Nurturing the next big thing
INNOVATION is a must-have. Doing it well, though, requires melding cutting-edge concepts with traditional governance.
BY SARAH FISTER GALE ILLUSTRATION BY MIKE AUSTIN
Merely coming up with the Next Big Thing isn't enough, however. Organizations must not only continuously push the envelope with big, bold ideas—they also have to follow through with projects that deliver the value of those ideas to the bottom line.
To make their mark, organizations must find a way to marry the fundamentals of project governance that helped them get where they are with the breakthrough concepts that will get them where they need to be.
“The world is full of prototypes, but turning them into business solutions is very challenging,” says Shihab Kuran, CEO and president of Petra Solar, a solar energy and clean-tech company in South Plainfield, New Jersey, USA. “Without proper project management, good ideas will never make it to market.”
That means slashing time-to-market without sacrificing quality, keeping up with the leading edge while staying out of the red and introducing more efficient processes without throwing existing projects off track.
PHOTO BY MIKE ROEMER
“The companies that are consistently successful don’t treat innovation like it's an event. it's embedded in the business process, with dedicated resources and leadership.”
—Paul Williams, PMP, Associated Bank, Green Bay, Wisconsin, USA
“The companies that are consistently successful don't treat innovation like it's an event,” says Paul Williams, PMP, vice president, technology infrastructure project manager at Associated Bank in Green Bay, Wisconsin, USA. “It's embedded in the business process, with dedicated resources and leadership.”
The instinctive reaction to economic malaise is to hunker down and ride out the storm. But forward-thinking companies see tough times as a prime opportunity to invest in projects that will separate them from the pack—and give them a spot on the inside track as the recession eases.
More than two-thirds—68 percent—of global executives agree that “innovation is now more important than it was prior to the recession,” according to Wipro and Forbes Insight's Growth Strategies for 2012 and Beyond. And almost a third of CEOs said they believe their biggest opportunities for growth lie in developing innovative new products and services, according to a 2012 PwC survey.
“With the competition companies face in this global market, innovation is the only game left in town,” says Craig Symons, vice president and principal analyst for the IT leadership practice at Forrester Research, Norwalk, Connecticut, USA.
Investment in research and development (R&D) projects jumped 9.6 percent to an all-time high of US$603 billion globally in 2011, according to the 2012 Booz & Company Global Innovation 1000 study. Three out of four organizations surveyed had increased their R&D spending from the previous year, with companies headquartered in India and China showing a 27 percent surge, on average.
“With the competition companies face in this global market, innovation is the only game left in town.”
—Craig Symons, Forrester Research, Norwalk, Connecticut, USA
Investment alone doesn't guarantee a win, however.
“What really matters is not the amount spent, but how those R&D funds are invested in talent, process and tools,” says Barry Jaruzelski, senior partner and head of the global engineered products and services practice at Booz & Company, Florham Park, New Jersey. “The most successful companies have clearly defined innovation strategies that tightly align with their business strategies.”
Yet this is where many organizations fall short. The Booz & Company study found the biggest obstacle to innovation was in translating ideas to actual projects. Almost half of respondents ranked themselves as either mediocre or ineffective at idea generation and conversion. Contrast that with the 25 percent of companies that considered themselves highly effective at those tasks: They outperformed their peers on revenue, growth and profitability. In fact, success at idea conversion proved more important than idea generation to producing superior financial performance over time.
NOT JUST ANOTHER BRILLIANT IDEA
To make the jump from a cutting-edge concept to a full-fledged project that delivers true innovation, companies must align their grand vision with the business’—and the market's—needs. “When you have an innovation strategy that defines where innovation is needed, it's easier to link projects to the goals you are trying to pursue,” says Jean-Philippe Deschamps, emeritus professor of technology and innovation management at IMD business school in Lausanne, Switzerland.
“The most successful companies have clearly defined innovation strategies that tightly align with their business strategies.”
—Barry Jaruzelski, Booz & Company, Florham Park, New Jersey, USA
At Associated Bank, the enterprise project office evaluates every proposal against a vision statement that centers around four principles: customer focus, innovation, partnering and value. “That vision isn't just a statement on the wall,” Mr. Williams says. “It is part of every decision-making step we take.”
He points to a recent project proposal to implement a policy allowing employees to use personal smartphones for work tasks. The proposal included information that would be at home on any IT project business case: cost, data security and key deliverables. The team went further, though, defining the innovative value proposition, which outlined the benefits of employees being able to use their own smartphones to stay connected, communicate about projects around the clock and solve customer problems during off-hours. The ROI comes from eliminating company-provided technology in favor of a “bring your own device” approach.
