“Arming employees with the tools, know-how, and mindset needed to successfully innovate on a continual basis will be paramount to organizational survival.”
– Kaihan Krippendorff
For more than 50 years, we have used traditional project management practices with a great deal of success. Unfortunately, this success did not occur on all types of projects. Everyone understood that different forms of project management should be used based on the type of the project, but there existed the mentality that “one size fits all.”
The birth of modern project management was attributed to contracts with the Department of Defense (DOD) and the Space Program. Whenever upgrades to the project management approach took place, emphasis was on “command and control” with the belief that success of a project was based solely on time, cost, and scope. As long as the project manager got the job done within these three constraints, the project was considered as a success.
The private sector realized quickly that a project (such as with an innovation intent) could be managed within time, cost, and scope, and yet there were no customers interested in purchasing the product. The interface between project management, marketing, and the customers was not seen as critical. Marketing or senior management would act as the sponsor for the project and maintain the customer interface. In some situations, project managers did not interface at all with the customers.
By the turn of the century, four significant changes occurred. First, companies realized that the traditional approach to project management had limits and a more flexible project management way of creating results was needed. The introduction of Agile and Scrum, both of which are flexible project management approaches, also called frameworks, solved this problem and forced proponents of traditional project management to thick about changes.
Second, our definition of project success was changing. Project success is when the results of a project produce sustainable business value. Completing a project within time, cost and scope does not mean that business value was created. Now, using business value as the driving force, we can have different definitions of success on each project based on how we define business value. This now required marketing to be involved with the definition of innovation project success.
Third, we need metrics other than time, cost, and scope metrics to measure business value success and benefits realization. Now, projects can have a multitude of metrics, and this can lead to issues with competing constraints. Projects can have dozens of metrics, and companies are creating metric libraries the same way that we created and used best practices libraries.
Fourth, we are changing to some degree our definition of “project closure.” Traditionally, when the deliverable or outcome of a project was completed, the project manager would complete the necessary administrative paperwork and move on to another assignment. The problem with this approach is that business value may not be measurable until some time after the deliverables were completed. Business value may be measured by the customer's purchase of the product and its beneficial usage. Therefore, on innovation projects, some project team members may still be assigned to the project to measure the possibility of sustainable business value and to see if any adjustments or scope changes may be necessary.
Project managers must think differently when managing innovation projects. Schedules, budgets, work breakdown structures (WBS), and statements of work may not be able to be used the same way that we used them in traditional projects because of the ambiguity, complexity, and uncertainty issues discussed previously.
For more than 20 years, the project manager's prime source of current information related to project management excellence came from the Best Practices Library managed by the PMO. Business related information was provided in the business case or by the project sponsor. We believe today that we are managing our business by projects and that project management is the delivery system for sustainable business value. Therefore, project managers are expected to make business decisions as well as project decisions and need direct access to a great deal of business information.
Throughout the life of a project, especially innovation projects, there is a significant amount of data that must be collected including information related to the project business case, project benefits realization plan, project charter, project master plan, customer interfacing, and market analyses. We must capture not only project-related best practices, but business best practices as well. But as we capture business best practices, we begin replacing the project management best practices library with a knowledge repository that includes both project management and business-related best practices as well as other necessary information. All this information falls into the category of intellectual capital and is shown in Figure 5-1. However, most companies have significantly more categories than what is represented in Figure 5-1.
It can be extremely difficult to get people to use a knowledge management system correctly unless they can recognize the value in its use. With the amount of information contained in knowledge management systems, care must be taken in how much information to extract. This is critical during the FFE of an innovation project. According to Calabretta and Gemser (2016,108):
All FFE activities require significant information management. Given the unpredictability of innovation outcomes, managers tend to reduce FFE perceived uncertainty by collecting as much diversified information as possible (e.g., market intelligence, technological knowledge, financial information). However, given the limitations of human information processing capabilities, simply accumulating information does not necessarily reduce uncertainty. To increase the odds of successful innovation, information should be selectively retrieved, meaningfully organized, and effectively communicated.
A mistake is often made whereby the only information extracted relates to your company and the targeted, end-of-the-line customer base. While it is true that not all customers and stakeholders are equally important, to increase the value created by the innovation, we must also consider new customers that might eventually buy into our products and services. Focusing on diverse needs of a larger customer base may prove rewarding especially if some customers no longer are important and new customers enter the market with needs that are different than current customers.
Companies invest millions of dollars in developing information warehouses and knowledge management systems. There is a tremendous amount of rich but often complicated data about customers, their likes and dislikes, and buying habits. This knowledge is treated as both tangible and intangible assets. But the hard part is trying to convert the information into useful knowledge.
Innovation personnel should first map out the mission-critical knowledge assets that are needed to support the strategy. The next step is to determine which knowledge assets to use and exploit. By mapping the knowledge assets, you put boundaries around what the innovation project is designed to do.
Unfortunately, the only true value of a knowledge management system is the impact on the business in areas such as revenue generation, increased profits, customer satisfaction and improved business operations (Hanley 2014). Simply stated, we must show that the investment in a knowledge management system contributes to a future competitive advantage.
There are four activities that are part of knowledge management: knowledge creation, knowledge storage, knowledge transfer, and knowledge application. Organizational cultures can influence knowledge management practices by affecting employee behavior (Kayworth and Leidner 2003).
The growth in intellectual capital, knowledge repositories and cloud computing has provided companies with the opportunities for data warehouses. According to Melik (2007, 238):
Many organizations use diverse applications and information systems, each having their own database. The data from disparate systems can be merged into one single database (centralized data) in a process known as data warehousing. For example, a company could use a customer relations management (CRM) solution from Vendor A, a project management system from Vendor B, and an enterprise resource planning (ERP) or accounting system from Vendor C; data warehousing would be used to aggregate the data from these three sources. Business intelligence and reporting tools are then used to perform detailed analysis on all of the data. Data warehouse reports are usually not real time, since the data aggregation takes time to complete and is typically scheduled for once per week, month, or even quarter.
Knowledge management can increase competitiveness, allow for faster decisions and responses to disruptive changes, and rapid adaptation to changes in the environment. Knowledge management access is critical during design thinking. The growth in information, as shown in Figure 5-2, has created a need for cloud computing. There is also a great deal of research being done on establishing categories for intellectual capital such as:
There are also intangible components of intellectual capital, as shown in Figure 5-3. The intangible assets—human, product, and structural capital—could be more important than the tangible assets on an innovation project.
Planning in a traditional project environment may be described as establishing a predetermined course of action within a forecasted environment. The project's requirements set the major milestones. This assumes that we understand the forecasted environment, we have well-defined business objectives, an easily understood business case, and a detailed project plan. There is also the assumption that the business case will remain the same over the life of the project. In an innovation environment, we must think differently because none of these items may exist.
Decision makers must understand that, over the life cycle of an innovation project, circumstances can change requiring modification of the requirements, shifting of priorities, and redefinition of the desired outcomes. This can happen on any project, but it is more likely to occur during innovation activities due to changes in consumer behavior and new products being introduced by the competition.
Project managers monitor closely the enterprise environmental factors which are assumptions about external environmental conditions that can affect the success of the project, such as interest rates, market conditions, changing customer demands and requirements, customer involvement, changes in technology, political climate, and even government policies. On innovation projects, enterprise environmental factors also include such items as:
Projects usually begin with the development of a business case for the project. This occurs most often well before the actual scope of the project is defined. A business case is a document that provides the reasoning why a project should be initiated. For example, if the project manager is expected to develop a new product, the intent may be to:
Each of these intentions could require a different type of innovation, have different budgets and schedules, and have a different form of governance. And to add in more complexity, the strategic goals and objectives can change over the course of the project.
Historically, business cases were small documents or presentations, and the decision to initiate the project was based on the rank of the person making the request. Today, business cases are well-structured written documents that support a specific business need. Each business case should describe the boundaries to the project in sufficient detail such that the decision makers can determine that the expected business value and benefits exceed the cost of performing the project.
The business case must contain both quantifiable and unquantifiable information that justifies the investment in the project. Typical information that can be part of a business case includes:
The above information is used not only to approve the project, but also to be able to prioritize it with all of the other projects in the queue.
Templates can be established for most of the items in the business case. Sometimes, the benefits realization is a separate document rather than being included as part of the business case. A template for a benefits realization plan might include the following:
Kaplan and Warren (2009, 98) have identified items that should be included in a business case specific to innovation projects:
Not all types of innovation projects will require a business case. The details in the business case can vary, based on the type of innovation project. This requires PMs to think differently. Pure research and bootlegged innovation may have no business case until important results are discovered and the project becomes a fully funded innovation project. Sometimes, this information in the business case is considered proprietary, and preparing a business case lets everyone know what innovation activities the company is working on.
It is entirely possible that the business case and benefits realization plan, if they exist, can change to a point where the outcome of the project provides detrimental results and the project should be canceled or backlogged for consideration at a later time. Some of the factors that can induce changes in the business case or benefits realization plan include:
One of the axioms of project management is that the earlier the project manager is assigned, the better the plan and the greater the commitment to the project. Unfortunately, there is a trend today for not bringing the project manager on board early enough to participate in business case development.
