Global Dynamics of Innovation and Project Management

A Look at Innovation in Established and Emerging Markets and Implications for Project Management

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The World Turned Upside Down

The Economist, April 2010

Developing countries are becoming hotbeds of business innovation in much the same way as Japan did from the 1950s onwards. They are coming up with new products and services that are dramatically cheaper than their Western equivalents: $3,000 cars, $300 computers and $30 mobile phones that provide nationwide service for just 2 cents a minute. They are reinventing systems of production and distribution, and they are experimenting with entirely new business models. All the elements of modern business, from supply-chain management to recruitment and retention, are being reinvented in one emerging market or another.

Background and Key Findings

The Centers of Innovation

New Definitions of Innovation

Choosing the Centers of Innovation

Mobile Money

Mobile Medicine (mHealth)

Convergent Healthcare

Human 2.0 (Human Augmentation)

Alternative Energy

Mobile Technology

Challenges and Implications

References

Background and Key Findings

Background

PricewaterhouseCooper's 2011 Growth Reimagined survey finds that CEOs are focused on innovation as the top means of growth for their firms. (1) In fact, the study shows that the percentage of CEOs who view “new product/service development” as their main opportunity to grow their business has more than doubled from 13% in 2007 to 17% in 2009 to 29% in 2011. This report echoes similar findings from 2010 reports from IBM and McKinsey and a 2011 report from Wipro and Forbes. The Wipro/Forbes report shows that 68% of executives surveyed say that “innovation is now more important than it was prior to the recession.”(31)

According to the PwC report, a key driver for this renewed focus on innovation is the significant and fundamental shift in the priority target consumer marketplace from developed markets such as the United States and Canada, Western Europe and Japan to developing markets such as India, China and Brazil. While developed markets suffer from slow GDP growth, high public debt and the need to significantly cut governmental spending and possibly raise taxes in the near-term, the developing world is seeing strong growth and a rapidly growing middle class (i.e., “prime consumers”). Findings from the research indicate that regardless of where a company is based, most CEOs will be seeking their greatest growth throughout Asia and Latin America. In order to compete in these high-growth consumer markets, companies need to tailor their offerings to the markets and this requires innovative products, strategies and business processes.

That being said, the 2011 Global R&D Funding Forecast, sponsored by Battelle, finds that United States research and development is “so large compared to R&D performed in the rest of the world that its individual components are mostly larger in funding and structure than the entire spending of most other countries.”(2) The report states that only China, Japan and Germany have R&D infrastructures at a scale comparable with the United States.

However, the same report does note that the globalization of R&D has started to erode the lead the United States has maintained for the past 40 years. Specifically, the report states that “the economies of China, Korea, India, Russia and Brazil, and their investments in R&D, are expanding at rates substantially higher than that of the United States, Japan, and Germany. As a result, emerging economies are starting to challenge the technological and discovery capabilities of the historic R&D leaders.”

Key Findings

This PMI report looks at key innovation developments around the world. We examine the dynamics of innovation in today's business environment and the challenges these dynamics present. Lastly, we integrate the implications for project management. Some highlights are below:

  • Much of the innovation happening today is due to a convergence of existing, albeit mostly new, technologies. Because of this, firms are working together within and across industries towards common deliverables. Thus, the ecosystem around any specific innovation area typically involves a great number of players; from government agencies and NGOs who fund and regulate to private or public-private manufacturers who research and develop the products or services to the various distribution channels that ultimately delivery the goods to market.
  • Somewhat related to this finding is the fact that innovation is rarely geo-centralized in today's “flat” world. From the initial research through to the development and delivery of a new innovation, governments and companies are working with global networks of stakeholders. We also found that, although there are clearly some leaders in any given innovation area, at least most of the major economies (or companies within them) are investing to some degree in most innovation areas. These findings are somewhat contradictory to the traditional concepts of innovation “centers” or “hubs” in that value is being created and consumed in a highly diffused manner.
  • Analysis of patent and R&D data shows that the United States is still a major player across nearly every major industry. However, Japan and China outrank the United States in nearly every patent category. China has increased its patent applications by between 100% and 1000% per industry over the past five years, surpassing the United States and Japan as the leader in several key industries, such as aerospace, agrochemicals, medical devices and pharmaceuticals. Along with South Korea, these three nations out-pace patent production of other nations by several multiples in nearly every industry. That is to say that looking solely at patent and R&D data does not provide a good indication of the development of smaller innovation hubs.
  • The examples in this report and the reviewed literature on innovation and project management suggest that the convergent and distributed nature of much of today's innovation has significant implications for project, program and portfolio management. Specifically, project, program and portfolio management must enhance the management of open innovation, must speed commercializing of innovations, must support the development of new customer markets and provide enhanced risk for large funders of innovation.
    • Enhancing open innovation: Managing innovation across multiple companies adds significant complexity to the mix. Can the practices of program and portfolio management be introduced to enhance the process? Can best practices in distributed project management be applied as well?
    • Speeding commercialization: In today's highly competitive global marketplace, speed-to-market is essential. Can organizational agility or iterative practices or Japanese kaizen or obeya techniques compress the process without sacrificing quality?
    • Targeted new market segments: As global firms seek to shift focus to customers in emerging markets, what roles will change management and risk management play?
    • Funding innovation: In both developed and developing economies, government departments are major funding sources for innovation. However, stakeholders are keeping an ever-closer eye on how these entities use their resources. Again, program and portfolio management may have a significant role to play.

