied by management, and individual ideas or projects can be rated for closeness of fit.

Using a simple form as shown in the following example, illustrated in Figure 12-5, both cumulative reward and cumulative risk factors can be generated.

In this example, the “fixed”⁵ weights for each reward factor (assigned by management) are multiplied by their associated rating, and the products for all reward factors are summed to obtain a cumulative reward score.

The weights for each risk factor (again, assigned by management⁶) are multiplied by their associated rating, and the products for all risk factors are summed to obtain a cumulative risk score.

Together, these scores can be used in a data visualization exercise to align ideas or projects on a risk/reward matrix. In the matrix shown in Figure 12-6, the “Target Zone” reflects the region with the optimal balance between the computed risk and reward factors (lowest risk and highest reward.)

With a scale factor applied to the axes, it is possible to visualize each scored idea or project in comparison to all others, such as in the Risk/Reward Matrix shown in Figure 12-6.

Note that this approach even allows for investment thresholds to help determine the dividing line for inclusion in the active portfolio.

As mentioned in the prior section on strategy, it was noted that the strategic objectives and their weightings can change due to conditions or events. The same is true for risk and reward factors and their weightings if using that approach. If the appetite for a particular type of risk is changed by management, it could impact the evaluation of every active project (as they may no longer be in alignment.) The same is also true for ideas—whether in the active portfolio or not —as they may not have “made the cut” the last time but may this time under different evaluation criteria.

When evaluation criteria change, all ideas and projects that could be impacted must be evaluated under the new conditions. See Figure 12-7. Also, if an evaluation factor is added or removed, all ideas or projects must first be rerated and then reevaluated to ensure that the portfolio of ideas or projects are in alignment with current strategic objectives and priorities. In these scenarios, active projects can be abandoned, deferred, or even killed.

Conclusion

Agile Portfolio Management is the most important aspect of your innovation management practice. You may have great ideas aligned with strategic intent, a culture to support innovation and a rigorous process with the proper infrastructure and tools to develop and implement them, but unless your innovation outcomes are in alignment with your organization's current strategic intent you won't be exploiting the right opportunities.

Introduction

COMAU is a worldwide leader in the manufacture of flexible, automatic systems and integrating products, processes and services that increase efficiency while lowering overall costs. With an international network that spans 15 countries, COMAU uses the latest technology and processes to deliver advanced turnkey systems and consistently exceed the expectations of its customers. COMAU specializes in body welding, powertrain machining and assembly, robotics and maintenance as well as environmental services for a wide range of industrial sectors. The continuous expansion and improvement of its product range enables COMAU to guarantee customized assistance at all phases of a project—from design, implementation and installation, to production start-up and maintenance services.

COMAU innovation is based on manufacturing's digital transformation, added-value manufacturing and human-robot collaboration; these key pillars allow COMAU to reach new heights in leading the culture of automation.

The COMAU Project Management Office (PMO)

In 2007, COMAU established a contract and project management corporate function, with the aim to create a stronger link between leading roles and project management and to ensure coherence between execution and company strategy. Over time, the contract and project management function grew in responsibility (as shown in Figure 12-8) and modified its structure to reach a configuration based on the coordinated sharing of knowledge and activities between PMO, risk management office and the COMAU PM Academy. The fourth pillar that sustains COMAU Project Management framework is constituted by the PMI® standard set, recognized as the best practice standard in the Project and Portfolio Management landscape.

PMO Innovation Pillars

In recent years, COMAU started thinking about the industry in a new way, developing new scenarios, designing innovative products, creating ways to streamline production processes, and defining new trends in digital manufacturing, creating a new paradigm to balance collaboration between people and machines.

We call it HUMANufacturing, the innovative COMAU vision that places mankind at the center of business processes within a manufacturing plant, in full cooperation with the industrial automation solutions and new digital technologies that surround them. The above vision needed changes and innovation in all company organization roles to be sustained.

The COMAU PMO is therefore innovating, expanding its project management landscape from traditional industrial project portfolio to new forms of projects, such as new product development, digitalization, and industry4.0 projects.

Through the innovation in each of the five pillars (see Figure 12-9) the PMO is now positioned within the organization as a valuable business partner, one that sharpened its capacity to be adaptive for different forms of projects within the company.

1. Leaner Execution Processes

Scenario Analysis The current context of market evolution highlights new disrupting influences:

• The degree of innovation is becoming predominant in all COMAU projects
• The size of traditional EPC projects is continuously decreasing
• The development of new, innovative, digital products and solutions is more and more expected by our customer base (traditional automotive, and new customer base: new automotive, general industry, electric vehicle)

Consequently, COMAU began a deep analysis of the current project execution course of action (process, organization, and tools) and of the project management methodologies adopted, to verify the alignment to market needs.