There are valid arguments for assigning the project manager after the requirements are outlined and/or the business case is developed:
While these arguments seem to have merit, there is a more serious issue affecting innovation in that the project manager ultimately assigned may not fully understand the assumptions, constraints, marketing's information on customer segments, and consumer behavior and alternatives considered. This could lead to less than optimal development of a project plan. It is wishful thinking to believe that the business case development effort, which may have been prepared by someone completely separated from the execution of the project, contains all of the necessary assumptions, alternatives, and constraints. The innovation PM must be brought on board as early as possible.
Business requirements, often established by marketing, may result in a highly optimistic approach with little regard for the schedule and/or the budget. Pressure is then placed on the innovation project manager to accept unrealistic arguments and assumptions made during business case development. If the project fails to meet business case expectations, then the blame may be placed on the project manager. There must be an understanding that is embedded in the corporate culture that not all innovation projects will be successful.
Quite often, the assumptions included in the project's business case are made by marketing and sales personnel and then approved by senior management as part of the innovation project selection and approval process. The expectations for the final results are usually heavily based on the assumptions made.
There are several types of assumptions. The two most common categories are explicit and implicit assumptions, and critical and noncritical assumptions. Critical and noncritical assumptions are also referred to as primary and secondary assumptions. These two categories of assumptions are not mutually exclusive.
Explicit assumptions may be quantified and are expressed without any ambiguity. An example might be the ability to increase market share in a given segment. Implicit assumptions may be hidden and may go undetected, such as the ability to penetrate new market segments. Explicit assumptions often contain hidden implicit assumptions. As an example, we could make an explicit assumption that five people will be needed full time to complete the project. Hidden is the implicit assumption that the people assigned will be available full time and possess the necessary skills. Serious consequences can occur if the implicit assumptions are proven to be false.
Critical assumptions are those assumptions that can cause significant damage to a project if even small changes take place. Critical assumptions must be tracked closely, whereas noncritical assumptions may not be tracked and may not require any action as long as they do not become critical assumptions. A critical assumption might be that competitors will not beat us into the market with a new product. Project managers must develop a plan for how they will measure, track, and report the critical assumptions. Measurement implies that the assumptions can be quantified. Since assumptions predict future outcomes, testing and measurement might not be possible until well into the future or unless some risk triggers appear. Sensitivity analysis may be required to determine the risk triggers.
In an innovation environment, the project manager and marketing must work together to identify the assumptions. An agreement must be reached on the critical assumptions especially with regard to business value, risks, and costs. An understanding must also be reached on what changes to the critical assumptions may trigger the need for scope changes. This requires that the project manager and marketing remain in close collaboration throughout the life of the project as they monitor the marketplace.
There are some assumptions that innovation project managers may never see or even know about. These are referred to as strategic assumptions and are retained by decision makers when approving a project or selecting a portfolio of projects. These types of assumptions may contain company proprietary information that executives do not want the project team to know about.
All innovation assumptions should be documented at project initiation. Throughout the project, the project manager must revalidate and challenge the assumptions. Changing assumptions may mandate that the project be terminated or redirected toward a different set of goals and objectives.
Documenting assumptions is necessary in order to track the changes. Examples of assumptions that are likely to change over the duration of an innovation project, especially on a long-term project, might be that:
Assumptions about enterprise environmental factors
Assumptions about organizational process assets are assumptions about present or future company assets that can impact the success of the project such as:
Faulty assumptions can lead to faulty conclusions, bad results, and unhappy customers. The best defense against poor assumptions is good preparation at project initiation, including the development of risk mitigation strategies. One possible way to do this is with a validation checklist, as shown in Table 5-1.
TABLE 5–1. ASSUMPTION VALIDATION CHECKLIST
Checklist for Validating Assumptions | YES | NO |
Assumption is outside of the control of the project team. | ||
Assumption is outside of the control of the stakeholder(s). | ||
The assumption can be validated as correct. | ||
Changes in the assumption can be controlled. | ||
The assumed condition is not fatal. | ||
The probability of the assumption holding true is clear. | ||
The consequences of this assumption pose a serious risk to the project. | ||
Unfavorable changes in the assumption can be fatal to the project. |
“Vision without action is a daydream, but action without vision is a nightmare.”
– Kaihan Krippendorff
When project managers are assigned to a project and review the requirements, they look first at the assumptions and objectives for the project. Traditional project management focuses heavily on well-defined business cases containing detailed objectives and statements of work whereas innovation project management is focused on goal-setting. Goals rather than objectives are frequently used at the beginning of an innovation project because the requirements may be ill-defined at this time.
A goal represents the end point or finish line that depicts where you wish to end up. Goals can have a window of 5–30 years. Objectives are long- or short-term activities or actions necessary to attain the goals. Many innovation projects start out with just goals, often “big hairy audacious goals” (BHAGs), and then the objectives are prepared as the project progresses.
A project's objectives, which are usually high-level objectives, provide an aim or desired end of action. Project managers must then prepare the interim objectives to satisfy the high-level objectives as well as the goals.
Clearly written and well-understood objectives are essential so that the project team will know when the project is over (i.e., the objectives have been achieved). Unfortunately, the objectives are usually imposed on the project manager, rather than having the project manager assigned early enough so as to participate in the establishment of the objectives.
Clearly written objectives follow the SMART rule: Specific, Measurable, Attainable, Realistic or Relevant, Tangible or Time-bound.
Project managers may not be able to establish the objectives themselves without some assistance from perhaps the governance committee and marketing. Most project managers may be able to establish the technical components of the objectives but must rely heavily on others for the business components.
If the project manager believes that the requirements are unrealistic, then he may consider scaling back the scope of the objectives. While other techniques are available for scaling back the objectives, scope reduction is often the first attempt. According to Eric Verzuh (2016, 278):
If the goals of the project will take too long to accomplish or cost too much, the first step is to scale down the objectives—the product scope. The result of this alternative will be to reduce the functionality of the end product. Perhaps an aircraft will carry less weight, a software product will have fewer features, or a building will have fewer square feet or less expensive wood paneling.
Positive. This will save the project while saving both time and money.
Negative. When a product's functionality is reduced, its value is reduced. If the airplane won't carry as much weight, will the customers still want it? If a software product has fewer features, will it stand up to competition? A smaller office building with less expensive wood paneling may not attract high-enough rents to justify the project.
Best application. The key to reducing a product's scope without reducing its value is to reevaluate the true requirements for the business case. Many a product has been over budget because it was overbuilt. Quality has best been defined as “conformance to requirements.” Therefore, reducing product scope so that the requirements are met more accurately actually improves the value of the product, because it is produced more quickly and for a lower cost.
Establishing goals requires forecasting. Forecasting what will happen may not be easy, especially if predictions of consumer reactions after commercialization are required. Forecasting is customarily defined as either strategic, tactical, or operational. Strategic forecasting is generally for five years or more, tactical can be for one to five years, and operational is the here and now of six months to one year. Although most projects are operational, many forms of innovation projects can be considered as strategic, especially if spinoffs or follow-up work is promising or if the expectation is to disrupt the markets. Forecasting also requires an understanding of strengths and weaknesses in:
Project planning takes place at two levels. The first level is the corporate cultural approach; the second is the individual's approach. The corporate cultural approach breaks the project down into life-cycle phases. The life-cycle phase approach is not an attempt to put handcuffs on the project manager but to provide a methodology for uniformity in project planning and structured decision making for control. Many companies, including government agencies, prepare checklists of activities that should be considered in each phase. These checklists are for consistency in planning. The project manager can still exercise his own planning initiatives within each phase.
Another benefit of life-cycle phases is control. At the end of each phase there is a meeting of the project manager, sponsor, senior management, and even the customer, to assess the accomplishments of this life-cycle phase and to get approval for the next phase. These meetings are often called critical design reviews, “on-off ramps,” and “gates.” In some companies, these meetings are used to firm up budgets and schedules for the follow-on phases. In addition to monetary and schedule considerations, life-cycle phases can be used for staffing deployment and equipment/facility utilization. Some companies go so far as to prepare project management policy and procedure manuals where all information is subdivided according to life-cycle phasing. They include:
When we discuss life-cycle phases, it is generally understood that there are “go” or “no-go” milestones at the end of each life-cycle phase. These milestones are used to determine if the project should be continued, and if so, should there be any changes to the funding or requirements? But there are also other interim milestones that support the end-of-phase milestones or appear within certain life-cycle phases.
Scope freeze milestones are locations in the project's timeline where the scope is frozen and further scope changes will not be allowed. In traditional project management, we often do not use scope freeze milestones because it is assumed that the scope is well-defined at project initiation. But on other projects, especially in IT and innovation, the project may begin based on just an idea and the project's scope must evolve as the project is being implemented. This is quite common with techniques such as Agile and Scrum.
According to Melik:
There will be resistance to scope freeze; if it is too early, you may have an unhappy customer, too late and the project will be over budget or late. Striking the right balance between the customer's needs and your ability to deliver on time and on budget is a judgment call; timing varies from project to project, but the scope should always be frozen before a [significant] financial commitment is made. (2007, 205−206)
What if the scope baseline cannot be agreed on? One of the following approaches may be helpful:
Scope freeze milestones are important in innovation projects because highly talented people may want to create a perfect product and continue designing and experimenting. There is a point where one must freeze the design, commercialize the product, and allow all further enhancements to be part of the next generation of this product. Scope freezes may be necessary to enter the marketplace quickly and generate revenue.
In addition to scope freeze milestones, there can also be design freeze milestones. Even if the scope is well defined and agreed to, there may be several different design options to meet the scope. Sometimes, the best design may require that the scope change and the scope freeze milestone must be moved out.
