Most executives understand the importance of being able to look ahead, to see multiple horizons and to innovate accordingly.
Most companies, however, fail to create structured processes to facilitate innovation. Those processes can be put in place, executed and refined — PPM provides an excellent framework for this.
Here is how PPM can reliably and repeatedly unlock the power of innovation.
The Problem: Many Organizations Chase Innovation Without a Strategy
All too often, executives in an organization regard innovation as something completely serendipitous. “I have encountered some innovation leaders who believe that innovation is about ‘letting a thousand flowers bloom,’” writes Tendayi Viki, author of The Corporate Startup.
It’s an understandable fallacy because it frames innovation as a response to consumer demand or news from a competitor. In this framework, innovation becomes dependent on an external stimulus to kickstart the wheels of creativity. And therein lies a crucial problem. If an organization doesn’t plan for its own innovative work, it cannot control or shepherd the ingenuity it is capable of.
“Without a holistic, comprehensive plan, innovation is done in fits and starts across the organization with wildly different outcomes,” consultant Jeffrey Phillips writes. “Further, since there is often little definition or clear expectations of outcomes, most innovation outcomes are incremental, since that type of innovation relies most heavily on how things are done today. This is why so much innovation work seems to fail to achieve expectations and ends up as modest changes to existing products.”
This is where portfolio thinking comes in. If innovation can be channeled into a project-level activity – and it can – then innovative projects can be managed, prioritized and executed as components of a larger portfolio.
Step one, however, is to align your team’s big ideas with the mission of your organization.
What Jeff Bezos Can Teach Us All About Strategic Alignment
“You need to identify your big ideas, and there should only be two or three of them,” Jeff Bezos said at the Internet Association’s Gala 2017. Tim Woods at Business Innovation Brief has a helpful summary of that talk. “… The main job of a senior leader is to identity two or three important ideas and to enforce execution against these ideas.”
Woods notes the big ideas that have driven Bezos and Amazon for the last quarter-century: low prices, fast delivery and massive selection. In themselves, those aren’t groundbreaking ideas — but the fact that Amazon has built processes that allow it to undercut any competitor on price, while offering same-day delivery in some cases, and with a product range that includes everything from audiobooks to organic fruits, is groundbreaking. The innovative nature of Amazon comes from its ongoing mission to deliver on those promises, and to get better at it.
Furthermore, organizations have to innovate with their customers in mind, whether the customers are everyday consumers or government agencies. An innovation must align with your organization’s mission, and it must address a need that your customers have.
“The fundamental mistake many companies make when innovating is they have an ‘inside out’ versus ‘outside in’ strategy: ‘what can we make?’ instead of ‘what does the consumer need and how do we make it?’” writes Paul Hillen, VP of global marketing at Cargill.
So, how do you draw a straight line through innovative capabilities, organizational missions and customer demands? By organizing innovation into a dedicated, managed portfolio of projects.
Using PPM to Build an Innovation Portfolio
Gregg Fraley, who coaches businesses on how to be more creative and innovative, argues that projects are where innovative ideas take shape. So, to take Fraley’s thought a step further, an organization that can manage a portfolio of innovative projects has the power to see and work toward multiple horizons. It’s not at the mercy of external stimuli that nudge creativity.
Further, PPM allows an organization to prioritize its innovative ideas and marshall resources into a series of projects that balance risk and reward. “Many companies use a ‘rule of thumb’ to divide the portfolio into 70% incremental, 20% breakthrough and 10% disruptive,” Phillips says. “This ensures the majority of the innovation activity is focused on near term products that have a high probability of success but lower potential, but also ensures that the company is taking some significant risks and focusing on longer term and potentially more valuable opportunities.”
Here are three tips that can help an organization build a robust PPM framework for managing innovation:
1. Focus On Implementation
Jessica Day at IdeaScale says implementation is one of the biggest obstacles an organization can face in putting together an innovation portfolio. That said, if your organization can get key stakeholders to buy in, secure a committed budget for launch and maintenance of the new process, and protect against a natural desire to try to do too much at once, “you can skyrocket past your competitors,” she writes.
2. Track Performance and Examine Results Regularly
David Hamme, the managing director at Ephesus Consulting, writes at BPMInstitute.org that the external realities surrounding innovative projects can change over time, and so executives need to periodically review all initiative to ensure that they’re still in line with the organization’s overall missions.
“This is not to suggest that project teams should stop one initiative and jump to another with each review cycle,” Hamme writes. “An initiative should be shuttered only in extreme circumstances when its value has plummeted due to extenuating circumstances. But the intent is to focus resources and energies on those initiatives predicated to deliver the greatest bang for the buck. At the end of the day, an initiative’s outcomes must justify why it is being executed.”
3. Keep It Agile
Along those same lines, agile processes have proved the most effective at managing an innovation portfolio. Agile thinking, Mohamed Khalifa Hassan and Muhammad A. B. Ilyas write in a paper for the Project Management Institute, allows you to treat a project portfolio as “a backlog of stories” that you can modify, delay or cancel at any point. If you’re diligent in your performance tracking, you will be able to recognize early on, before too many resources are committed to the project, whether a project should pivot or be shut down.
Consider one of Hassan and Ilyas’ examples, a project that has demonstrated after a couple of iterations that it will not show the promised returns: “The project’s priority drops and its resources are freed for other more lucrative projects. The project’s achievements, though, are stored; the project has simply been moved into the agile portfolio — returned to the backlog, so to speak.”
By translating your big ideas into innovative projects, and then by managing those projects within a PPM framework, you can turn innovation into a reliable process that you can then shepherd. Doing so will orient you with your multiple horizons and help chart a successful path forward for your organization.