COMAU redesigned its project management process to make it scalable to the degree of innovation typical of each project and adopting where applicable Lean and Agile solutions.

Guidelines The main guidelines followed:

• Profile the process based on project classification criteria. From the well-established COMAU PM process, optimization is achieved by selecting the appropriate activities/tasks/milestones that fit each different project, maximizing the business added-value.
• Empower project managers and encourage team co-location to improve the integration and communication within the team members, and of the project team itself with functions and finally with the customer.
  • Team co-location has introduced a work space re-layout, the integration of the planning activities, and the introduction of a platform organization.
• Digitalization of the project management process, realizing a paperless process in order to achieve a faster and more user-friendly utilization and optimize time/cost of process management.
• Encourage visual management, and exploit the potential of mobile applications (see Figure 12-10)

The benefits obtained with these operations have been a reduced complexity, reduced time and lower effort for milestones and activities/tasks execution and, in general the reduction of “not value added” operations, maximizing effectiveness and efficiency as requested by the current business scenario.

2. New Project Management Framework for Product Development

The product development business of COMAU is broad, as the company has many branches that require different technologies and competencies. All have very diverse needs when it comes to product development projects, while at present the company only provides the business units with one project framework that supposedly should fit all their needs.

How is it possible to merge the need for differentiation among the businesses with the struggle to keep uniformity within the company? The answer to this question is in having one single process for product development projects that is modified case by case. To achieve this result, it is important to understand how to characterize each project in order to have the elements needed to customize the process. The main elements to be taken in account are product development complexity and innovation; the frame proposed to assess product complexity level is as per the matrix shown in Figure 12-11.

This matrix is just a part of a wider evaluation tool that guides the user in the definition of the project needs. Other focal points are:

• Field competences
• Sales outlook
• Project risks
• Product strategic relevance

According to the differentiation derived from this evaluation tool, we can then identify and apply different project management patterns. These patterns are identified by selecting the right steps among the ones available in the company process. In this way it is possible to assure the highest quality is delivered while consistently reducing the effort every development team has to put in place in order to act accordingly to the company standards and frameworks.

COMAU encourages the use of a mixed approach that merges stagegate and Agile project management principles. Exploitation of Agile tools and methodologies enables shorter development time, with a consequent cost reduction, and an improved target achievement as the whole team is more focused on the value to be generated and on the customer needs rather than on following a rigid internal protocol.

3. COMAU Risk Management

History and Achievement In 2006, COMAU began to address risk management with a more focused, strategic approach, recognizing it as an essential part of the successful completion of projects. With the increase of organizational complexity and global presence it was necessary to find more structured and refined tools for managing uncertainties. Consequently, in 2010, a risk management office as part of the PMO was created (see Figure 12-12).

Specific responsibilities of the risk management office included the definition of a framework (methods, processes, tools) for the management of projects and portfolio risks as well as improve the concrete application throughout the entire project life cycle.

Beginning in 2015, COMAU decided to make a further maturity step, launching an initiative aimed to reinforce and better integrate risk management practices at different company levels (contract sales, project execution, and portfolio management) with a global perspective (see Figure 12-13).

The completion of the initiative provided COMAU with the adequate risk management approach and tools needed to manage the turnkey projects portfolio composed by fixed-price EPC contracts, each characterized by a high degree of complexity and a fixed scope for which a traditional project management predictive approach is to be adopted.

Risk Management for Innovative Projects. The acceleration impressed by the digitalization era required changes to business model for many companies included COMAU. Risk management as all other functions within companies is required to change as well and to approach new models to cover new forms of projects, those that might be named innovation projects (see Figure 12-14).

Innovation projects such as new product or solution development and digitalization projects have peculiarities that need new risk management approaches. To fit with this requirement, COMAU developed a first “concept” to extend and integrate the well-established traditional risk management.

The concept is based on the following guidelines:

• Risk management is a primary vehicle to reinforce PM “strategic thinking” into project execution.
  • New risk management approach might bridge the project management perspective from tactic to strategic as it focuses on pursuing a wider business-value objective.
  • Project managers are now expected to master company business processes in addition to the PM process and to be than able to anticipate the implications of project decisions on the different functional objectives, communicate them, and collaborate with functions to set up counteractions.
• New company functions and customers are involved in project risk management.
  • Accepting that perimeter of project risk management is widening, there are a number of people/structures within the company (i.e., innovation, marketing, sales functions) that become important stakeholders, bearers of interests and objectives that, differently from the past, might be subjected to redefinition while the project is ongoing (Agile approach).
• New metrics to measure project risks.
  • The value expected and created by innovation projects goes beyond the end of the project itself. The project constraints to be taken into account when assessing the risks are not only limited to scope-time-costs as in a traditional predictive approach. New metrics for the qualitative and quantitative analysis of risks that could include also a wider, more strategic measure of long-term risk impacts are needed. COMAU's new approach to project risk management, as seen in Figure 12-15, is therefore based on a hybrid of predictive and adaptive components.