The Centers of Innovation

New Definitions of Innovation (Excerpts from recent articles on innovation)

Frugal Innovation

Also known as “reverse innovation” or “constraint-based innovation,” takes the needs of poor consumers as a starting point and works backward to strip offerings down to their bare essentials. This does not simply mean cutting costs to the bone because frugal products need to be tough and easy to use.(5) - First break all the rules: The charms of frugal innovation. The Economist.

Ambidextrous Innovation

Looks to gain both efficiencies and differentiation at the same time. Cloud computing, for example, can enable companies to manage business processes more efficiently. But it can also empower entirely new business models, for example, ones that connect supply chain partners in a single differentiated offering for customers.(1) - Growth reimagined, prospects in emerging markets drive CEO confidence. PricewaterhouseCoopers.

Scaling Up and Scaling Out

When companies aim to reduce unit costs by centralizing manufacturing and producing long runs of identical items, they are said to be “scaling up.” However, centralized production adds expensive layers of bureaucracy, and it is hard to make it work in emerging markets where populations are often widely scattered and distribution systems abysmal. A growing number of entrepreneurs in the emerging world are replacing scaling up with “scaling out,” which means involving a wider range of people in the process of production and distribution, something that has been made much easier by mobile phones and the internet.(4) - Here be dragons: The emerging world is teeming with new business models The Economist.

Open Innovation

Demand for innovation is driven through the supply chain. In a 2010 PwC survey, 39% of CEOs said they expected the majority of their innovations to be co-developed with suppliers. Many CEOs are concluding that no one organization has enough of the right people and the right amount of funding to innovate successfully on its own. (1) - Growth Reimagined, Prospects in emerging markets drive CEO confidence. PricewaterhouseCoopers.

Mass Production of Services

The developing world's most innovative business model may be the application of mass-production techniques to sophisticated services. This started with India's outsourcing firms, which demonstrated that economies of scale and scope could be reaped from services that used to be highly fragmented and geographically rooted. These outsourcers are still expanding and moving upmarket. Indian consultancies are now challenging Western ones in complex services, not just dealing with customer complaints. Emerging-market entrepreneurs want to apply these techniques beyond IT and the back office. For example, they see a huge market for legal services requiring a high level of expertise. (4) - Here be dragons: The emerging world is teeming with new business models. The Economist.

Pull Models

Western companies have spent the past century perfecting “push” models of production that allocate resources to areas of expected demand. But in emerging markets, particularly those where the Chinese have a strong influence, a very different “pull” model often prevails, designed to help companies mobilize resources when the need arises. Hong Kong's Li & Fung and China's Chingquing Lifan Group can use their huge supply chains to produce fashion items or motorcycles in response to demand. These pull models fundamentally change the nature of companies. Instead of fixed armies looking for opportunities, firms become loose networks that are forever reconfiguring themselves in response to a rapidly shifting landscape. (4) - Here be dragons: The emerging world is teeming with new business models. The Economist.

“It doesn't matter where scientific discoveries and breakthrough technologies originate – for national prosperity, the most important thing is who commercializes them.”

—The McKinsey Quarterly

A 2009 McKinsey Quarterly article looks at the definition of innovation in a broader sense, stating that “innovation involves the development of new products or processes and the know-how that begets them. New products can take the form of high-level building blocks or raw materials (for example, microprocessors or the silicon of which they are made), midlevel intermediate goods (motherboards with components such as microprocessors), and ground-level final products (such as computers).”

