Project Management for Continuous Innovation
Management by Project Mapping
By Kern Peng, PhD. Stanford University Professor
Abstract: This article is based on the author’s book and is mainly about corporate innovation and project management. Corporate innovation is defined as a process to achieve breakthrough results for sustainable growth through fulfilling customer and market expectations. It starts with a concept called Management by Project Mapping (MBPM), which reflects the concept of Management by Objective (MBO) from Peter F. Drucker. MBPM is a strategic concept and a systematic methodology that leverages projects to transform an enterprise’s operational system, organizational culture, and learning competence to achieve continuous innovation in a productive manner.
Measuring Corporation Innovation
Could you name some of the innovative companies?
Perhaps: Apple, Google, Tesla…
Why do you consider these companies innovative?
Perhaps: New products, New markets, New ways of doing business…
What criteria are you using?
Perhaps: Creating values, Making money, Changing our lives…
If corporate innovation isn’t measured by profitability or technical capability, then how is it measured?
It is simply the perception of the customers and the market. Companies that are considered innovative must have a great focus on their customers and the markets. They understand the needs of their customers and markets and, more importantly, not just meeting those needs but exceeding the expectations of their customers
The Journey of Innovation
Innovation means achieving breakthrough results and more specifically breaking through customer and market expectations, which is difficult to maintain constantly. The process of achieving these results continuously is defined as the journey of innovation.
Engineers may feel that a new product incorporates many technological breakthroughs and exceeds management’s expectation as well. However, exceeding the company’s own expectation does not count: only exceeding the expectations of the customers and the market is considered innovative.
As shown in figure 1, the first innovation gets the customer’s attention and several consistent innovations are then needed to achieve customer loyalty. Customers also expect more as a company innovates so the bar is rising for the next generation of products or services offered. Simply coming up with a product that is better than the previous generation will not be considered innovative if it just meets customer expectations.
There are only limited examples of companies that are able to keep innovating continuously. Apple Inc. is a good example but even it has ups and downs in the innovation journey. Since shifting their focus into
the consumer electronics market with the iPod/iTunes, iPhone, and then the iPad, it has been considered one of the most innovative companies in the world. However, its future journey is filled with uncertainties and in my opinion, it is at the inflection point. We are waiting for the next “wow” product from Apple. Innovation is determined by the market and consumers. Exceeding the company’s own goals in achieving its vision may not be considered innovative. It is difficult to keep up with the innovation journey as companies must continue to thrust the effort to exceed market and customer expectations. The crucial question is thus “how can a company keep innovating time and time again?”
Before answering this question, let’s look at the two main paths toward innovation. The first is leader driven innovation, which is often seen in startup companies.
In most cases, as a company grows, the founder tends to hire people who are good at execution because the founder requires individuals who can execute his or her vision.
Companies that cannot maintain innovation will remain small or eventually be out of business. Companies that continue to innovate have more potential to grow into large corporations, but no large corporation can sustain its innovativeness by depending on a single individual. The desired approach to sustaining long-term innovation is a corporate culture driven innovation.
As demonstrated in the figure, management has a vision that exceeds the customer and market expectations, and more importantly, the project team achieves the performance result above all expectations including the expectation.
The right corporate culture attracts devoted talents and creates an environment for a learning organization, which creates sustainable capability. It is the culture that fertilizes employees’ willingness to go above and beyond management expectations to achieve innovative results. People who seek achievement will have the desire to learn and eventually gain the ability to do so. With committed and talented employees, innovation will come. Innovation, to every single employee in a company, simply means producing a surprising result that exceeds the expectation of customers who may be external or internal.
Project Management and Innovation
Organizational work can be categorized as projects or operations.
Why then are companies spending their resources on projects, which do not directly generate revenue?
The simple answer is that it is for the future of the company. As such, it is crucial to have innovative projects. If the results of the projects are not innovative, the company will not gain competitive advantages in the market, thus jeopardizing its future.
Most of the current project management approaches focus on the success of individual projects and lack a built-in mechanism for promoting corporate innovation. On the contrary, these approaches often impede innovation with their well-structured processes.