Definition and Positioning the Future Center

The company defines the Future Center as “a specially designed space/environment to imagine the future and to solve difficult problems through dialogue.” Specifically, it is used as a place for stakeholders to talk about problems that are difficult to solve by conventional means, and to devise meaningful solutions. The aim is to create new ideas by discussing the issues in a “free” atmosphere in a space away from everyday life. Future Center sessions are held during business hours.

Conclusion

As for the future direction of utilization of the Future Center, it is possible to expand the scope of coverage. Stakeholder management is primarily concerned with establishing good relations with outsiders; in the future it is expected that the target participants will be further expanded and will include users and managers of information systems.

Introduction

GEA is one of the largest suppliers of process technology for the food industry and a wide range of other industries. The international technology group focuses on process technology and components for sophisticated production processes in various end-user markets. In 2017, GEA generated consolidated revenues of about EUR 4.6 billion. The food and beverages sector, which is a long-term growth industry, accounted for around 70 percent. GEA employs nearly 18.000 people globally.

Because of a multitude of merger and acquisition activities in the past, the company structure was highly fragmented. With the strategic initiative “OneGEA” in 2015, the company has integrated the activities in a new structure. The overall GEA vision, “Fit for 2020,” aims to be the globally leading engineering group providing smart solutions for the process industry and to be customers' first choice in food industry.

Innovation Management at GEA: General Challenges

For GEA, innovations act as a major lever for sustainable growth. The new organizational structure enables the company to develop and drive new developments across locations and functional areas.

The management of innovations was developed in a stepwise approach (see Figure 12-16) where first the needs analysis had been evaluated using support from all the functional units. The second step was starting a series of launches, where specific locations were onboarded using the new system of innovation process, innovation platform, and innovation organization. In the last step, the transition to a sustainable setup was made to ensure ongoing engagement and opening the door for strategic outside collaborations on a company level.

The primary goal of the strategic project was setting up a company-wide innovation management system and the rollout to the key product development units.

Innovation Management at GEA: The Technical Aspects

The technical aspects of the Innovation Management System are the innovation process, the InnoVate platform, and the innovation organization (see Figure 12-17).

Innovation Process

The GEA innovation process consists mainly of four phases divided into two major clusters (see Figure 12-18):

• Innovation
  1. Front-end phase. Idea generation via Idea Generation Campaigns, looking for opportunities, identify major uncertainties (market, technical)
  2. Foundation phase. Identify major skills and next evaluation steps, prepare development project plan and business case, identify major risks (market, technical), conduct feasibility studies
• Development
  3. Development phase. Create tests and prototypes design, feasibility tests with customers or customers' products, and preparation of series production.
  4. Go-tomarket phase. Sales release, market entry planning, and handover to target business unit.

To reduce (pre-)development time and to foster cross-business collaboration, there is additional opportunity to set up Agile teams besides the daily development business and maturate ideas that address new markets or new technologies. This can be oriented as well in the overall Innovation Process and fed back to a standard product development in a later stage.

InnoVate Platform

To represent the innovation process, GEA has set up an IT platform (see Figure 12-19), which covers the major parts of the idea campaigns, idea generation, and front-end activities. In this process phase, the focus is much on finding the right experts for given challenges. The platform provides access to all GEA employees and enables finding the right expertise in a small amount of time. Furthermore, it acts as an exchange platform for inspirations—may it be market-wise (e.g., new products, new business models) or technically (e.g., new technologies such as 3D-printing). Platform users can enter new ideas and inspirations and are invited to comment on existing ideas. A powerful search functionality also ensures that stopped ideas (including know-how that has been entered) in the past can be found again via keywords.

Innovation Organization

To live the Innovation Process, it needs organizational parts to drive idea generation and to execute decision making. As for the very different businesses in which GEA is active, it wouldn't make much sense to have one central unit or decision board to quote on ideas. GEA has set up a two-fold organization, as shown in Figure 12-20, whereby the major part deals with product-near innovations (but not only restricted to “Incremental Innovations”) and is organizationally located within the business areas and the product units of GEA. Typically, there is a decision board for the gate decisions within the innovation process and an innovation manager role is to facilitate the decision-making process. Centrally, there is only a small team necessary to address cross-business topics, establish cross-business execution options, and identify target units for handover.