The McKinsey article concludes that arguing about which innovations or innovators make the greatest contribution to economic prosperity, however, isn't helpful, for they all play necessary and complementary roles. Innovations that sustain prosperity are developed and used in a huge game involving many players working on many levels over many years. (3)

Choosing the Centers of Innovation

Selecting the centers of innovation to include in this report was a combination of art and science. The report is not meant to detail all centers of innovation or even the largest; but instead highlights several thought to have significant potential impact on the business world. We started with an analysis of patent and R&D data by country to spot areas that were clearly taking a serious approach to innovation.

We also used a number of compiled lists of “most innovative countries” from sources such as The Economist and BusinessWeek. (6) We then drilled down into a selection of both developed and developing countries to study patent data at the industry level (using a custom report from Thomson Reuters). This information helped us understand not only which countries were innovating, but in which sectors they were most heavily investing.

Patent data for select countries and industries

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Source: Thomson Reuters

It became clear that most countries at least dabble in innovation in nearly all sectors, so we refined our list to target those centers that had the strongest local ecosystem. We looked at factors such as available resources; natural, human and financial as well as government support. We also looked at local need: was the sector critical to the current and future well-being of the local population (e.g., water supply in India or medical care in underserved areas)?

However, despite all the existing data on innovation at the industry or country level, the concepts of open innovation and alliance networks appear to be taking center stage for most innovations. Our research found that innovation areas that transcend industries and national boarders were often the most compelling in terms of current momentum and future potential.

In the following sections we summarize six innovation areas, five of which involve industry convergence.

Industry Innovation Convergence Web

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Source: PMI 2011

Mobile Money

“The Emerging World's Five Most Crucial Words: ‘To Move Money, Press Pound’.”

—Ram Menno, The Global Information Technology Report 2010 - 2011, World Economic Forum (7)

Mobile banking was recently identified as the number one mobile application by Gartner. According to Gartner, “Mobile banking will have a big impact in developing markets, by giving people access to financial services; both banks and mobile operators can expect new revenue streams from this service.”(8)

According to a 2010 McKinsey Quarterly article, “Financial services for the unbanked are among the most promising opportunities for mobile-telecom operators hoping to counter slowing subscription growth with auxiliary offerings, such as banking, health care, and education services. Approximately one billion people in emerging markets have a mobile phone but no access to banking services; by 2012, this population will reach 1.7 billion. Today, only about 45 million people without traditional bank accounts use mobile money, but we expect that this number could rise to 360 million by 2012 if mobile operators were to achieve the adoption rates of some early movers.” (9)

The main agents in the mobile money area include:

  • Global Hubs: These are typically money transfer organizations such as Western Union, which transfers money from the sender agent to the recipient agent. Also, they provide the physical agent location when the sender or recipient does not have a mobile-enabled account.
  • Mobile Network Operators: These serve as the digital agents, with a large target subscriber base. Mobile payments provide them with the opportunity to generate additional revenue from money transfer and to reduce churn.
  • Financial Institutions: Most countries allow only banks or bank holding companies to store and hold money. Therefore, the financial institutions play an important role, as carriers expand their MMT service to serve also as a savings tool for the recipient.
  • Mobile-Wallet Providers: M-wallet is an electronic account for mobile phones and is usually linked to a mobile number. The user can deposit funds into the account or the account can be used for mobile commerce, mobile payments at point-of-sale and peer-to-peer money transfers.

Global Hot Spots for Mobile Money Transfer

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Mobile Medicine (mHealth)

“Fifteen years ago, we never could have imagined mobile health. Today the debate has shifted. It is not about whether mobile technology can be used to deliver good quality healthcare, but how to do it in the most efficient and cost-effective manner.”

—Sachin Pilot, Minister of State for Communications and Information Technology of India

According to research compiled by Booz & Company, computing and healthcare are the two largest global R&D areas; accounting for nearly half of all R&D spending in 2009. (14) One convergence between these two segments is telemedicine or mobile health. Mobile health technology can empower frontline community healthcare providers, including accredited social health activists working at the village level, by giving them mobile access to basic information such as checklists, reminder systems and immunization records. Mobile health technology will also enable patients and healthcare providers to access holistic, cradle-to-grave health records. With 3G and 4G broadband cellular communications on the horizon, there is the potential to use cellular networks to help prevent and manage chronic disease, offer consultation, make diagnoses and prescribe treatments.