A design freeze milestone is a point in a project where no further changes to the design of the product came be made without incurring a financial risk, especially if the design must then go to manufacturing. The decision point for the freeze usually occurs at the end of a specific life-cycle phase. There are several types of freezes, and they can occur in just about any type of project. However, they are most common in new product development (NPD) projects.
In NPD projects with technical innovation, we normally have a both a specification freeze and a design freeze. Innovation teams usually dislike specifications claiming it limits their freedom to be creative.
I think that a lot of the most interesting and novel solutions come when you don't have a definite specification.
Dr. William McLean, Sidewinder project director, in hearings before the Committee on Armed Services, US Senate, December 1971, p. 233.
However, specifications are often necessary and dictate the set of requirements upon which the final design must be made. There may be health and safety reasons for the specifications.
Following a specification freeze, we have a design freeze whereby the final design is handed over to manufacturing. The design freeze may be necessary for timely procurement of long lead items such as parts and tooling that are necessary for the final product to be manufactured. The timing of the design freeze is often dictated by the lead times and may be beyond the control of the company. Failing to meet design freeze points has a significantly greater impact on manufacturing than engineering design.
Design freezes have the additional benefit of controlling downstream scope changes. However, even though design changes can be costly, they are often necessary for safety reasons, to protect the firm against possible product liability lawsuits, and to satisfy a customer's specific needs.
Changes to a product after the product's design is handed over to manufacturing can be costly. As a rule, we generally state that the cost of a change in any life-cycle phase after the design freeze is 10 times the cost of performing the change in the previous life-cycle phase. As an example, let's assume that if a mistake is made prior to the design freeze point, the correction could have been made for $100. But if the mistake is not detected until the manufacturing stage, then the correction cost could be $1000. The same mistake, if detected after the customer receives the product, could cost $10,000 to correct a $100 planning mistake or a $1000 manufacturing mistake. While the rule of 10 may seem a little exaggerated, it does show the trend in correcting costs downstream.
Some innovations may be designed for a specific customer base and may be done as part of co-creation. Project managers often neglect to include in the life-cycle phases timeline milestones and the accompanying time durations for customer approvals of the project's schedule baseline with the mistaken belief that the approval process will happen quickly. The approval process in the project manager's parent company may be known with some reasonable degree of certainly, but the same cannot be said for the client's or partners' approval process. Factors that can impact the speed by which the approvals take place can include:
Simply adding a milestone to a schedule that says “customer approval” does not solve the problem. Project managers must find out how long their customers need before making a decision, and it may be better to indicate customer approval as an activity rather than as a milestone.
As stated earlier, innovation projects may not work well within the traditional life-cycle phases. Some companies use product development life-cycle phases in additional to traditional life-cycle phases on other projects. Techniques such as Agile and Scrum are flexible approaches that set up their frameworks according to the unique requirements of each project. Once again, one size does not fit all.
Innovation can use nontraditional life-cycle phases, as shown in Figure 5-4. These life-cycle phases can still use scope freeze milestones, design freeze milestones, and customer approval milestones. There can be different nontraditional life-cycle phases on innovation projects based on whether we have product, service, or process innovation and whether the innovation is intended to be incremental or radical.
A work breakdown structure (WBS) is a product-oriented family tree subdivision of the hardware, services, and data required to produce the end product. The WBS is structured in accordance with the way the work will be performed and reflects the way in which project costs and data will be summarized and eventually reported. Preparation of the WBS also considers other areas that require structured data, such as scheduling, configuration management, contract funding, and technical performance parameters.
The WBS acts as a vehicle for breaking the work down into smaller elements, thus providing a greater probability that every major and minor activity will be accounted for. However, in innovation there may be no statement of work or listing of detailed requirements. As such, we may have only high-level activities identified in the WBS and need to use rolling wave or progressive elaboration as the project progresses.
In innovation, we tend to prepare a high-level WBS for activities that we are sure about over the next month or two. As we progress with design work, experimentation and testing we expand the WBS with more detail for the next two months. In this case, we are using a two-month moving window for updates to the WBS. The failure of as little as one test could result in a major change in the WBS as well as in the direction of the project.
The length of the moving window and the elaboration of the WBS with more details will vary based on the type of innovation and the amount of information available. Developing a detailed WBS for incremental innovation is much easier than for radical or disruptive innovation.
There are three categories of estimates that most companies use. The decision of which category to use is based on the amount of information available at the time of the estimate. The first type of estimate is an order-of-magnitude analysis, which is made without any detailed engineering data. The order-of-magnitude analysis may have an accuracy of ±35 percent within the scope of the project. This type of estimate may use past experience (not necessarily similar), scale factors, parametric curves, or capacity estimates.
Order-of-magnitude estimates are top-down estimates usually applied to level 1 of the WBS, and in some industries, use of parametric estimates are included. A parametric estimate is based on statistical data.
Next, there is the approximate estimate (or top-down estimate), which is also made without detailed engineering data, and may be accurate to ±15 percent. This type of estimate is prorated from previous projects that are similar in scope and capacity, and may be titled as estimating by analogy, parametric curves, rule of thumb, and indexed cost of similar activities adjusted for capacity and technology. In such a case, the estimator may say that this activity is 50 percent more difficult than a previous (i.e., reference) activity and requires 50 percent more time, man-hours, dollars, materials, and so on.
The definitive estimate, or grassroots buildup estimate, is prepared from well-defined engineering data including (as a minimum) vendor quotes, fairly complete plans, specifications, unit prices, and estimate to complete. The definitive estimate, also referred to as detailed estimating, has an accuracy of ±5 percent. Another method for estimating is the use of learning curves. Learning curves are graphical representations of repetitive functions in which continuous operations will lead to a reduction in time, resources, and money. The theory behind learning curves is usually applied to manufacturing operations.
Each company may have a unique approach to estimating. However, for normal project management practices, the three estimating categories discussed would suffice as a starting point. Many companies try to standardize their estimating procedures by developing an estimating manual. The estimating manual is then used to price out the effort, perhaps as much as 90 percent. Estimating manuals usually give better estimates than industrial engineering standards because they include groups of tasks and take into consideration such items as downtime, cleanup time, lunch, and breaks.
Innovation projects, with limited information available at the onset, are generally forced to use order-of-magnitude estimating. As the work progresses, and more knowledge becomes available, companies can use different and more accurate estimating techniques for the remaining work.
Task duration estimates and schedule preparation suffer from the same issues as with budgeting. If you can prepare a detailed schedule for innovation and predict the exact date when you will make a technical breakthrough, you do not have innovation.
Researchers and innovators prefer very loose schedules with the freedom to go off on tangents, whereas developmental schedules, such as used in incremental innovation, are often more rigid. Research and innovation schedules identify parallel activities, whereas in development, scheduled activities may be sequential.
Schedules are usually prepared using moving window or rolling wave planning where a detailed schedule may be prepared for a short window of time, such as two or three months. The results of one or two tests could require that the schedule be changed significantly. Since the schedule is prepare from the activities in the WBS, it is understandable that the accuracy of the schedule is based on the levels of detail used in the WBS.
A critical tool employed by a project manager in traditional project management is configuration management or configuration/scope change control. As projects progress downstream through the various life-cycle phases, the cost of changes in the design of a product or service can grow boundlessly.
Innovators generally function with weak specifications because of the freedom to invent, whereas development personnel are paid not to create new alternatives but to reduce available alternatives to one, hopefully simple, solution available for implementation and commercialization. Unfortunately, weak specifications are an invitation for scope changes.
Configuration management is a control technique, through an orderly process, for formal review and approval of scope changes. If properly implemented, configuration management provides:
At a minimum, the configuration control committee should include representation from the customer, contractor, and line group initiating the change. Discussions should answer the following questions:
Changes cost money, impact schedules, and can alter promises made by marketing to downstream customers. In the life-cycle stages of a research or innovation project, engineering changes, specification changes, and engineering redirection (even if caused simply by the whims of management) may have a minor cost impact compared to these same changes occurring in the development or commercialization life-cycle stages. Therefore, it is imperative that configuration management be implemented correctly. The following steps can enhance the implementation process:
If co-creation is being used for innovation, determining the members of the CCB will be challenging because some of the scope changes can alter the baselines and accompany expectations of the co-creation team members. All members of the co-creation team must be made aware of the approved and denied changes. Marketing may wish to consult with product end users as well as to their opinion of the changes.
An important question that needs to be answered during a CCB meeting is whether resources with critical skills will be available for the scope change. The change may dictate the need for skills at a higher level than the project team possesses. If these resources must be removed from other ongoing projects, the other projects may incur significant slippages. Given this, some scope changes that are needed may be placed on the back burner for a later time.
As a final note, it must be understood that configuration/scope change control, as used here, is not a replacement for design review meetings or customer interface meetings. These meetings are still an integral part of all projects.
“It is critical to learn how to listen for what is not being said.”
– Debra Kaye, Red Thread Thinking: Weaving Together Connections for Brilliant Ideas and Profitable Innovations
Many people argue that the most important skill that a project must possess is communications management. Yet at the same time, innovation in project communication management has been slow. We tend to focus primarily on the way that project managers communicate with the project team. In most cases, it is either with a collocated or virtual team where communication takes place using written reports, presentations or videoconferencing.
In the early years of project management, all external communications to stakeholders, and in some cases the customers as well, were handled by the project sponsors. All of this has now changed, and the project managers have the responsibility of communicating with everyone.