The innovation managers play a central role for living the innovation process and to give support to the idea owners and project managers in the different stages of the process. They are the “go-to-persons” if idea enablers need contact persons ( e.g., for making market assumptions or providing their networks for finding technology solutions to the challenges identified during idea generation). The innovation managers are part of a central, organized network in the company to regularly exchange key challenges and findings. Therefore, they must have a good overview of the major developments and success stories to provide this to the other innovation managers. With this approach, GEA transports new impulses across the business areas.

Innovation Management at GEA: The Strategic Parts:

To measure and steer the overall innovation activities of GEA, the company has set up a set of key performance indicators (KPI). Since an increasing number of new ideas does not reflect perfectly the innovative power of a company, there are further measurements necessary. At the GEA Group, we use six strategic KPIs. The key measurements are:

1. Turnover with new products
   • As global markets are continuously changing, the company's portfolio has to be renewed regularly. This can be measured by the share of new products against the overall turnover.
2. Development Time
   • Especially in the first two phases, “front-end” and “foundation,” the preparation of new development projects is done in parallel to daily business tasks by development experts. Data evaluations show that some ideas in the front-end or foundation take a long time to mature enough for a decision to be made. On the other hand, if decisions take too long (especially in an early phase), motivation of employees can drop significantly, and idea maturation or content quality may suffer. Quick decisions, transparent feedback, and (if possible) personal feedback for the idea owner facilitated by strong innovation managers and a powerful innovation community ensure fast idea handling and highly motivated people.
3. Amortization
   • Each organization must prove that it creates value for the company. Innovation organizations face the challenge that their measurable return is usually longer than one fiscal year. A more virtual but pragmatic measurement shows the amortization value, which gives a good indication of how efficient an innovation management system works.

Furthermore, to get a more general overview, we use the following three KPIs:

1. Ideas and projects per innovation phase
   • This is just an overview showing how many ideas or projects are in the respective Innovation Phase (Front-End, Foundation, Development, Go-To-Market). This gives an impression on how many ideas you need to generate in the Front-End to get a final product launched in the market.
2. FTE in R&D
   • Via the units controlling departments, we create an overview on the number of full-time-equivalents working on R&D topics.
3. R&D spending
   • Similar to the above number, this is a collection of how large a budget is spent on development works. Most of these are identified through unit-related specific R&D budgets.

To accompany the top level KPIs (strategic), the company has set up six additional KPIs to identify measures of the operative part of Innovation Management. Key measurements for the operative part are:

1. Sales potential in pipeline
   • Since the pure number of ideas does not guarantee successful innovation, we must recognize the sales potential in the funnel. Furthermore, there is a systemic trap one might fall into when purely regarding these numbers as sales potential in EUR (or any other currency): ideas in the Front-End or Foundation phase are often still linked to an uncertainty. Ideas may not technically work in real scale or the market information is not reliable or just not available. In these cases, you must calculate an additional factor of uncertainty to your sales potential of the respective ideas. Two major pitfalls could occur: (1.) Underestimation of market potential leads to stop of an idea (which might have a good chance for success), and . (2.) Overestimation of sales potential leads to focus on high-risk ideas that might not fulfill the promises once made.
   • Generally, it has to be ensured during the overall Innovation Process that the underlying data are well challenged and evaluated.
   • A specific measure of feasibility challenging the data given for the ideas is to ensure that financial and market experts have had a look on the numbers given.
2. Workout and processing time of ideas and projects
   • The duration of ideas in the specific Innovation phases does not only consist of the pure work on ideas such as conducting workshops for maturation, problem solving, solution finding, testing, etc., it must also consider how long it takes for decision making. As soon as the idea owner posts an idea to the process owner, he wants to get a decision as soon as possible to further work out the solution. The longer it takes for this decision making, the less motivation, endurance, and persistence you get for the further workout of the idea. This also leads to less quality, and in the end, the idea may be stopped. Especially in the Front-End phase, it is necessary not to over-engineer deliverables: who really believes in complete business cases in such an early stage? A way out is to focus on the next step of reducing uncertainty or simply: risk. It might happen that the idea will be stopped in the next phase (e.g., Foundation) if the results are not as expected but especially for very new things you must go to the first trials.
   • Specific measures can check regularly the processing times for decision making. With the InnoVate platform at GEA, it is easy to check this automatically on a regular basis and evaluate what the hurdles for decision making are. Second, regarding the pure working time of ideas, it is feasible to create local support networks to identify how to support idea teams (or idea originators) to manage the next steps.
3. Number of new patents
   • Similar to the pure number of ideas, this might not be a strict measurement of innovative power if you only regard the number of new patents. As patent applications and the regionalization can be quite cost-intensive, a company must consider how important the application for a specific solution will be. If there is no doubt that filing the patent is important, then also the overall number of newly generated patents has some validity. Therefore, it is mainly for identifying and applying measures within your own company on how to improve the process. As a benchmark number with other companies this might not be feasible as each company faces different strategies for intellectual property.
4. Number of ideas per innovation field
   • This is an overview of ideas per innovation cluster. There are a set of innovation clusters called “Innovation Fields” such as “Digitalization,” “Sustainability,” and “Product Safety.” Those innovation fields summarize a larger set of ideas with common challenges where groundbreaking work is being done before deployment into the different areas. With the operational dashboard we detect if such an innovation field runs dry.
5. “Ratio submitted versus realized ideas
   • These ratios are already mentioned in the strategic dashboard (“Number of ideas per Innovation Phase”). This gives us an insight on how healthy the feeding part of the innovation funnel looks like.
6. “R&D spent versus budget
   • This is a high-level measurement or comparison of what percent of the budget is spent on R&D works compared to the overall budget.