Perhaps nowhere are the areas of healthcare and telecommunications coming together faster than in India. India's healthcare system needs massive additional investment. About 70% of the population lives in villages with no access to healthcare. Some five million Indians die of cardiovascular diseases every year, more than the quarter of them under 65. About two million die from drinking contaminated water. Healthcare delivery in India has typically followed a top-down approach. Yet, no matter how fast they move to build new hospitals and clinics, public health officials are always playing catch-up as the population continues to grow. At the same time, roughly 600 million Indians now have cellular phones and it is estimated that an additional 50 more mobile phones are sold every second. Politicians have promised to deliver world-class infrastructure – in this case, broadband access – to 250,000 villages by 2012. Cellular devices therefore offer an effective way to reach much of the bottom of the pyramid with healthcare in a way that is localized, effective, affordable and scalable. (13)

Global Hot Spots for Mobile Medicine

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Convergent Healthcare

“The aging population in the United States will certainly put an unprecedented burden on the health care system. The shift toward an older, more engaged patient (consumer) base is prompting greater focus on and demand for improvements to the diagnosis and treatment of chronic conditions. At the same time, U.S. based life-sciences firms are facing diminishing returns from their R&D, intensifying cost and competitive pressures from global competitors. Convergence presents a new avenue for innovation and business growth for these firms.”

—Deloitte Consulting (16)

The convergence of drugs, devices, and diagnostics is leading to innovative health care solutions and new opportunities for business growth and product differentiation in the life sciences industry. Motivated by scientific advances, consumer demand, and market pressures, firms in all sectors of the life sciences industry have already created a full spectrum of combination products. Examples include diagnostics that help target drug therapies, devices that can monitor patients and precisely deliver drugs, and devices that are coated, filled, or packaged with drugs. Many of the early examples involve combining diagnostics or devices with drugs, but this is shifting as new opportunities emerge to integrate diagnostics and devices with sophisticated instrumentation and information technologies.(15)

The number of combination products under development is rising quickly as developers seek to enhance existing products and introduce fundamentally new health care solutions to the market. Convergence is transforming cardiovascular care, orthopedic treatment, tissue-wound management and other clinical areas. One of the most salient examples of convergence between a device and a drug is the drug-eluting stent (DES), a tiny, bare metal stent coated with a drug that helps prevent restenosis (the narrowing and reclogging of arteries) after heart surgery.

Global Hot Spots for Convergent Healthcare

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Human 2. 0 (Human Augmentation)

The field of human augmentation (sometimes referred to as “Human 2.0”) focuses on creating cognitive and physical improvements as an integral part of the human body. (17) Human augmentation moves the world of medicine, wearable devices and implants from techniques to restore normal levels of performance and health (such as cochlear implants and eye laser surgery) to techniques that take people beyond levels of human performance currently perceived as “normal.”

Human augmentation as an emerging field is still in the first stage of development according to Gartner's latest emerging technologies Hype Cycle report.(18) They do, however, see “transformational” potential for the field. The Gartner Hype Cycle report goes on to state that the World Health Organization estimates there are more than 750 million disabled people in the world and that the video game, filmed entertainment and the television network business markets are already at US$46.5 billion, US$104 billion and US$227 billion, respectively. Given the medical and entertainment opportunities to enhance people's lives through human augmentation, this field will easily reach and surpass the US$1 billion mark during the next decade. A few major possibilities include:

If computer power continues to develop rapidly, while physical processors continue to shrink in size, future enhancement might easily allow a person to attain “network enabled telepathy,” or the ability to immediately access and manipulate massive amounts of information with a simple thought. Chris Taylor, a futurist with Business 2.0 reported that, “Sony has already patented a game system that beams data directly into the brain without implants,” heralding that the technology in question is well on its way.(20) Also, in 2009, Honda Research Institute developed the world's first “Brain Machine Interface” technology that uses electroencephalography and near-infrared spectroscopy along with newly developed information extraction technology to enable control of a robot by human thought alone. It does not require physical movement such as pressing buttons. According to Honda, this technology can be further developed to integrate with human-robotic systems, such as exoskeletons. (21)

Global Hot Spots for Human Augmentation

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Alternative Energy

“The pace of global investment in renewables bounced back in 2010 following a subdued 2009. This was largely driven by a recovering global economy, the presence and expansion of strong incentive schemes for renewables in the pursuit of national targets, and a generous earmark of stimulus funding for renewable energy projects by countries including the United States, China, Germany and Japan. Installed non-hydro renewable capacity, mostly wind power, increased by 21% year on year according to our estimates, with China accounting for 40% of this growth. Although it still accounts for only a small fraction of global generating capacity, solar power experienced a boom in 2010, and capacity expanded by 30% in OECD member states.”