As project management grows into a multinational environment, project managers are finding themselves in a different type of communication situation. As an example, a multinational project manager in the United States commented:
In the United States, when you have an issue on a project, you know that the communication path goes to the project sponsor, and many times it stops there for resolution. In some countries, when you escalate an issue, you are unsure where the issue will go. Suddenly you discover government ministers and other government and political figures that previously were not involved in the project are now becoming active stakeholders. They may even attempt to micromanage some of your activities and require different forms of communication.
We are now looking at ways to innovate communications management. We have more metrics on projects today than we had in the past. Companies are asking for real-time status reporting, perhaps daily, and with the use of dashboards. Project managers are now being asked to communicate with everyone, and this is adding complexity to the traditional project management processes. Innovation in communication is now a necessity and the growth in information warehouses supported by innovation software is helping.
Traditional project management practices have been considered for decades as general guidance for project managers. But today, we recognize that each project may represent a highly unique situation. From the word situation, I can say that based on the project manager's actions and reactions, an innovative solution(s) may be necessary that may or may not be able to be generalized.
I have a strong belief that project management is still immature, and a lot of ideas and techniques can be applied to enhance the approaches of tackling issues and risks in projects. Moreover, the way we will be running projects in the future will lead eventually to adopt innovative thinking in all projects.
During the last 20 years, I have realized that we must distinguish between types of projects, the expected ways of how to run these projects, and the capabilities and traits of the assigned project managers to run specific projects. On large projects and high-risk projects, we must stop using the term manager and use leader instead. In these projects, we need leadership traits, not managing skills only. The leader must be able to think outside the box as well inspire and motivate others to adopt any urgent change. The leader can build the trust inside his team such that they will achieve the goals together. More concentration on communication and adopting a correct strategy between parties is a must.
I used this innovative thinking approach for project management and applied it on one of the construction projects under my direct supervision. I will highlight how we can utilize the general knowledge and combine it with innovate new ideas to tackle challenges, issues, and risks that could affect the project's outcome if not been resolved.
A practical implementation will be provided for Kurt Lewin's three-step change plan theory (with modification). Lewin's change theory model is based on a three-step process (unfreeze-change-freeze) and provides a high-level approach to change management.
Within the change process, I have implemented an IT program I developed, which has some interfaces to help visualize the requirements and establishing the recovery program needed in case of delays. Also, I will show a communication pattern that enables communication with the mainstream stakeholders.
The project consisted of four steel cylindrical tanks, each with a height of 21 m and 110 m diameter with capacity of 190,000 cubic meters, service buildings, roads, and supply of all materials, equipment and services required for the project. The project would supply up to 760,000 cubic meters of drinkable fresh water for the Mashaer Area in Makkah (Arafat, Muzdalefa, and Mena, Saudi Arabia) resident population. Timely completion of the project was crucial, since these reservoirs were needed to meet increased water demand for the pilgrimage in 2016.
Some significant challenges included:
I carried out a detailed study to identify the practical solutions to mitigate the risks/issues of the project. But first it was necessary to change the mentality of both the contractor and the client if we were to proceed and achieve the projects' goals. Dealing with the client and contractor made it clear that fundamental changes, including a proper communication strategy, were needed, and that the traditional way of managing projects would not work.
First, I had to identify the barriers to communication between us as consultants and the other two parties, especially the contractor. This issue motivated me to develop and implement my theory for communication, utilize Lewin's three-step theory with my own modification, and integrate information technology into project management by a simple software program that I had developed.
Thinking outside the box and with this proactive technique played a crucial role in the successful delivery of the project, on time and with the required high quality. The most important interface, which had a great impact on the project, was the interface for the recovery plan.
One of the important aspects to achieve the project's targets is to have an ultimate understanding and healthy communication practices between all the parties involved with the project. Many people believe as I do, that the readiness and willingness to accept communication is more important than the mode of communication. Sometimes it is not misunderstanding, or any type of barriers that affect communication; it is the wrong communication strategy between the parties and to get all the parties together on the same wavelength, maintaining effective communication between parties during project's life cycle.
Here I am introducing a new theory in communication, which I adopted on two projects, and the results were quite noticeable and gave positive results leading to each project's success. I had been inspired by mathematical linear equations to structure this theory.
To build a communication strategy, we need to understand the perspectives of others, how they think, their exact capabilities based on their situation, as well to grasp the type of relationship that exists between each two parties. Then we must put them together in the same balanced equation to achieve harmony. After building the strategy and before communicating with others, it is also important to ensure that there are no barriers hindering transfer of the information.
First, I will provide a definition for the situation and relationships:
To understand the individual's situation and his/her entire capabilities, we must put ourselves in the other person's shoes and see the project through their eyes. With multiple relationships we will have more than two parties that need to communicate with each other, and all those parties are stakeholders. Their interference can have an impact on the project. We will analyze each two-party relationships separately. For example, in a construction project, the three important parties (i.e., stakeholders) whose interference has the great impact on the project are the client (owner), the contractor, and the supervising consultant. Each party has a role and an input for the completion of the project. The relationship is controlled by a contract between each of two parties or an item/article written in the contract. This relationship must be controlled (balanced) all the time.
As in mathematics, I have considered these relationships as linear equations. First, each of the two parties will have its own relationship, and finally, we will have one equation containing all the parties together.
where the constants A, B, C, and later D representing the type of communication based on the relation itself (the harmony).
To have an effective and efficient communication pattern, which will serve the project's target, we need to have all parties in the same harmony of communication:
This equation represents the final shape of the communication map of all parties involved in the project; any misunderstanding of the type of relationship will result in a distortion in the final shape of the equation and will not result in the exact value of D.
By substituting one variable in the place of another to solve all the above equations, you can build a suitable system of communication by substituting (imagining) yourself in the contractor/client place to understand his situation. During this substitution, a SWOT (strengths, weaknesses, opportunities, and threats) analysis was done for each variable (X, Y, and Z), which included gathering information and building trust, identifying weaknesses, strengths, opportunities, threats. There were also some specific objectives recorded for all parties. Then the picture became clear and answered the question concerning communication barriers. Based on this information, I was able to bridge the gap to build a strong and effective communication strategy.
I began by explaining my strategy to my team and sharing my concerns. This resulted in a great deal of support for my communication model. I was able to motivate them during all of the project's stages, and maintaining their enthusiasm. Continuous meetings, integrity, patience, brainstorming sessions, and motivation were important factors for success.
Lewin's change theory model is based on a three-step process (unfreeze-change-freeze) that provides a high-level approach to change. This theory was chosen because it provides a framework to implement a change effort, which is always very sensitive and must be made as seamless as possible.
I also included in this theory what I call shock-negative and shock-positive results.
My modification was necessary because we needed a shock to force the respondents (client and contractor) to accept change and unfreeze them to reshape their behavior. We tried to convince them that the current attitude would lead to unwanted results or negative impact. My approach was that we needed a “shock treatment,” with evidence that current behavior would lead to a disaster. After we were able to convince them and after the change had been completed, the second step was another shock, in order to keep the new changes (freeze). This second (positive) shock was to convince them that this new change would have a major positive impact. With this shock I utilized information technology that was able to show impressive effects.
The client (owner) had been engaged in projects for some time, using habits and routines that were based on past project experiences. Tasks and procedures that were not relevant or useful any longer were still being performed by force of habit, without anyone questioning their legitimacy. The client's organization was in a mode where people or processes were not open to or willing to accept a major change.
During unfreezing, my aim was to get the stakeholders to gain a perspective on their day-to-day activities, unlearn their predefined procedures that were not relevant to the project, and expose them to innovative ways of reaching their objectives. The current practices and processes were reassessed prior to the start of the next stage.
During this phase of the change process, we went through different sessions to explain the current situation to all the stakeholders (shock-negative) and its impact on the project. I explained all technical and management issues and guided them scientifically to uncover all the bad scenarios that might result with the current approach. The purpose of change was very clearly explained to all stakeholders during this stage. Several presentations and awareness sessions were arranged at the site office (contractor and my team) as well as the client office to enable them to adapt to change. During this stage, the following steps were taken:
Understanding that this stage is quite important and dynamic, I did everything feasible to make the change stage successful and assured them that for each activity there would be sufficient time. This transition phase basically is the process of educating people on the changes, putting them into practice, testing them, and doing change assessment to make sure policies line up, and that related policies and processes don't clash once the changes are implemented. To gain efficiency, I engaged in some tasks and responsibilities, such as conducting training sessions and conducting meetings, which entailed a learning curve that could show the project's progress. In the end, we had benefited with project progress, quality, and EHS requirements.
During this phase, different training sessions were arranged for the client and contractor to bring them to the required level of project management awareness. Along with this, different but useful information was shared with them regarding quality control and EHS. Some of the training sessions were carried out as part of an on-site tour to understand exact areas where change was essential. I also encouraged all parties to utilize information technology in their work, using the relevant software programs. . I found that they were having difficulties with some programs, for many reasons, so I developed an easy to use software program to deal with some aspects of the project.
In summary, the following was done during this stage:
After changing the previous approach of the client and the contractor to an acceptable degree, and make sure the change was permanent, some steps were followed. Further changes in the project procedures had been made along the way. The final project management plan and quality procedures were monitored and controlled. This was achieved by regular feedback and following up all the details, even minor ones. At each stage of the project, we ensured that the contractor was conforming to the quality control procedures and EHS standards.