Innovation Management at GEA: The Enabling Parts

The above section was mainly explaining the technical parts of GEA's innovation management system consisting of process, platform, and organization as well as regarding several KPIs and defining measures around it.

Besides the technical aspects, there are further success factors to ensure effectiveness and efficiency of the innovation management system. GEA has therefore started to create internal networks to support process, ideas, and solution-finding. The network consists not only of management people—who act as innovation ambassadors and often act in the roles of innovation managers and decision bodies—it also consists of engineers and people on the working level who are ambitious but may not want to play a management role. But they are open minded, interested in new things, hands-on in solution finding, and willing to share new findings. This community is called the VIBE network, where VIBE stands for vital innovation behavior engagement.

VIBE consists of people from nearly all levels of responsibility, different locations, and different units. When starting to reach out for experts, starting new (company-wide) idea campaigns, the VIBE network is always included to identify where the experts for a specific topic are and how they can be approached. Two times a year we try to bring the community physically together with the innovation managers to exchange learnings, new findings, and also meet for problem-solving sessions.

Summary and Outlook

GEA started its innovation management system in 2016 with the concept phase, started the launch phase in 2017, and is in the phase of sustaining this approach. Further major challenges from market developments were identified, and the concept of bringing the customers point of view in at a very early stage of phrasing an idea campaign will be refined. After more than 10 idea campaigns in one year, the innovation core team has perfected of setting up idea generation frameworks so that the sponsors' needs are fulfilled with a high rate of hits. It might take up to eight weeks to phrase the real challenge of an idea campaign—after that, within a restricted time frame of typically three to five weeks the idea generation phase starts. Within the next 6–10 weeks, the ideas can be maturated to a stage for decision making and prioritization. The results at GEA show that if you do not spend the time to create a clear focus and expectations of idea campaigns, you will not get ideas that solve the real challenges the company is facing.

In the next several years, GEA will use open innovation approaches to include new skills and capabilities that are not in the DNA of a machine producer and engineering company. Requests for digital solutions, new business models, and new material technologies provide challenges from the customer side as well as providing opportunities to grow.

BDPR as a New Approach in Decision Making from Research & Development

Within the product management life cycle, the concept phase is critical to define the key development projects for any industry, which bring more benefit to the business and, most importantly, which ones will increase the competitiveness of products. This section describes a process called the business-driven program Roadmap (BDPR), which is used to as a tool to prioritize and to arbiter research and development projects within portfolio product management.

Within a large enterprise with a complex and extend portfolio of products, it is key to know the areas to research and to promote incremental developments in order to provide higher return of investments, and more competitiveness. As important as arbitration is, the transparency of incremental development projects is ongoing, and we must understand more how they are interlinking together between different products within a portfolio.

The mission of BDPR is to ensure that portfolio programs and projects pull from a business perspective a portfolio of products and services in the mid-term (years 1 to 5) and long-term (years 6 to 10). Therefore, in the long-term BDPR shall be fully aligned with each program unit and its strategy vision, and also shall ensure alignment across all of them. Figure 12-21 illustrates typical BDPR program roadmap key principles.

The BDPR is annual cycle governance with regard to incremental developments for products and services programs and projects together with their financial implications. It forms part of the company key governance controls. The governance is built “right to left” following an operation plan cycle, aiming the end result of the validation of programs framing by the executive committee within Q3 of the year. The BDPR annual governance cycle is built around one kickoff, one steering committee and one steering close-out meeting, held as part of the executive committees meetings as follows:

• BDPR kick-off to capture business needs (Q1) with the confirmation of top business objectives at within BDPR time frame (N+5 and N+10 years). This deliverable is built in one hand from Global Marketing Analysis with the comparison of our products with the competitors and voice of customer to identify the potential new products and features needs; on the other hand, program strategy gathers inputs from customer and stakeholders to consolidate and to propose the potential scenarios concerning product development.
• BDPR steering committee, with the selection of key business projects at Q2, reviews the BDPR deliverables to provide strategic guidance, to ensure and to confirm prioritization of incremental development projects and financial consolidation.
• BDPR close-out with the prioritization and arbitration of the key projects at Q3 with the final confirmation of BDPR data package and their incremental development projects, which will be included within research and development budget.