—The Economist Viewswire, June 2011

Perhaps no sector is as good an example of globally diffused innovation as alternative energies—from Brazil's investments in non-hydro renewables such as wind, and incentives for investments in solar thermal energy to India's plans to install 20 million solar lights and 20 million square meters of solar thermal panels to generate 20,000 megawatts by 2022. China added more wind power capacity than any other country in 2010, and Germany is pursuing an aggressive target of 35% of electricity generation from renewable sources by 2020, and recently released draft legislation to expand incentives for new wind and solar projects.

Common Alternatives

Solar energy: Photovoltaic solar power is one of the most promising renewable energy sources in the world. It is non-polluting, has no moving parts, requires little maintenance and has a life of 20 to 30 years with low operating costs.

Biomass energy: Biomass is one of the most plentiful sources of renewable energy in the world. Broadly speaking, it is organic material produced by the photosynthesis of light. The most common biomass used for energy is wood from trees. However, innovations are needed to make biomass more efficient, less polluting and at least as economical as current energy sources.

Wind energy: Wind power is now the world's fastest growing energy source, and the recent development of offshore wind farms has the potential to deliver substantial quantities of energy at a price that is cheaper than most of the other renewable energies, as wind speeds are generally higher offshore than on land.

www.altenergy.org

Global Hot Spots for Alternative Energy

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Mobile Technology

“In emerging markets, many (mobile) operators are almost turning themselves into finance companies as they look to take advantage of various mobile money services. Kenya's Safaricom, a leader in this area, is particularly noted for the success of its M-PESA service, which allows customers to receive and send money and make payments using simple text-messaging technology. With the rollout of more sophisticated data networks, opportunities will develop in areas like machine-to-machine communications. Deutsche Telekom (Germany), for example, believes that new opportunities in the energy, healthcare, media distribution and automotive sectors will account for €1 billion of its total revenue by 2015.”

—The Economist Viewswire, June 2011

While the market for mobile phones is highly saturated in the developed economies and growth is even slowing in developing economies, the potential for mobile technology is still significant. Specifically, data plans and the applications and content they support will continue to grow this market. Rising incomes in developing countries will also facilitate upgrading of mobile handsets, notably to 3G-enabled models. In fact, China's 3G subscriber base was expected to reach 100 million by the end of 2011 and pass the 150 million target set by the Ministry of Industry and Information Technology within 2012.(24) China's ZTE, the country's second-largest telecom equipment maker, boosted R&D spending to 45% and it had the second highest number of international patent applications in 2010. ZTE recently announced that it would be setting up ten international innovation centers across Europe and South America. Although ZTE operates a number of innovation centers in China, they also announced the creation of additional centers there. In addition, ZTE has established collaborative research centers with four research institutes and 19 universities, including Peking University and Tsinghua University. (25)

Elsewhere, South Korea-based handset makers LG Electronics and Samsung have recently each released early 4G wireless phones designed to take advantage of the increased speed and bandwidth of 4G networks. In the United States and abroad, Apple has created a new market for tablets, which with their increased functionality and screen size can significantly benefit from data-friendly 4G networks.

Global Hot Spots for Mobile Technology

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Challenges and Implications

“To turn really interesting ideas and fledgling technologies into a company that can continue to innovate for years, it requires a lot of disciplines.”

—Steve Jobs, 2006

Innovation has never been easy. Innovating in emerging economies for a quickly evolving consumer base brings its own set of challenges. The stories surrounding the highlighted innovation hubs, as well as the literature on innovation and project management, suggest a number of implications for project, program and portfolio management. A commonly found implication for project management is that flexibility is a necessity, suggesting a high value for organizational agility, including the use of iterative methodoligies. However, the literature also suggests a need for more formal methods to manage the “fuzzy front end” of innovation more like a project. The importance of strong change management and risk management capabilities are also recurring themes.

The research suggests that there is also a high potential value contribution from program management and project portfolio management. The drivers of technology convergence and its counterpart – open innovation – are primed for some manner of disciplined program management to tie the various parties and projects together. Likewise, the combination of explosive business growth and talent shortages in developing economies begs for a mechanism for project selection and prioritization (i.e., portfolio management).

Below we summarize the key trends and challenges in innovation and suggest implications for each.

Managing Open Innovation

Most of the highlighted centers of innovation mentioned in this paper include players from multiple industries and/or multiple countries. Open innovation and network “pull models” (reference page 5) are clearly more than buzz words. Firms like China's ZTE, Boston Scientific from the United States and Vodafone from the United Kingdom have embraced the idea of co-innovating with partners as a main strategic focus. From building the right partner network to working together to take an idea through to commercialization, innovating across industries and borders is not without challenges.