One tool to ensure continued improvement is effective communication management. We kept the client informed at every stage of the project so the client could learn the different skills needed for project management. Also, to ensure that the change would be permanent, “shock-positive” was presented; not just by showing the positive impacts on the project itself but also by applying the same approach to the client's other projects, especially the projects with poor performance. The good results were impressive.
During this stage, the following was done:
Before and during the unfreeze stage, there should be an explanation of the current approach and its potential negative impacts. This should come as a shock to prepare them (the client and contractor) for the unfreeze stage. Without this shock the change will not start. The shock will provide clear evidence that the current approach will lead to disaster and will result in not achieving the project's target. There were some major technical issues explained, and all parties were convinced that they needed to change their approach and to follow approved procedures and standards.
During and after the freeze stage, there will be evidence that this new approach has very positive impacts on the project (and on other projects, if applied).
These two shocks have been explained and presented during meetings, presentations, and lectures.
There was not much use of information technology (IT) by the contractor and client in the project. The challenges, such as the need to have exact information, how to recover the completion plan, lack of IT awareness or importance, and the contractor and client's difficulties using the available software in the market motivated me to create an easy software program to steer, monitor, and control most project activities. This software program is still under development, and with hope within two years it will be available for public use.
Unfortunately, the contractor began blasting activity without considering the existing utilities during the project initiation or site study. Also, there was no risk management plan, which would have included a risk register and assessment for these utilities. We explained to the client the dangerous impacts that blasting could have on nearby structures. The blasting activities were suspended until a technical evaluation and a proper assessment of the related risks were carried out. The evaluation report came up with some recommendations for the blasting activity, such as limited blasting per day and using a limited number of explosives per blast. The related risks were eliminated but resulted in a delay at this stage.
Everyone understood that the blasting activity, which is one of the critical path activities, would take longer than expected, and would have a time-delay impact on other project activities. This could lead to a significant delay in the completion date if these issues were not resolved. The complexity of the situation increased as a result of my detailed study of the baseline and showed that some activities needed more time than planned.
My goals were to optimize the resources and find ways to accelerate the progress of activities after blasting. Major activities after the site preparation (blasting) included removing rocks resulted from blasting to the dumping area, which is around 10 kilometers from the site, and welding steel sheets (10 meters by 2.5 meters, with an average weight of 6 tons each) to form the reservoir structure. The project consisted of four reservoirs, and each reservoir structure was almost 43 meters in height (including the aluminum roof dome) with a diameter of 110 meters. Construction required major resources such as cranes, a submerge arc welding (SAW) machine, an electro gas welding (EGW) machine, welders, and coating machines, all working in several shifts.
I became obsessed with the word “time” and examined all activities to find suitable ways to decrease activity durations and/or find alternative solutions. At that stage, I managed to have all parties working as one team and all were thinking in the same way—to decrease time.
After a detailed assessment, we managed to decrease the duration of many activities by restructuring the way we were performing or by increasing resources. But the major two activities that had the greatest time impact on the project were removing the excavated rocks to the dumping area and the construction of the steel reservoirs.
The nearest dumping area was almost 10 km from the site. The contractor's plan was to use 30 long trucks to shift the excavated rock, which totalled around 990,000 cubic meters, from site to the dumping area. Each truck could accommodate approximately 20 cubic meters of rock; hence a maximum of 160 cubic meters per truck (8 trips per day based on geography and traffic analysis) could be shifted per day. This activity alone would take almost 206 days to complete, and we needed a cleared site area to start other activities. The remaining time at that stage was about 300 days. It would be impossible to complete the project on time if we followed that approach. The issue had been escalated to find an urgent alternative. After searching for an alternative, an idea came to the team to build a riprap from the excavated rocks near to the site. (Riprap is also known as rip-rap, shot rock, and rock armor.) Rock or other material such as concrete is used to armor shorelines, streambeds, bridge abutments, pilings, and other shoreline structures against scour and water or ice erosion. (See Figure 5-5) This opportunity to save time and the sustainable reuse of the construction waste was explained to the client. The client supported the idea and helped get all the approvals from the concerned authorities. This idea saved around 150 days.
The contractor constructed a riprap at the edge of the mountain and around the parking area to prevent any loose rocks from falling. Also, the riprap protected both the public and local properties in case any loose rocks did fall. The location of the constructed riprap wall was around 500 meters from the project site. This riprap wall construction idea not only saved time but reduced cost and pollution. This result was based on a numerical calculation, which enabled all stakeholders to have a clear vision about what they should do.
I decided to utilize software to develop an accurate recovery plan for the project. I developed a program to calculate the exact resources required for the completion of each stage that was part of the construction of the reservoir. I started by using readily available software, Microsoft Excel. Then, when I had decided to add more interfaces, I utilized the programming language V.net to build the software program.
Interfaces were also part of the software program. The intent of one of the interfaces was to calculate the optimum time to complete an activity as well as provide a clear idea about the exact resources needed for on-time completion. The most accurate time duration for each activity was calculated. I converted the required resources to a data format to be incorporated into the program. Several surveys and samples of data were taken on site and compared to similar current projects and some past projects. Converted data was used to calculate and identify the exact time required to complete each layer of the structure. Some activities were subdivided for more accurate output. This helped in monitoring the progress. Another usage of this interface was to identify the required working hours/shifts for each resource.
Results from a test simulation were confirmed against the known outputs. Successful completion of the tests showed the possibility of completing the project on time if the proposed set of actions were followed. The test program calculated the required resources and optimization of resources for greater productivity. The contractor was very pleased to have the exact information and guidance since they were under pressure to find a suitable solution that would function as a recovery plan. Implementing effective resource management practices based on the developed program, the contractor succeeded in establishing an action and recovery plan. The program identified the exact resource allocation requirements and optimization ideas to squeeze the activities to comply with the project's crucial completion time.
The other interfaces were for monitoring the progress, recording inspections, providing quality control for documentation, fundamental design for a steel reservoir, and more. Multi-capability forms of this program can be developed and can be applied to any similar project. The program idea can be used in any project, regardless of scope, activity, or resources.
Without a doubt, we are now in an age where the pace of change in IT and services is greater than ever before. Rapid innovation is demanded by clients and expected by the markets. There are continuous developments in technology (e.g., digital transformation, automation, robotics, etc.) and methodologies (e.g., Agile, DevOps). So, the question is, is there still a place for a standard project management framework that will enable companies to succeed and bring value to their clients?
At NTT DATA, the answer is yes. So how do we balance the need for rapid, transformative innovation while leveraging our project management framework? The answer is that we use both the “art” and the “science” of project management.
NTT DATA partners with clients to navigate and simplify the modern complexities of business and technology, delivering the insights, solutions, and outcomes that matter most. We deliver tangible business results by combining deep industry expertise with applied innovations in digital, cloud, and automation across a comprehensive portfolio of consulting, applications, infrastructure, and business process services.
NTT DATA is a top-10 global business and IT services provider with 100,000+ professionals in more than 50 countries, and is part of NTT Group, a partner to 85 percent of the Fortune 100.
NTT DATA welcomed Dell Services into the family in 2016. Together, we offer one of the industry's most comprehensive services portfolios, designed to modernize business and technology to deliver the outcomes that matter most to our clients.
The patented PM31 is the NTT DATA Services Global Project Delivery Framework, which encompasses the project and program management framework, the project management office (PMO) framework, and the internal project delivery governance standards and processes. The patented PM3 methodology and supporting documents require qualified project management team members to interpret and apply the methodology, standards, and tools appropriately, based on the specific needs of the project or program.
Project management cannot be executed successfully, nor can the value and benefits be fully realized, by following a checklist, or step-by-step procedure. Standards, process, and tools are only half of the equation. Successful project management relies on strong leadership, decision making, and expert judgment, as well.
To reap the maximum benefits, the use of the PM3 Project–Program Management Framework, project managers must strike a balance between the science of disciplined execution and the art of using sound judgment in leading the effort.
The value comes when the processes and tools are applied properly and most efficiently for both our clients and NTT DATA Services, balancing risk with the degree of rigor applied.
When you are dealing with requirements that need a great deal of innovation, you are going to lean more heavily on the “art” of project management while you leverage the best practices available from the “science” of project management where they make sense.
Remember: The PM3 Framework is a means to an end. There can be several paths that lead the PM practitioner to the critical outcomes that are necessary for project success.
The strong project manager will balance the “art” and “science” to ensure the critical outcomes are achieved.
It is essential for the success of our projects and our clients that we invest in our project managers by providing them with the tools that will enable them to deliver on critical outcomes. At NTT DATA, our people are not only who we are today, but are the future of our organization. We know our employees are our most important investment and with the right tools and environment, the potential to succeed is unlimited.
In addition to technical skills related to the specific project management processes and tools, or what is sometimes referred to as the “science” of project management, the NTT DATA Services Project Management Learning System (PMLS) emphasizes the importance of human performance skills, or the “art” part of project management. Excellent leadership skills and good judgment are critical to the success of any Project Manager.
The PM3 Project Management Certification Program and associated PM3 Training are critical to long-term sustainability of the standards. The PM3 includes a comprehensive curriculum that provides project management team members the opportunity to build project management skills and understand the NTT DATA Services approach.
All of the PM3 training is web-based, offered online to provide easy access and navigation, in the most convenient and cost-effective manner for NTT DATA Services project management team members.
