1. Nurturing
Big
the
Next
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
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2. MARCH 2013 PM NETWORK 29

3. There’s no shortage of surveys
heralding the miracle of innovation
for organizations trying to remain
competitive in a volatile global economy.
As that uncertainty becomes the norm, the
focus on innovation is bound to grow.
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-
PHOTO BY mike roemer
tech company in South Plainfield, New Jersey, USA. “With-
out 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.
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4. “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
MARCH 2013 PM NETWORK 31

5. “The companies that are consistently successful don’t treat innovation like
In 2011, investment in
it’s an event,” says Paul Williams, PMP, vice president, technology infrastruc-
research and development
9.6
ture project manager at Associated Bank in Green Bay, Wisconsin, USA. “It’s
projects jumped
embedded in the business process, with dedicated resources and leadership.”
Innovating in Troubled Times
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
percent
Source: Global Innovation 1000,
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 “inno-
Booz & Company
vation 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, Con-
necticut, 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
“With the
competition
companies
face in this
global market,
innovation is
the only game
left in town.”
—Craig Symons, Forrester
Research, Norwalk,
Connecticut, USA
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6. year, with companies headquartered in India and China
showing a 27 percent surge, on average.
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 strate-
gies.”
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 conver-
sion. 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 Laus-
anne, Switzerland.
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.” “The most successful companies
He points to a recent project proposal to implement a policy allowing have clearly defined innovation
employees to use personal smartphones for work tasks. The proposal included strategies that tightly align with
information that would be at home on any IT project business case: cost, data their business strategies.”
security and key deliverables. The team went further, though, defining the inno-
—Barry Jaruzelski, Booz & Company,
vative value proposition, which outlined the benefits of employees being able Florham Park, New Jersey, USA
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 proposi-
tion and how it aligned with business strategy—in this case, meeting customer
needs more efficiently—helped the team win support for the project.
MARCH 2013 PM NETWORK 33

7. “You need someone who can 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
create a structure to move an deserve to get past the prototype phase,” says Mr. Williams.
idea from concept to prototype The Associated Bank enterprise project office continually reviews the port-
through the implementation. folio with an eye to dropping projects that aren’t adding value—regardless of
Project managers are familiar how innovative they might seem. “If something isn’t going to deliver benefit
with all of those steps. When and you can’t fix it, you need to have the courage to kill it,” Mr. Williams says.
they are made responsible for “Otherwise it’s just going to limp along, taking up valuable resources that could
this movement, it increases the be better used.”
likelihood of success.” Although most of these decisions are made at the portfolio level, project
—Paul Williams, PMP managers have their own role to play in the innovation game. “You need some-
one 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 Weyer-
haeuser, a pulp and paper company, on
a project to replace fiberglass or min-
eral 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 vehi-
cles, while still creating durable vehicle
components,” says John Viera, global
PHOTO BY mike roemer
director of sustainability and environ-
mental matters at Ford, Detroit, Michi-
gan, USA. The resulting components
weigh about 10 percent less, can be pro-
duced 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.”
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8. 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 measur-
able 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 “Governance gets
right reasons.” a bad reputation
He recommends implementing an innovation steering committee that
because people think
evaluates proofs of concept and how they align with strategic goals of the
business. Based on that information, the committee determines which projects
it’s synonymous with
should take the next step to proposal.
bureaucracy and red
“Companies struggle with this phase because it’s hard to measure innova-
tape. It should be a
tion,” he says. “True innovation has no roadmap, but that doesn’t mean you process that manages
can’t quantify the opportunity in terms of anticipated outcomes and prob- risk and ensures the
abilities.” company is making
Ford, for example, assesses innovation it terms of whether projects can the right decisions for
reasonably move the business strategy forward and whether they can quantify the right reasons.”
that business value. “If they do, we mark those projects as successes, and we put
—Craig Symons, Forrester Research,
resources and investment toward bringing them to market,” Mr. Viera says. Norwalk, Connecticut, USA
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.”
MARCH 2013 PM NETWORK 35

9. [case study]
Putting on the Brakes
When companies get sucked into new gadgets or interesting ways to manipu-
late 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 plan-
ning and business development at OnStar, a General Motors com-
pany in Detroit, Michigan, USA.
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, unrav-
eling 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
photo courtesy of General Motors
myriad possibilities in front of them.”
To make sure the OnStar team stays on target, a steering commit-
tee 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:
n Send an automated message saying “I’m driving and will respond when I arrive”
n Send a text verbally
n 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 pro-
totype phase, and the tech team built a working model.
Once the prototype was complete, the committee reviewed the app and
“To be truly determined it would add value for customers. Yet the group also predicted that
innovative, you in a short time, most smartphones would offer similar features. That made the
have to look project economically unattractive, Mr. Pudar says.
beyond what’s “For us to launch this project, we would have to write unique apps for every
easy and focus operating system, which would have been a tremendous effort and cost,” he says.
Relying on its portfolio review process, OnStar was able to identify mar-
on what’s right.” ket risks that would make the project unsuccessful from a strategic business
—Nick Pudar, OnStar, Detroit, standpoint. So the organization shut it down and redirected the team to
Michigan, USA
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.”
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