Implications/Opportunities

  • Network project portfolio management
    Project portfolio management takes on new challenges as the portfolios of various partner organizations come into play. Tools and services to help network participants select and prioritize across a variety of innovative ideas may be of value.
  • Project portfolio matching
    Likewise, assistance in matching firms with similar portfolio goals and gaps may be of value.

From the Literature: “Integration uncertainty refers to whether necessary interfaces exist to integrate components into an effective combination product. In creating the first drug-eluting stent, a special material was needed to enable the anti-clogging drug to adhere to and be released from the metal stent. J&J partnered with SurModics to adapt its patented drug-delivery coating technology. From the early stage of feasibility testing to the later stages of formulation and process optimization, the two companies worked together to integrate J&J's stent and Wyeth's sirolimus drug. ” (15)

  • Network program management
    Open or network pull innovation nearly always implies multiple related projects across multiple firms. The significance of good program management practices here is clear.

From the Literature: “Key success factors for innovative programs; The project team needs to be largely self-managed; micro scheduling and planning every activity is inappropriate; Accountability processes must emphasize progress and learning. ” (27)

  • Network program risk management
    When multiple firms are working together on separate-but-related projects, there is clearly an increase in the risk for overruns or program failure.
  • Virtual program management
    Running programs across a distributed network requires specialized skills and resources. Can best practices in virtual project management be positioned to assist in this regard?
  • M&A program management
    M&A activity is very high in the developing economies. Can program management be positioned as a discipline to help mitigate the risk of mergers and acquisitions?

Targeting New Market Segments

Working “down the income pyramid” can be tricky, even for well-established global brands. Local competitors can be numerous and nimble. Existing marketing and sales platforms are typically inappropriate and distribution logistics can seem overwhelming. When companies aim for the “bottom of the pyramid” they often have to educate the market on the need for their product; a process that can take years itself. The most successful firms are those that closely study their new potential customers, even embedding employees in the local cultures to better understand how to make their product or service “fit.”

According to the Economist Intelligence Unit, “The most difficult trick of all is what some call “straddling the pyramid” or “playing the piano:” serving both the people at the bottom of the pyramid and those at the top. The acknowledged masters of this are consumer-goods giants such as P&G and Unilever. These companies not only rigorously segment their markets by income level; they also lead consumers up the value chain as they become richer. However, the true masters of pyramid-straddling are mobile-handset makers. Nokia produces phones for every market, from rural models designed to cope with monsoons to fashion accessories that will look cool in a Shanghai nightclub.” (34)

Implications/Opportunities

  • Change management
    As was highlighted by the PwC study findings, organizations are shifting significant resources to focus on a new customer base in developing economies. Multi-national banks and mobile operators working to bring mobile banking to underserved populations is one example. The enterprise level implications of shifting to a new priority market require world class change management processes.

From the Literature: “Projects concerned with innovation and those involving radical strategic change require very similar organizational cultures and processes to operate effectively. The projects undergo iterative development. Open communication and senior management support are essential. ” (27)

“(There is a) need for an effective vehicle for organizational management of the rapidly altered environment created by changes in technology and innovation. Specifically, it requires a greater organizational tolerance for risk and ambiguity, as opposed to the quashing of these elements in the name of quality and control. ” (28)

  • Project risk management
    The inherit business risks in serving customers at the “bottom of the pyramid” require skilled project risk management.

From the Literature: “With failure as a built-in possibility, innovation teams are more actively involved with risk management and need to learn to fail fast and fail smart in order to move on to more attractive options. ” (32)

  • Project management for market research
    Can the practice of frugal innovation be enhanced by bringing formal project management techniques to customer insight research? Does stakeholder management start before the formal project starts?

Speeding-Up Commercialization

“Growth shapes the outlook of the developing corporate world. There is a spirit that is rare now in the West, born from a mixture of optimism and arrogance. The business news buzzes with stories of acquisitions and start-ups. To flourish in this atmosphere, it helps to have the spirit of a frontier settler, not a corporate bureaucrat. Companies are obsessed with grabbing their share of the frontier, both geographical and technological, before somebody else does. This puts a premium on both speed and flexibility. But businesses also sometimes engage in lateral moves that make little sense to Western managers. A property company, say, might suddenly move into computers. Rather than worrying about synergies or core competences, they see opportunities and seize them. The pursuit of growth is forcing firms to engage in relentless innovation.” (34)

—The Economist Viewswire

Implications/Opportunities

  • Anti project management attitude
    Will the innovators in the developing world view traditional project management techniques (especially project risk management) as slow and limiting?
  • Agile project management practices
    Most literature on innovation stresses the importance of flexibility in the ideation and commercialization process. Agile and other iterative project management practices are being used by innovative firms like Google to constantly bring new products and features to market.