Communication and change management are foundational components of good project management. In an environment where innovation and rapid change are the dominant force, communication and change management are not only foundational but critical.
NTT DATA's Organizational Change Management approach enables fast-paced innovation that delivers value to our customers. Our approach includes the following elements:
PM3 contributions by subject matter experts from across NTT DATA Services, with specific authorship for this publication by the Services Enterprise PMO Team:
Michael Bauer, head of the Global SSMO (Solutions and Services Management Office) at Philips Business Group MA&TC Services (Monitoring and Analytics and Therapeutic Care) and Mary Ellen Skeens, director of Solution Design and Delivery Processes at Philips Business Group MA&TC Services, describe how innovative solutions are successfully supported by a scalable solution design and delivery services framework.
Special thanks to Lisa Midttun (solution release manager in MA&TC Solution and Segment Marketing) and Stacy Meyer (MA&TC SSMO senior consultant) for their valuable contributions in the respective areas of solution innovation and commercialization process and importance of communities of practice (CoP) and social learning for solution innovation success.
In the fourth edition of Project Management Best Practices Achieving Global Excellence, Michael Bauer provides an overview of the Philips SOLiD Framework, along with key takeaways on how a scalable approach enables organizations to achieve solution implementation and services excellence (Kerzner 2018, 453−456).
In this section, we review key trends in health care driving solution innovation, translation of these into customer needs and solution complexity, as well as enablers for achieving solution design and delivery service excellence, including:
Royal Philips2 (NYSE: PHG, AEX: PHIA) is a leading health technology company focused on improving people's health and enabling better outcomes across the health continuum from healthy living and prevention, to diagnosis, treatment and home care. Philips leverages advanced technology and deep clinical and consumer insights to deliver integrated solutions. Headquartered in the Netherlands, the company is a leader in diagnostic imaging, image-guided therapy, patient monitoring, and health informatics, as well as in consumer health and home care. Philips' health technology portfolio generated 2017 sales of EUR 17.8 billion and employs approximately 77,000 employees with sales and services in more than 100 countries.
The Monitoring and Analytics (MA) Business Group is a software and solutions business encompassing patient monitoring and its capabilities. Reaching more than 370 million people every year, MA solutions are advanced intelligence platforms, providing key insights and information to clinicians when and where they need it. The ultimate priority for the MA Business Group is to enable smart decision making for caregivers, administrators, and patients such that costs are controlled, efficiency is increased, and better health is supported.
The Therapeutic Care (TC) Business Group is expanding access to and quality of respiratory care, resuscitation, and emergency care solutions (including devices, services, and digital/data solutions). Hospital respiratory care (HRC) and emergency care and resuscitation (ECR) solutions are helping caregivers and lay responders both inside and outside the hospital.
The health-care industry is quickly evolving (see, e.g., www.results.philips.com/publications/ar17#/strategy). Digital technology and innovative solutions are shaping the industry to support individuals taking charge of their own health.
There are four key trends driving disruptive change in health-care technology:
These trends have resulted in health-care organizations striving to find solutions to reach the goals of improving clinical, patient, and financial outcomes while also addressing the well-being and engagement of health-care employees (Bodenheimer and Sinsky 2014).
Philips has adopted a solution-oriented approach in delivering value to customers via integrated solution offerings. Philips defines a solution as a combination of Philips (and third-party) systems, devices, software, consumables and services, configured and delivered in a way that solves customer- (segment) specific needs.
Solutions address the customer's need to cost-effectively maximize speed and consistency of clinical decisions, actions, and usage of patient information for reduced clinical variation and improved clinical performance within their IT ecosystem.
Designing and delivering solution projects is a local activity performed at hospital organizations in every country, often in the local language. Philips operates with both local and centralized resources to support this. This global/local organizational design often leads to virtual working environments with specific requirements to efficiently drive the solution project delivery. The requirements and maturity levels in each country, market, and hospital customer vary greatly. Each project in a hospital is unique and varies in duration (from weeks to years), in size (up to multimillion euros/dollars) and in complexity (from stand-alone solution for one clinician to regional distributed solution for thousands of users). The range of size and complexity for solution projects in health care is broad. It includes simple products, highly configurable systems, as well as software and services, including clinical consulting. It is influenced by different customer situations, demand, and existing and new technologies. A solution design and delivery framework addresses customer needs and requirements, which vary from project to project:
Figure 5-6 gives an overview of the complexity drivers in health care projects.
The variability in customer needs drives the solution commercialization process. Important elements considered include scalable solution requirements in product and service design, solution delivery readiness, and quality of execution in markets.
When designing and delivering low-complexity, single-solution projects in one hospital department on a simple, stand-alone network, the project manager will implement basic tasks within the five Project Management Institute (PMI) process groups (for more information, see www.pmi.org). They include stakeholder identification, plan development, performing installation, controlling scope, and obtaining customer acceptance. When a high-complexity solution is delivered within a health system, with many stakeholders and a variety of solutions, the solution design and delivery model becomes much more detailed. The project manager and the multidisciplinary project team will execute additional tasks from the five PMI process groups. These include performing a customer expectation analysis, developing a stakeholder RACI matrix, performing a workflow analysis, performing solution integration testing, controlling risk, cost and labor budgets, and conducting lessons learned reviews.
The different complexity drivers lead to different complexity levels (see Figure 5-7, with three different complexity levels).
Solution innovation development and commercialization processes are key enablers for an effective and efficient solution design and delivery process. These processes support the development and launch of new solutions, define new ways of working, and drive necessary changes to supporting infrastructure.
In order to develop a solution that includes systems, devices, software, consumables and services, first we rely on stellar project management for product and services realization and market launch. Second, we build on this foundation to add new capabilities (process, tool, content) as needed for a complete solution for a customer. An example is new ways of transacting business with Philips, such as subscription services. Third, we underpin both with the human resource capabilities (skill) required to design, deploy and deliver the solution. This may include new roles, or new ways of working across the organization. Fourth, as we transform into a solutions partner, we are assessing our organizational structure and ensuring an E2E systems approach is followed. Customer experience is driving all of our decisions regarding changes to our internal processes and organization.
Two new processes have been developed in response to solutions transformation:
Due to the nature of solution innovation, the traditional aspects of project management are needed but are not enough. Focus on the human aspects is necessary to help impacted parties (internal, partners, customers) to transition through change. It helps to ensure adoption and to sustain the change. Key to this is strong, aligned messaging, delivered by all levels of leadership, articulating business and customer benefits and our contribution to that benefit.
Solution projects need a specific combination of services, executed by a multidisciplinary team consisting of project managers, solution architects, technical consultants, clinical consultants, and field service engineers in teamwork with sales and other professional services team members. Some of the solution-related services are specific to the solution, some are more generic and independent of the solution. For any solution, it is a combination of both (see Figure 5-8 as an overview).
A set of capabilities are required to provide solution design and delivery services. Philips considers the following important capabilities with regard to solution design and delivery services:
Some of the solution-related capabilities are specific to the solution, some are more generic and independent of the solution. For any solution, it is a combination of both. The solution-specific capabilities are directly linked to the solution innovation. To be fully successful with selling, designing, and delivering solution projects, these capabilities need to be prepared, designed, and deployed to executing organizations in the countries.
The SOLiD design and delivery framework has an integrator function to combine a solution-specific and solution-independent capabilities for any solution, which enables every role to contribute successfully to the project (see Figure 5-9 as an overview).
Philips strives for solution design and delivery excellence. This is not seen as a static goal, and the ambition is to continuously raise the bar for the overall maturity and all capabilities.
The following aspects are critical to build and improve solution-related capabilities:
MA&TC Services strategized a fully integrated approach on how to offer and implement solutions and services from a process and methodology perspective. This is getting more important as the MA&TC portfolio transitions more and more into a solutions and services business. A more holistic approach is key for scoping and designing, delivering and servicing solutions to the customer throughout the customer life cycle (see Figure 5-10 for a graphical overview.7
The customer life cycle begins with solution discovery. This involves intensive dialogue with the customer to fully understand the customer needs. It is followed by the solution design phase during presales, where reference architectures and design guidelines help to shape a strong customer solution. This phase is essential for following solution phases, it builds the real foundation. “Having a solid foundation is an essential element for delivering project excellence” (Martin 2010). The work performed in the solution design phase is captured and documented into a statement of work (SOW), which is referenced throughout the rest of the project. McKinsey emphasizes the importance of technical and commercial capabilities: “Companies that invest in this capability are able to achieve win rates of 40 to 50 percent in new business and 80 to 90 percent in renewal business.”8 Following the solution design phase, a multi-year solution life-cycle plan is aligned with the customer. Then the solution delivery phase is executed to implement the solution initially and additional services are provided over the lifecycle to fully create the customer value. Continuous customer engagement is key for full success and enablement of the desired customer outcome (including continuous partnership and collaboration going forward).
Out of the entire customer life cycle several key areas need to be highlighted:
Solution Discovery
Solution Design
Solution Delivery
Service Management
Philips is conscious that each organization leaves an imprint with the customer, an experience made up of rational and emotional aspects that determines what health-care customers associate with the Philips brand, and what Philips means to them. This is especially pronounced in a services business. Customer experience is at the heart of a relationship that translates into whether customers repeatedly rely on the organization's capabilities and embrace them as a trusted advisor.9 Therefore another important aspect is how the organization actively and holistically “design” the customer experience end-to-end (E2E) in terms of all capabilities (e.g., tools, processes and skills). Philips strives to apply this customer experience–focused approach across the entire customer life cycle from the point in time that customers share their vision through solution design, delivery, and continuous engagement and improvement.