“The first slide of the project proposal included the vision statement and how the project's innovative new approach incorporated both the customer-focus and innovation quadrants,” Mr. Williams says. Understanding the value proposition and how it aligned with business strategy—in this case, meeting customer needs more efficiently—helped the team win support for the project.
“You need someone who can create a structure to move an idea from concept to prototype through the implementation. Project managers are familiar with all of those steps. When they are made responsible for this movement, it increases the likelihood of success.”
—Paul Williams, PMP
Such review strategies can also help companies identify innovative concepts that aren't up to par. “Project management isn't free, and some ideas don't deserve to get past the prototype phase,” says Mr. Williams.
The Associated Bank enterprise project office continually reviews the portfolio with an eye to dropping projects that aren't adding value—regardless of how innovative they might seem. “If something isn't going to deliver benefit and you can't fix it, you need to have the courage to kill it,” Mr. Williams says. “Otherwise it's just going to limp along, taking up valuable resources that could be better used.”
Although most of these decisions are made at the portfolio level, project managers have their own role to play in the innovation game. “You need someone who can create a structure to move an idea from concept to prototype through the implementation,” Mr. Williams says. “Project managers are familiar with all of those steps. When they are made responsible for this movement, it increases the likelihood of success.”
AN ALLIED FORCE
Companies don't have to go it alone on innovation. Ford Motor Company, for example, is collaborating with Weyerhaeuser, a pulp and paper company, on a project to replace fiberglass or mineral reinforcements. Working together, the companies came up with a plastic-composite material made with cellulose fibers from trees.
“By using this composite material, we're in a position to decrease the environmental impact of building vehicles, while still creating durable vehicle components,” says John Viera, global director of sustainability and environmental matters at Ford, Detroit, Michigan, USA. The resulting components weigh about 10 percent less, can be produced 20 percent to 40 percent faster, and require less energy to make than their fiberglass counterparts.
Alliances can also help companies gain exposure to new ideas, says Mr. Kuran. “The world is packed with great ideas, solutions and concepts, and you need to work within that ecosystem to identify and capture the best ones,” he says. “Partnering is a great way to improve your own innovative solutions and to learn from others in the industry.”
PHOTO BY MIKE ROEMER
NOT JUST RED TAPE
In an uncertain economy, most organizations can't afford to blindly follow a half-baked idea. An innovation governance process may help organizations find the elusive balance between fostering creativity and demanding measurable outcomes.
“Governance gets a bad reputation because people think it's synonymous with bureaucracy and red tape,” Mr. Symons says. “It should be a process that manages risk and ensures the company is making the right decisions for the right reasons.”
He recommends implementing an innovation steering committee that evaluates proofs of concept and how they align with strategic goals of the business. Based on that information, the committee determines which projects should take the next step to proposal.
“Companies struggle with this phase because it's hard to measure innovation,” he says. “True innovation has no roadmap, but that doesn't mean you can't quantify the opportunity in terms of anticipated outcomes and probabilities.”
Ford, for example, assesses innovation it terms of whether projects can reasonably move the business strategy forward and whether they can quantify that business value. “If they do, we mark those projects as successes, and we put resources and investment toward bringing them to market,” Mr. Viera says.
If companies want to capitalize on the promise of innovation, they must rely on stringent project and portfolio management processes to shepherd the best innovations to market while also having the courage to cut loose those projects that do not deliver demonstrable value, says Mr. Deschamps. “That's how you create an innovative corporate culture.”
“Governance gets a bad reputation because people think it's synonymous with bureaucracy and red tape. It should be a process that manages risk and ensures the company is making the right decisions for the right reasons.”
—Craig Symons, Forrester Research, Norwalk, Connecticut, USA
When companies get sucked into new gadgets or interesting ways to manipulate existing technology, they can lose sight of their broader business goals. “To be truly innovative, you have to look beyond what's easy and focus on what's right,” says Nick Pudar, vice president of planning and business development at OnStar, a General Motors company in Detroit, Michigan, USA.
PHOTO COURTESY OF GENERAL MOTORS
For OnStar, that means making sure every project creates a better experience, whether that is in the form of connectivity for remote diagnostics, in-vehicle security, entertainment, hands-free calling or in-vehicle navigation. “Each of these services demand their own kinds of innovation, but ultimately they link back to the overarching business strategy of creating a great customer experience,” he says.