From the Literature: “By their nature, projects involving high levels of change and/or innovation have “outcomes that are not clearly defined and their execution may require many iterations of development. ” (27)

  • Obeya
    “Big room” in Japanese: this method has become an important part of project management at Toyota; primarily aimed at shortening the plan-do-check-act cycle, which in turn leads to a speedier time-to-market. The method emphasizes effectively and timely communications between upper and lower management, and across functions.

From the Literature: “An obeya group at Toyota would meet daily and would typically include engineers, assembly workers, marketers, designers and suppliers. An obeya room would have whiteboards with graphics to depict schedules, progress, warnings, and scenarios for a product's development. ”(31)

  • Managing the “fuzzy” front end of innovation
    Innovation requires flexibility. However, firms cannot simply invest endlessly in promising fields. There needs to be some timeline and process by which to bring innovative ideas into the commercialization process. Can aspects of project management be incorporated into “pre-project” work?

From the Literature: “Because of the nature of discovery, it has largely remained outside the domain of conventional project management. Breakthroughs in technology require time: discoveries cannot be scheduled. However, resources and programs can and must be managed. ” He suggests a process, which involves periodic time-based reviews of learning. (29)

“Value analysis may be a useful tool to help qualify an idea as an opportunity. Value analysis provides a first screening of ideas by looking at the contributing value that the idea brings to the business. SAVE International is the organization that oversees the professional standard for value management. ” (30)

“The definition of the project life cycle as per the PMBOK® Guide is ‘project managers or the organization can divide projects into phases to provide better management control with appropriate links to the ongoing operations of the performing organization. ’ The opportunity management framework used by innovation management consulting firms such as Make Innovation Happen (mihcentre.co.uk) or multi-nationals such as Nortel Networks fits exactly the description of the PMBOK® Guide. It is a series of phases that connect the input of ideas with the output of business results. ”(30)

Funding Innovation

According to PMI's 2010 Government Best Practices in Program Management Study, stakeholders expect governments to deliver innovative solutions to the public's challenges. There are in fact many governments who are funding innovation, from DARPA in the United States to India's investments in mobile health programs. NGOs such as the World Bank and the Bill and Melinda Gates Foundation are also investing in the discovery of new ways to meet the challenges of today's society.

Implications/Opportunities

  • Project portfolio management
    Can project portfolio management help these entities fund the right project and allocate resources to them in a way that increases the odds of success?
  • Program management
    We know there are pockets of excellence in program management in the government. Can PMI be part of the network that spreads this excellence across agency lines?

From the Literature: Statistical analysis of the data indicates that the relationship between project management and innovation (at a country level) is best represented by an inverted U-curve. The analysis also shows that, when three outliers are eliminated, the U-curve accounts for 66% of the variability in the data. This is a quite remarkable result given that the innovation score is aggregated from 25 different indicators. Analysing the data shows that increasing levels of project management are correlated to increasing levels of innovation. A nation's ability to build and sustain its innovation capacity depends on developing and maintaining project management skills at world-class levels, on high-quality, education (not just painting by numbers) and on the best professional accreditation in the discipline. ” (33)

1. Growth Reimagined, Prospects in emerging markets drive CEO confidence. PricewaterhouseCoopers. 2011. http://www.PwC.com/ceosurvey

2. 2011 Global R&D Funding Forecast. Battelle. 2011. http://www.battelle.org/aboutus/rd/2011.pdf

3. Where Innovation Creates Value. Amar Bhide, The McKinsey Quarterly. February 2009.

4. Here be dragons: The emerging world is teeming with new business models. The Economist. 15 April 2010. http://www.economist.com/node/15879289

5. First break all the rules: The charms of frugal innovation. The Economist. 15 April, 2010. http://www.economist.com/node/15879359

6. The 30 Most Innovation-Friendly Countries. Bruce Einhorn, Bloomsburg Businessweek. http://images.businessweek.com/ss/09/03/0312_innovative_countries/index.htm

7. The Emerging World's Five Most Crucial Words: “To Move Money, Press Pound.” Ram Menon. From The Global Information Technology Report 2010–2011, World Economic Forum. http://www.ecdl.org/media/WEF_GITR_Report_2011%20LR.pdf