In addition, to ensure full consistency (before the BDPR kick-off, steering committees and close-out meetings), there shall be a series of alignment sessions with program and enablers functions (engineering and industrial):

One of the key deliverables is the BDPR roadmap, which is a collaborative time-based plan for 5–10 years that offers a look into the future by representing visually where the business is, where it wants to go, and how to get it there.

The BDPR roadmap shown in Figure 12-22 is an effective communication and decision-making methodology, which links strategic vision and market/customer needs toward a desired future state of products and services business. It represents interdependencies among business solutions/projects, which anticipates alternative routes to optimize resource allocation and minimize risks. As well, it allows evaluation of technological changes and supports programs and services in the prioritization and arbitration of business opportunities that matter for realizing a desired future.

Finally, BDPR as an integrated process provides the following benefits to the company:

• Provide transparency on incremental product development over portfolio, and acts as a single point of truth about incremental developments within company.
• Facilitate the prioritization and arbitration of projects driven by business needs within different programs.
• Promote standardization of incremental developments in different products to increase the value add of investments in research and developments.
• Reduce bureaucracy and improve alignment among all stakeholders in a common shared governance.
• Integration between program development needs with other layers as services, industrial and process, methods, and tools enablers.

Background

In the heart of midtown Atlanta sits the high-tech corporate innovation center at the Georgia Institute of Technology (Georgia Tech)—one of the world's most prestigious hubs for creative engineering. Georgia Tech, a top-ranked engineering school known for its academic rigor and groundbreaking research, is strategically collocated with start-up company incubators and corporate innovation centers, one of which is thyssenkrupp. thyssenkrupp—a global, diversified industrial company with a 200-year heritage in the German steel industry and a modern portfolio in elevator technology, plant technologies, automotive components and systems, and material services—opened an innovation center at Georgia Tech to work in an open innovative environment.

What exactly does open innovation mean, and how does it apply to a large company like thyssenkrupp?

Five years ago, thyssenkrupp's elevator business unit recognized the need to create an innovation group to scout technology for future business integration and to test new, innovative ideas that might be considered high-risk or not well-understood. The priority of this innovation group was to focus on longer-term projects that were fundamentally higher risk and more prone to failure. These projects would complement the product development powerhouse that designs and launches products in a traditional product development process with one- to two-year timelines.

This model has worked well for the company, as it allows each group to set its own priorities and run projects independently. Shorter-term product development and launch is the focus for the product development team and longer-term research and idea-testing is the focus for the innovation team.

There are also organized innovation processes at thyssenkrupp AG headquarters in Essen, Germany. The office of Technology, Innovation and Sustainability (TIS) uses the “foresight” process to identify long-term trends and potential future needs, which helps all the business areas identify possible future states.

Another way that thyssenkrupp empowers innovation is through the “shark tank” style “innovation garage,” where thyssenkrupp's start-up team members from all group areas come together to learn new ways to innovate, push the boundaries of possibility, and break free from traditional ways of thinking. Teams pitch their projects to potential “investors”—thyssenkrupp business leaders.

The next step for the successful pitches could be the creation of a minimum viable product, which is then taken to an innovation team for continued incubation and research or to a business area product development team.

An “open innovation” model like the model advocated by Dr. Henry Chesbrough of the Open Innovation Center at UC Berkeley has been established as seen in Figure 12-23. To the traditional product development funnel, thyssenkrupp allows ideas to enter and exit the system at the appropriate times. If thyssenkrupp develops a good idea, but one that isn't quite right for the company, the idea can be shared/licensed/spun off/traded with other open innovation partners.

The traditional product development “funnel” is augmented with radical product ideas using the “garage” process (above) and with radical ideas following a tech center approach.

It is important to keep some groups with innovation responsibility separate from product development. There should be a connection to product development and with the global and regional TIS teams, but a locally managed team can provide more flexibility for innovations.

The following two case studies focus on how the project management approach for innovation projects are different from traditional or standard product development processes.

Case 1: HoloLinc is an application involving Microsoft's HoloLens to design and visualize a residential stair lift. The technology allows integration of data through the whole process enables thyssenkrupp accessibility to drastically shorten the lead time between the initial customer visit and installation, which is critical to quality in this market segment. This project was supported by a research innovation center located in Gijon, Spain, to the factory in the Netherlands, using Microsoft assistance in the United States. This is truly a global development and has won the innovation award within thyssenkrupp TIS.

Case 2: This example focuses on the award-winning invention from thyssenkrupp—the MULTI® elevator. The MULTI® was designed to replace the hoist cables with magnets and linear induction motors, allowing multiple cabins to be placed in a single hoist way and move not only vertically but also horizontally. This frees up a tremendous amount of building square footage in tall buildings, which are mostly empty elevator shafts. For a tall building, many elevator shafts are needed to service the population, but these take away from rentable space. For super-tall buildings above 50 floors, the cross-section is mostly elevators, which is a huge waste of rentable space. With MULTI®, there are multiple elevators in one shaft, so the shaft cross-section is greatly reduced.

The MULTI® product was initiated in the Research and Innovation Center (RIC) in Pliezhausen, Germany, leveraging the linear induction motor expertise from the TransRapid group of thyssenkrupp in Munich, Germany; which was responsible for the high-speed MagLev train in Shanghai.

The costs and project management approach were different from a traditional product development process. The RIC had a small team in Germany looking at the feasibility of key risk points. The standard product development process milestones were replaced with innovation risk points. Once the key risks were mitigated, lab prototypes were built to test the feasibility under lab conditions. From there, a scale model of the key propulsion and exchanger systems was mocked up in the RIC Gijon at a scale of 1:3. Finally, a full-scale model was developed at the RIC in the new elevator test tower (the tallest in the world) in Rottweil, Germany. A true international team collaboration.

Will the MULTI_® transform the elevator industry? Perhaps. But meanwhile, it is certainly an award-winning invention and an important innovation for the company.

Project Management Differences

For a traditional product development project, there is a repeatable development process. Thyssenkrupp Elevator uses a standard product development process with clear phase requirements, activities, and gate review requirements, as outlined in Figure 12-24.

Rather than using such a linear process for innovation projects, innovation teams need an oversight process to track and show progress, decide when to stop projects, and accelerate into product development when warranted. An adapted risk point was used and from there either spawn follow-on feasibility projects, initiate development projects, or stop efforts on the idea.

A typical product development project has a Microsoft Project schedule in detail with a standard template for deliverables from each phase and a detailed time-phased resource schedule. Underneath the tasks or work packages, there is still risk as product development R&D is inherently variable.

Innovation projects, on the other hand, are different. The project selection is less systematic and linear. The project location is more global, more inside/outside the organization using students, universities, entrepreneurs, etc. Where is it done? Why is it done? Where does it go if it is successful?

Conclusions

Where to from here?

Enterprise collaborative research projects using Georgia Tech research partnerships, open innovation, leveraging internal and external partnerships, and utilizing global innovation and engineering capabilities will ensure that thyssenkrupp continues to meet and build on its brand promise: “engineering. tomorrow. together.”

Project Fox: Project Management and Innovation

The fox is often associated with the figure of the con artist. But as a spirit animal, it can also be a teacher providing guidance on how to swiftly finding your way around obstacles. If you follow the fox, you may be called on to use or develop quick thinking and adaptability.

Project Fox was a sales origination initiative focused on the US real-time energy market with a clear goal to capture order intake. The project was initiated in 2015 and managed by a project manager and a cross-functional team. When the project ended in 2017, the outcome was not only concrete sales cases, a pipeline of leads, and new offerings, but also, and even more valuable, insight on the energy transition toward a renewable energy system. However, let's take it from the start.

Project Fox: Making of a Value Proposition

We strongly believed that there needs to be value in the activities we do and that it is important to be able to showcase and follow up tangible results. Project Fox was initiated as a strategic initiative to develop the existing market in the United States. The ambition was to find new customers and pitch the offering to a different segment of consumers and increase sales.

We started by addressing the four main steps we considered to be important when developing a market:

1. Make a value proposition.
2. Get organized—set up a team for the task and agree on a plan.
3. Develop relationships with the target customers and find a role for the offering to meet their strategy and business.
4. Support customers decision making, and develop leads and deals.

Value proposition is about showcasing customer value and not talking about offering features. To simplify this through an example in Project Fox, one offering feature could be high efficiency. The customer benefit in this case would be saving fuel, and customer value would be to save money and the environment.

The overview of the different steps is shown in Figure 12-25. To create a value proposition in Project Fox, we needed to understand the electricity market and develop tools to quantify the values. In addition, we needed to understand the market mechanism and compare market similarities. To be able to compare different markets, the team developed an Excel-based modelling tool. The result from the modelling needed to be verified, and that was done through customer visits and discussions. The result was turned into a value position that was presented to the customers, and together with them the tool was fine-tuned to meet specific customer cases. This co-created input was later turned into business cases. The modeled tool could later be used for other customer cases on the market to showcase the value and expand it to different parts of the US market.