Mr. Pudar likens his company's innovation strategy to the way chess masters approach their game. “They decide before they begin what their checkmate will be and work back from that point, unraveling all the moves necessary to get to that outcome,” he says. “By beginning with a specific goal, they don't get mired down in the myriad possibilities in front of them.”
To make sure the OnStar team stays on target, a steering committee performs regular reviews to assess not just whether the project is still a good idea, but if the cost-benefit scenario delivers acceptable value to the business.
Through that lens, Mr. Pudar says, even brilliant ideas don't always measure up.
His team launched a project in early 2012 to address drivers’ inherent compulsion to text. The resulting app would sense whether a phone was in a moving car and give drivers three options to respond to a text:
- ■ Send an automated message saying “I'm driving and will respond when I arrive”
- ■ Send a text verbally
- ■ Open a hands-free phone line so the driver could call the sender back
After approval from the steering committee, the project moved to the prototype phase, and the tech team built a working model.
Once the prototype was complete, the committee reviewed the app and determined it would add value for customers. Yet the group also predicted that in a short time, most smartphones would offer similar features. That made the project economically unattractive, Mr. Pudar says.
“For us to launch this project, we would have to write unique apps for every operating system, which would have been a tremendous effort and cost,” he says.
Relying on its portfolio review process, OnStar was able to identify market risks that would make the project unsuccessful from a strategic business standpoint. So the organization shut it down and redirected the team to other projects.
“There are so many projects we can do, and they all offer some level of value and innovation quotient,” Mr. Pudar says. “We know we can't do them all, so we focus on the ones that we think will be most impactful.”
“To be truly innovative, you have to look beyond what's easy and focus on what's right.”
—Nick Pudar, OnStar, Detroit, Michigan, USA
Petra Solar in South Plainfield, New Jersey, USA, has been lauded for its innovative solar technology, smart-grid and clean-tech projects. But the company's CEO, Shihab Kuran, is the first to admit that the organization doesn't have a monopoly on brilliant ideas.
“For us, innovation is all about talent,” he says. “We know the smartest people in the world don't all work for Petra, which is why we need to work within the broader ecosystem to find great ideas and solutions.”
Once Petra identifies a market need, the first thing Mr. Kuran does is assemble his internal team. Then he brings in partners from academia, the government and the utilities sector to brainstorm.
“We need to work within the broader ecosystem to find great ideas and solutions.”
—Shihab Kuran, Petra Solar, South Plainfield, New Jersey, USA
When Petra was looking for ways to add solar panels in densely populated New Jersey, it came up with the idea of mounting solar panels on utility poles that could be tied back to the grid without adding more infrastructure. Working with Public Service Electric and Gas, the state's largest utility company, Petra finessed the concept, and recently completed a US$200 million installation project that generates 40 megawatts of power.
IMAGE COURTESY OF PETRA SOLAR
“The utility company became a teaching customer for us,” Mr. Kuran says. “They helped us turn what could have been a crazy idea into a practical solution.”
Those kind of alliances help Petra overcome obstacles that might otherwise hold innovative solutions back. “If you're humble enough to listen to your customers and brainstorm ideas, you can learn how to adapt your solution,” he says.
Petra is currently working on another innovative initiative in Jordan, once again making the most of teaching opportunities. In partnership with the Royal Scientific Society of Jordan and Jordan Enterprise Development Corporation, Petra will install government-owned and -operated rooftop solar systems on 20,000 homes in low-income communities across the country.
As part of the community collaboration, Petra is engaging local students to deploy the technology, which offers benefits for both parties. “We are teaching the students about the technology, but they are teaching us how to engage with this society,” Mr. Kuran says.
Petra's goal for the first phase of the project was to install 1,000 rooftop systems between August and December 2012. But first they had to get local families to agree to participate.
“This is where the students came in,” Mr. Kuran explains. They engaged social media and reached out to relatives and friends to educate the community about the project and ease any concerns local stakeholders might have had about working with a foreign company.
“These are things our engineers could never have done,” he says. “If we had just parachuted into Jordan with this project, we would have faced many more objections.”
With the students’ help, Petra was able to install all 1,000 rooftop systems in a single month, and the company is now preparing to move into phase two of the project.
“The lesson is that to be successful with innovation, you have to respect the talent and innovative ideas of others,” Mr. Kuran says. PM
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