8. Hype Cycle for Consumer Services and Mobile Applications, 2010. Sandy Shen, Gartner. 26 July 2010.

9. Capturing the promise of mobile banking in emerging markets. Christopher Beshouri and Jon Gravrak, The McKinsey Quarterly. February 2010. http://www.mckinseyquarterly.com/Capturing_the_promise_of_mobile_banking_in_emerging_markets_2539

10. You've got money! Transfers on the mobile. Howard Wilcox, Juniper Research. January 2011. http://www.banknews.com/fileadmin/White_Papers/Mobile_Banking_-_Juniper/Mobile_Money_Transfer.pdf

11. Bringing mobile money to the world. Michael Joseph, The World Bank. 4 April 2011. http://blogs.worldbank.org/psd/bringing-mobile-money-to-the-world

12. The Economics of M-PESA: An Update. William Jack and Tavneet Suri, MIT. October 2010. http://www.mit.edu/~tavneet/M-PESA_Update.pdf

13. India Economic Summit: Implementing India. New Delhi, India 14-16 November 2010. http://www3.weforum.org/docs/IN10/WEF_IES_2010_Report.pdf

14. The Global Innovation 1000: How the Top Innovators Keep Winning. Barry Jaruzelski and Kevin Dehoff, Booz and Co. November 2010. http://www.strategy-business.com/article/10408?gko=08375

15. Managing Pathways to Convergence in the Life Sciences Industry. Deloitte Research. 2007. http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/us_DR_LSConvergence050107.pdf

16. The future of the life sciences industries: strategies for success in 2015. Deloitte and The Economist Intelligence Unit. 2006. http://www.deloitte.com/assets/Dcom-Global/Local%20Assets/Documents/2006FutLifScnRptFINAL.pdf

17. Exoskeletons, Powered Prostheses and Optical Sensory Devices. ABI Research. 2010. http://www.abiresearch.com/research/1004686-Exoskeletons,+Powered+Prostheses+and+Optical+Sensory+Devices

18. Hype Cycle for Emerging Technologies, 2010. Jackie Fenn, Gartner. 2 August 2010.

19. http://www.augmented-human.com/

20. Surfing the Web with nothing but brainwaves. Chris Taylor, Business 2.0 and CNN Money. 24 July 2006. http://money.cnn.com/2006/07/21/technology/googlebrain0721.biz2/index.htm

21. http://world.honda.com/news/2009/c090331Brain-Machine-Interface-Technology/

22. Brazil: The Land of Renewable Opportunity. Jeffries International Industry Flash Note. 3 February 2011.

23. Emerging Market Analysis: Solar Photovoltaic, India, 2010 and Beyond. Philip Koh, Gartner. 12 October 2010.

24. China telecoms: Sub-sector update. Economist Intelligence Unit. 15 June 2011.

25. ZTE to set up ten international innovation centres. Computer Business Review. 25 July 2011. http://telecoms.cbronline.com/news/zte-to-set-up-ten-international-innovation-centres-250711

26. Ex-Googler Aims for China's Mobile Users. Loretta Chao, China Real Time. 7 September 2010. http://blogs.wsj.com/digits/2010/09/07/ex-googler-aims-for-chinas-mobile-users/

27. Effective Project Management for Strategic Innovation and Change in an Organizational Context. John Kenny, Project Management Journal. March 2003.

28. The Perfect Storm. Michael Thorn, PMI Global Congress – Atlanta, Georgia. 2007.

29. Leading the technology development process. W.D. Sheasley, Research Technology Management. 1999.

30. Delivering Innovation through Value and Project Management. Sylvain Gauthier, PMI® Global Congress 2007—Asia Pacific.

31. Growth Strategies for 2012 and Beyond. Wipro, 2011. http://www.wipro.com/insights/cxo_report.htm

32. Project management vs. managing innovation projects. Joyce Wycoff, Innovation Network's Heads Up! http://www.innovationtools.com/weblog/innovationblog-detail.asp?articleid=303

33. Innovation & Project Management - Exploring the Links. Dr. Donncha Kavanagh and Ed Naughton, PM World Today. April 2009. http://www.pmforum.org/library/papers/2009/PDFs/apr/Kavanaugh-Naughton-Innovation-PM.pdf

34. Emerging markets – Easier said than done. The Economist. 20 April 2010.

35. Emerging markets – Grow, grow, grow. The Economist. 20 April 2010.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

4 October 2011

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