In this context, solutions design and delivery services excellence are key strategic ingredients to ensure that Philips reliably and repeatedly delivers the desired customer experience. Hence, building and sustaining project solution design and delivery services excellence and reaching a high level of project management maturity with solution implementation projects is an adamant ambition of vital importance for both the customer and Philips.
In close collaboration with the Philips Solutions and Services Community around the globe, the SOLiD Framework was developed. The SOLiD Framework is now the Philips solution approach for designing, managing, executing and servicing customer facing solution implementation projects and services. SOLiD stands for:
The underpinnings of this framework are the process groups of initiating, planning, executing, monitoring/controlling and closing as defined in the Guide to the Project Management Body of Knowledge (PMBOK® Guide) by the Project Management Institute (PMI).10 Each process group is then further broken down into more specific processes and procedures detailing the implementation of solution projects and services. All project team member roles are included in the framework, along with the related activities each is responsible for during the solution design and delivery phases. This definition enables the organization to deliver high quality implementations and includes a holistic approach to solution design and testing. An important element of the approach is the definition of a customer reference architecture for the solution. This serves as the vision for the solution where use models, application/configuration, and infrastructure elements are defined. The reference architecture specification is utilized to develop the system design and define the solution test plan.
Scalability in project implementations is key to allow the right, flexible, agile, and efficient approach per project but to leverage from a rich tool set. Solution projects are defined by their level of complexity. Typical factors when defining complexity are total cost of the project, number of team members involved, number and size of deliverables, complexity of deliverables, complexity of the customer environment, and time frames involved.
PMI defines a project as being different from other ongoing operations in an organization, because unlike operations, projects have a definite beginning and an end—they have a limited duration and bring value to the organization.
The SOLiD Framework is designed to help offer guidance based on various complexity levels and modules (Figure 5-11 gives a graphical overview about the modular concept):
In developing the solution design and delivery capabilities needed for customer success, it is imperative to ensure connections exist between project team members and their domain peers for the purpose of ongoing learning, knowledge sharing, continuous process improvement and people development. In a multidisciplinary team environment, it is important for the project team members to have access to a network of peers that share their experiences and lessons learned. Two specific approaches for social learning have been utilized in Philips: community of practice and virtual brainstorming.
The basic model for a CoP includes three main parts—domain, community, and practice. First, the shared domain of interest that people identify with is defined. The community then determines who should be included and what kind of relationships they should form. Lastly, within the practice, members determine what they want to do together and how they can make a difference in practice. These elements are essential for a CoP to thrive. There are key differences between CoPs and formal work groups, which should be recognized. The purpose of CoPs is to develop self-selecting members' capabilities and to exchange knowledge with one another whereas, a formal working groups' purpose is to deliver a product or service with everyone reporting to the group's manager. Both groups can be complimentary to each other and are essential for innovation to occur (Wenger and Snyder 2000).
The real value practitioners' gain from being part of a CoP is to help each other solve problems, reflect on practices to improve, keep up with change, cooperate on innovation, and find a voice to gain strategic influence.11 As new communities emerge, within and across business groups, functions, and markets, even more knowledge is shared. In today's world, knowledge sharing is simply not enough. To truly transform and innovate faster, social learning spaces are necessary to pay attention to the data, engage uncertainty and move people to make a difference. Learning partnerships created to cross boundaries can turn into valuable learning assets. Value-creation frameworks provide a structure for capturing the flow of events or ideas from social learning spaces (virtual or in person), through data and stories. The information learned together in the space, new ideas, methods, and tools flow back into the real world through the small and big actions taken as a result.
An example of applying this social learning concept is to facilitate open collaboration, between boundaries by bringing people together to share ideas, feedback and questions on a specific topic. This type of virtual brainstorming is a powerful way to find new and exciting improvements to challenges and unknowns in our rapidly changing world. Customers are increasingly looking for solution propositions that will help them add value and address their business challenges. Communities of practice create environments where exchanges can happen in real-time between various functions that trigger new ideas leading to solutions customers really need.
Philips designs, facilitates and supports CoPs in close teamwork with functional leadership. Consulting is provided for new communities wanting to form as well as facilitation of a global group of CoP moderators. This moderator group consists of leaders with a passion for CoPs who collaborate regularly to share insights, knowledge, and best practices they have learned in building and working with different types of communities.
A key takeaway from our community development experience is to ask the community first, before sharing what is already known, because this helps to build engagement by allowing the members to find the answers themselves through collaboration. Sharing value creation stories that come from their ideas, creates strong feedback loops. Results are achieved by applying learnings to build on strengths. Innovation comes from finding something new out of something known.
The key takeaways for achieving solution design and delivery service excellence could be summarized as follows:
Digital transformation and the fourth Industrial Revolution have been gathering momentum across all industry sectors, driven by a new wave of disruptive technologies forcing businesses to adapt to new ways of working. As organizations strive to harness the business benefits of digital disruption, the value of robust and more strategic project management practices continues to soar. Digital disruption brings huge challenges as well as major opportunities to drive business growth and competitive advantage across all diversified industries.
Innovation in silos often posed a huge challenge at Dubai Customs, especially when business units and departments were running their own research and analysis to build prototypes of similar nature initiatives, limiting the transparency of opportunities addressed in dealing with disruptive technologies. As disruptive technology impacts the work we do, Dubai Customs sets out to explore a more collaborative solution that enables business owners, SMEs, and customers to be involved in every part of the exploratory process and find new ways to better enhance project management capabilities in innovation to gain a competitive advantage.
Dubai Customs, as an innovative organization, realized that these disruptions in the nature of new advancements in knowledge/technology, involving some level of uncertainty and having multiple dimensions (in terms of the kind of outcomes/cost and time), presented the opportunity to evolve our existing best practices. For this, the most important aspect was to create the culture within Dubai Customs that can support agility by embracing a new a design thinking-led approach (Figure 5-12) to better manage disruptive technologies, such as blockchain, artificial intelligence (AI), Internet of Things (IoT), augmented reality and virtual reality, relying on project success as a competitive advantage and succeed in a fast-paced and disruptive business environment to move quickly, decisively, and effectively to anticipate, initiate, and take advantage of change, yet remain robust enough to absorb any setbacks.
Using the approach Dubai Customs further set out to create a collaborative accelerated exploratory environment which was a joint task force (Figure 5-13) formed between demand management, services innovations, project delivery and customs IT development, which better served as an opportunity to advance, focus on the value delivery landscape for the business community, and enable project managers to play a more strategic role in managing disruptions and embrace the value delivery landscape. The lab offered a unique, collaborative environment specifically designed to facilitate idea exploration through research and development to seek the desired results focused in establishing a partnership from idea to impact by having all the concerned partners working together both internal and external to Dubai Customs exploring and prototyping the changes/ potential solutions systemically through agile projects in rapid iterations.
The accelerated exploratory lab landscape (Figure 5-14) addresses three main areas; determining the strategic direction, then learning to determine if something works and finally scaling to growth the potential solutions that create value for the organization. In the figure, CDC is a governing body overseeing all technology-related investments at Dubai Customs. The landscape helps teams quickly get on-boarded and encapsulates the complexities and challenges involved in testing and building a solution development overlooked by the innovation governance process. The entire governance process is integrated into the landscape with an innovation committee overseeing all the R&D initiatives and ensuring traceability with infused expertise in agile project management approaches wherein project managers are involved right from the start having more subject matter expertise creating more in the value delivery process.
In dealing with all disruptive technologies project categories were categorized under the umbrella of innovation projects (Figure 5-15), such as hypothesis research projects, data research projects and new product / experimental development projects run in an agile approach with rapid iterations for all the exploratory initiatives to determine value delivery capabilities and differentiate our customer experiences.
The benefits realized from all innovation engagements:
In the current economic worldwide context, a company can survive only if the following component are achieved:
In order to fulfill the first point, you need to be better than the competition and then, to have innovative products. Having a strategy is not enough by itself. But if you look on the process described here, you will see that this is the starting point of the “market pull” process to deliver new products on the market. To develop some market-pull products, a classic project management process is required with some stage gates, decision point, signatories, and so on, during the execution phase.
In parallel to this process, you have a “technology push” process, as shown in Figure 5-16, which is nurturing the above process. In fact, some new trends and technologies can influence your strategy, your defined product, and technology roadmaps.
These two processes should be different as they are not addressing the same topics.
What is important, as a lesson learned from past experiences, is to have two separate processes: one to address new product development and another one for new technologies development.
For the new technology development process, the project management style should be different, as it requires more flexibility and agility. This process should focus on new technologies to be embedded into future new products but also to acquire knowledge.
Let me share with you some thoughts on this process.
Even if this process is flexible or agile to allow for creativity, you cannot let a team circle around for months or years knowing that you have limited resources and budget. You still must have some project management basics as, for example:
You can have creativity, brainstorming, and so on during a phase, but at the end of the day, the team should know where to go and the desired end point. This has already been addressed, using design thinking in each phase where design thinking is necessary, while keeping in mind the original global goals and objectives of the project, as budget and resources are not unlimited, unfortunately.