Concrete tools that could also support the value position creation could be the business model canvas and the value proposition canvas innovation tools developed by Alexander Osterwalder. These are good tools to help business developers to understand the customer and how to deliver value. One concrete way of summarizing a sales story is the “elevator pitch.” The idea is that you can explain your idea in one 30-second elevator ride, for (target customer), who has (customer problem), our (solution) that gives (key function), unlike (competition), the product (competitive advantage) is a good indication of whether you understand the topic well enough. If you can't explain something in an easy way, then you might not understand the topic well enough.

Project Fox: Placing the Customer in Focus

In a project like Project Fox, one must establish a formal project organization but also a matrix organization to implement needed actions. The roles of the team had to be clarified, including the project manager, sales, marketing and offering development. The work was kicked off by a face-to-face meeting, and we saw that it would be crucial throughout the journey to have regular follow-up meetings and continuous communication about the initiative.

For this big project, there needed to be a plan, but the key was to iterate the plan along the project based on needs. One of the most frequently used buzz words in innovation today is agile. Agile is used especially for software development, and it means to divide tasks into short phases and frequent adaptation of plans. Project Fox was a great example of agile in action. This is illustrated through two concrete examples. One of the key insights of learning through this process was the journey that the customer goes through. Through modeling, we in the Project Fox team had found that the offering we provided was more feasible than that of the competitors, and we were confident that our customers would readily accept the value model. This did not turn out to be the case. We visited the customers, and even though we could showcase facts and figures, they did not buy into the topic.

We realized that one of the reasons behind this was that the customer's current understanding did not support the new findings and that the customer had its own set of strategies and plans that were not easy to change. The reasoning behind this can also be found in psychology, where it is natural behavior to first deny new information that is not supported by the current knowledge. It was necessary to gain more insight and look at the facts; i.e., to gain understanding. This new understanding creates inner acceptance and transforms into self-confidence that can result into action.

To explain the value, we agreed to write a book about the transition to demonstrate the value, called Goodbye to Deerland: Leading Your Utility through the American Energy Transition.

Let's state the obvious: coal isn't coming back. Ask any energy utility executive in America today and they'll tell you that the days of coal-based power are over—regardless of shifting politics—and that the time to invest in wind and solar is now. Electric utilities in conservative states like Texas and Oklahoma are at the epicenter of this great transition, where the shift from coal to renewables is already happening today.

As I describe in my book Goodbye to Deerland, the transition from coal to wind won't happen overnight, but an honest examination of the economics will show that utilities today cannot afford to wait and hold their breath. They must act now, or they risk losing out to competitors and falling behind in the market.

Goodbye to Deerland: Leading Your Utility Through the American Energy Transition is the story of a utility CEO facing the crisis of his life, and how he overcame it. It is also, more importantly, a roadmap to transform your electric utility and succeed in the fast-changing US energy landscape. Something new is happening across America: a new way of powering communities, a new way of doing business, a new way of thinking.⁷

The other example of an agile way of working came from the offering development side. Much of our offering development follows a stage-gate model, where the projects are prioritized according to a set metrics. Through the customer visits we found the need for low load optimization. The development started by analyzing the customer's needs and preparing a waterfall model of the key metrics. This waterfall model was then used to showcase the different values that the offering development cases would have. For the product development organization this was of great value, as it gave clear prioritisation resulting in a record short time to market. In big corporations, there are usually several divisions; these might sometimes have different priorities. However, when we were able to showcase the value for the customer, this created a good basis for collaboration and working together toward a common goal.

To support in understanding the customer's experience and feelings, one could do a Customer Journey Mapping that is a good innovation tool for stepping into the customer's shoes to gain understanding. These customer journeys are also a great way of visualizing the customer and telling their story for stakeholders in the company. Having a process and way of working for how to engage with customers is important. If you work in a company that may have several functions, there may be a need for each function to address the same customer and it is therefore important that these activities are synchronized.

Project Fox: Telling the Story and Envisioning the Future

The ambition with the project was to build a portfolio of leads and sales, and that was achieved. As the project evolved, there where a lot of learning experiences that emerged as best practices for future initiatives such as the need for clear prioritization and how showcasing customer value can speed up development. However, the greatest learning from the project was the transition towards renewable energy. The transition into the United States was an eye-opener for what will happen in other markets. The message is that world is in transition towards 100 percent renewable energy sources, not because they are green, but because it makes financial sense. This was the starting point for a new vision on how to lead the organization for future generations.