A new concept called “Management by Project Mapping (MBPM),” which can systematically and strategically utilize projects to achieve continuous corporate innovation.
If a company wants to achieve consistent innovative results from projects, the project management approach cannot just focus on meeting the targeted results of a few projects. Instead, it should take the systems approach to utilize project management to build the foundation for innovation.
Strategic Use of Project Management
Projects are the building blocks in the design and execution of strategies for an enterprise to achieve its vision. And that vision must include innovation.
It is well known that there is a significant relationship between projects and an enterprise’s strategic planning. Companies devote serious efforts to developing their project portfolios and planning their project roadmaps. Much of the efforts, however, are too focused on tactical level approaches and applications. For example, the project selection process focuses on picking the right projects that meet the needs of the market or customers. When designing a project portfolio, considerations are often based on customer requirements, complementary to product lifecycles, factory capacity, or the needs for different market segments. The approaches are process-oriented, with an overwhelming emphasis on results but tending to be very inconsistent in achieving innovative results. There are many examples of companies that had a few innovative products and services but failed to keep up with the markets. As we have seen in the journey of innovation, being successful in a few projects and doing well with a few products is not enough to sustain a company’s long-term competitiveness.
Most of the current project management approaches aim to achieve planned results for a given project with the main focus on techniques and procedures for planning and controlling. These approaches create a framework that confines project team members to operate within a set of processes and measures: set a scope, develop a charter document, have a plan, control changes, report status, and so on. When things are not going well, more processes are then added to remedy the situation. This may be one of the contributing factors for the growth of project management. The number of processes in PMI’s PMBOK guide has grown from 37 processes in its first edition to 49 processes in the latest edition (6th Edition published September 2017) . Many project management practices are bureaucratic and confine the project team members to operate within certain perimeters.
As shown in the figure on the next page, these practices create a control system, like putting guardrails to ensure that the execution of the project is within certain limits. Management is also making sure that these limits are well-known to the project team members by rewarding them when they are doing well and taking corrective actions when they are doing poorly.
It is difficult to ask project team members to think outside of the box while using this “box” style system to manage projects. Policies and procedures like this can only create a compliance-based system. If we want to create a value-based system in which employees are motivated to perform beyond management expectations, different project management approaches must be used.
Overemphasis on project success discourages risk-taking because employees may not want to initiate projects unless they feel the chance of success is high. Inhibiting risk-taking constrains learning opportunities and innovation. In other words, failures should be accepted on the path to innovation. It is okay to fail in some projects, but we also want success in certain projects too. Therefore, the first step in project management should not be selecting and initiating projects that have a higher success rate, as current project management approaches do. It should be identifying and categorizing projects so that we know which ones are okay to fail and which ones must be successful.
MBPM, which is designed with this exact purpose in mind. Obviously, one single project management approach cannot be used for projects with totally different desired outcomes. Therefore, we need to understand the different project management approaches currently being used. It sets the foundation for applying the right approaches to the right category of projects.
Project Management Approaches
Since we have many different project management approaches available, the question is deciding which one to use. The developers of these approaches and their advocates naturally promote their concepts as the best solution for managing projects. However, these approaches should not be viewed as competitive alternatives; it is not about which one is better than the others. All approaches are effective if they are applied to the right projects under the right circumstances.
In his book, Wysocki uses the model with two scales, “goals” and “requirements & solutions,” to classify the projects. He suggests that Traditional Project Management is suitable for projects with clear goals and clear requirements and solutions. Agile Project Management is best for projects with clear goals but unclear requirements and solutions. Extreme Project Management is appropriate for projects with unclear goals, requirements, and solutions. I disagree with such project classification. As mentioned in earlier sections, projects should have significant importance and impact, as they are the strategic endeavors for the future of an enterprise. As such, why does a company use resources doing projects with unclear goals? Is it just an attempt to hit something big with luck? In my opinion, every project done in an organizational setting should have at least one or sometimes even multiple goals, and these goals must be clear to the project team to be effective to achieve desired results.