This is where the project manager's role becomes important: Letting the team be creative but ensuring that the framework is well understood and managing the team within that framework. This is key for a project manager: the ability to drive the team within a defined framework to a defined goal but allowing for enough flexibility to “unchain” the team members.
We have encountered many situations where the project manager was following the defined process as is, without taking into account the situation or the personalities of the different team members. This is a recipe for failure. With this separate process, you then have the possibility of knowing exactly what the budget is you are investing in new technologies and potentially this budget may not be recoverable through future sales.
One of the first steps in portfolio management activities a company must take is to build the definition of the innovation categories. Why? These definitions will be critical in order to implement portfolio management. Breakthrough innovations are at risk and you need to know how much money you want to be at risk.
A very reference is Harvard Business Review, “Managing your Innovation Portfolio,” by Bansi Nagji and Geoff Tuff (2012). In this paper, they describe how to build the definition for three innovation categories—breakthrough, incremental, and sustaining—based on two axes: through the customer's lens and through your internal capability's lens. This way, we can define the different categories in such a way that they can be used in all types of industries.
With these definitions, you can tag your projects in your company and then have additional information to manage your portfolio. Keep in mind that a complete disruptive technology can be embedded or hidden in an incremental product. This is what we see in the automotive industry, for instance: cars are incremental, but with new features and breakthrough technologies. This is why multiple processes are needed: to maintain an efficient innovation portfolio and for project management.
When you are developing a new product, you can run in parallel the multiple processes described above: the product development process and the new technology development process. This can happen when you identify the need for a breakthrough technology during the development of your product. This technology will be then embedded into the product.
It is quite a challenge to to run both activities through the same process and at the same time. The pace, the project management style, is not really the same for each. The project manager is responsible for driving decision making.
If the technology you are looking for is not part of your company's capabilities, you as project manager need to ensure that a clear decision is made by the sponsors whether to “make or buy.” This happened on one of our projects; we wanted to develop our own technology, and after several month of work, project management personnel pushed for a clear decision. Then a compromise was formed because similar technology had already been developed.
One of the key terms in all situations, and whatever the process used, is common sense. A project manager's key skill is to be able to adapt and to lead the team through complex situations. This is where we can recognize an efficient project manager.
Some time ago, based on our strategy and customer needs, it was decided to start working on new technologies that would be able to quickly detect microorganisms in different matrices for a dedicated market. The choice had been made to develop these technologies within the company instead of forming partnerships. At that time, new technology choices and evaluation were in the hand of the R&D group. We had a clear process with defined milestones and R&D was the only signatory for each step. Scope was defined by R&D and the work started. The team's status reports stated that we were progressing well and after two years, results were shared with and approved by the head of R&D.
Then we started a project to develop a new product using this promising technology. Marketing confirmed the customers' needs, the different matrices to be used, and the conditions for product usage. During one of the first project meetings, the R&D team started to compare the work already done on the technology with the product features and requirements. There was no, or little match! The technology defined had been tested on some topics that were not relevant for the future products at all. As a result, the R&D team was frustrated by the loss of time and money:
Repsol is a global and integrated company in the energy sector. We operate across 37 countries with a team comprising over 25,000 people who work on building a sustainable future. Our vision of being a global energy company based on innovation, efficiency, and respect sustainably creates value to promote progress in society.
Innovation is an important leverage in our vision and is also one of our company values, together with transparency, responsibility, results orientation, and collaboration. At Repsol, we believe that the key to our competitiveness and development resides in our ability to generate new ideas and put them into practice in a spirit of cooperation and continuous collective learning. It has been a long and arduous journey to get innovation as part of our DNA, and there are still many challenges to be overcome.
The following is how we are building the culture and capabilities for being the global and integrated energy company that we want to be and keep sustainably in the market.
Until 2011, innovation at Repsol was focused on R&D activity. In 2011, the innovation program was launched in response to the strategic plan (2011–2014) about the quality control and knowledge management functions. The program was sponsored by upper management that decided to incorporate innovation as one of the corporate values since 2012. The main objective was to embed the innovation in our culture and day-to-day activities.
In addition, an organizational structure was created to support and encourage the innovation program. The corporate innovation unit, business innovation units, and the innovation committee were the organizational units in this structure. An innovation network was created including entrepreneurs, innovation teams, and facilitators.
In 2013, the focus was to build the capacity for the organization. The first edition of the Facilitators Training Program was held to support continuous improvement processes with lean-based methodologies.
Besides that, a pilot within the chemical business started. This pilot is a successful case in our company and it has become the lean transformation program for this business and other businesses and corporate areas where it has been deployed according to their needs.
The aim was to promote a culture of innovation in 2014. The strategic innovation reflection (SIR) was held with the participation of all the innovation units generating a company model to add more value from innovation. Meanwhile, the first edition of the IN awards was launched with the participation of +5.000 employees and +500 initiatives. In 2014, the innovation network continued growing until around 75 innovation and improvement teams.
In 2015, some KPIs were defined and put in place to measure the impact of innovation. A global corporate program called “Go” started with the aim to generate innovative proposals in order to improve the EBITDA. In addition, business units deployed the innovation model through specific roadmaps to leverage their strategic plans.
Figure 5-17 shows actions put in place to support and encourage innovation from the innovation units in corporation and business areas.
Since 2016, an evolution of the operating model (processes, structure, policies and management criteria, work dynamic and decision making, knowledge management, etc.) is afforded by each business unit in accordance with the new strategic challenges. The innovation programs accompanying the new strategic update include the identification and prioritization of initiatives by the business units committees.
The alignment and mobilization of the organization to attain a shared purpose and vision are essential in this transformation. Besides this, communication is a key element to ensure the final goals.
Some global initiatives foster a more flexible and efficient corporate environment, taking advantage of the new technologies:
The result, as shown in Figure 5-18, is a cultural transformation based on innovation and new ways of working that have provided Repsol some important leverages of this transformation toward becoming a lean company.
Skill level of the resources needed is generally predictable if we have a well-defined SOW and detailed listing of the requirements. In innovation, the skill level of the resources required may not be known until well into the project and may change based on changes in the marketplace and enterprise environmental factors. Generally, more resources are needed for development work such as in incremental innovation rather than pure research or radical innovation. This generates a greater need for structured supervision in certain types of innovation, such as in pure research, which is often conducted in a campus-like work environment.
Having good intentions for and expectations from innovation activities is based on proper staffing. Resources can be obtained by:
Executives tend to select projects, add them to the queue, and prioritize them with little regard if the organization has available and qualified personnel. Even worse, most executives do not know how much additional work they can take on without overburdening the labor force.
Balancing resource availability and demand requires open dialogue. Innovation PMs need to be brought on board early. Project managers need to participate in staffing activities and seek out qualified resources that support the idea and are willing to work in a team environment. Some people may feel skeptical about the project. The PM must allay their fears and win their trust. Project staffing requirements may dictate that the PM works closely with human resources for the duration of the project if people with new skills must be hired.
Companies can be working on several different types of innovation concurrently. This poses a challenge as to which innovation projects should have the best resources:
In fast-changing organizations, the link between strategy formulation and strategy execution is based on the organization's understanding and use of dynamic capabilities. Dynamic capabilities theory concerns the development of strategies for senior managers of successful companies to adapt to radical discontinuous change. It requires reconfiguring assets to match a changing environment (O'Connor, 2008). Organizations must have a firm grasp of the resources needed for competitive survival as well as the resources needed in the future for a competitive advantage. This can be accomplished using a talent pipeline that recognizes the competencies that are needed and their readiness to step in on short notice as backup talent. Specialized resources may also be needed because of deficiencies resulting from organizational change management.
There are shortcomings in resource management practices, as shown in Figure 5-19, which can prevent organizations from achieving their strategic goals and allow bad projects to survive. Executives may find it necessary to add resources to an apparently healthy project that has greater opportunities if successful. If the resources must be removed from another project, then the other project may have schedule delays and miss windows of opportunity. With a fixed manpower base, decisions must be made based on the best interest of the entire portfolio rather than a single project.
Identifying the resources needed is part of the challenge. The other part is how the resources are allocated. Usually, there is a priority system for resource assignment, as shown in Figure 5-20.
Optimal resource capacity planning and staffing may be unrealistic. Some people, such as Murro et al. (2016), believe that having organizational slack in resource assignments will increase the opportunities for creative behavior and contribute to a competitive advantage. We can define three types of organizational slack from which we can obtain resources:
There are pros and cons for each category of organizational slack. In one company that prided itself on innovation, management created a culture whereby all workers were expected to spend at least 10 percent of their time on existing projects looking for ideas for new products and services for the firm. While this had the favorable effect of creating new products, it destroyed the budgets that project managers had for existing projects and was accompanied by significant cost overruns. Although we discuss organizational slack in terms of human resources, there can also be slack in physical resources and financial resources.
It should be noted that many companies, even those with good capacity-planning systems, have had to assign more of their already scarce resources needed for innovation activities to potential problems resulting from regulations and legislation with respect to such items as:
Making the most out of highly talented people is often difficult, especially if they are prima donnas. Some resource utilization issues common to innovation include:
The importance of the human resources department is often hidden, but it does have an impact on creating a corporate image and reputation that promotes innovation. This is accomplished by attracting talented technical people, giving them the opportunity to be creative, and ultimately increasing the public's confidence in the value and quality of the innovations.
Experienced project managers will have to change the way they use traditional project management tools and processes when managing innovation. Some of the significant issues that PMs must deal with include: