Category Archives: Innovation

Project Portfolio Management; you might be doing it wrong…

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Around 10 years ago, companies started ramping up Program Management Offices (PMOs) in an effort to drive greater efficiency through their Innovation Portfolios.   The primary goal was to deliver strategic objectives faster.   Speed – so it was thought – was the key to competitive advantage.

Did it work?    Let’s break it down.

The PMO Mission

PMO’s are chartered to bridge the gap between product strategy and execution – ensuring that programs are aligned to business goals and deliver expected enterprise value on time and within budget.  To do this, PMOs adopted governance frameworks based on a hierarchy of Portfolio, Program and Projects.

  • PORTFOLIOS – the collection of programs that optimize the delivery of strategic enterprise objectives.
  • PROGRAMS – groupings of projects designed to deliver specific business features.
  • PROJECTS – activities that deliver a defined business or technical capability based on an agreed upon schedule and budget.

 

What’s working well – Project Management

And during the past decade, PMO efficiency gains have been at the PROJECT level where adoption of iterative execution methodologies – the most popular being Scrum – coupled with outsourcing has reduced cost and increased the speed of innovation delivery. This project-level focus was understandable as projects are the source of the greatest expense.  Agile development coupled with the use of offshore resources has increased the velocity of innovation.

So does this mean that project portfolio management has been successful?      Not yet.

Slide1What’s not – Portfolio Management

While PMOs are delivering capabilities more efficiently due to better project management, less has been done to ensure that the programs within the innovation portfolio are optimal.

Steve Jobs described innovation as: “You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things.”

Prioritizing the right development initiatives is the focus of project portfolio management. And prioritization is sorting by desirability… making sure that teams work on first things first.

The most common approach to prioritization is ranking programs against a value metric of expected financial return.   This is done by plotting the expected return of a project against the cost to deliver to create a frontier graph as a way to visualize the best ‘bang for the buck.’

In this example, I’ve graphed a single value criteria (NPV) against the cost to deploy each project.   Those projects plotted to the left add significantly more value with less cost with successive projects adding less return to the portfolio at higher cost.

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Project prioritization based on a single value criteria is seductively easy.   In fact, it’s too easy.

‘Ranking and Yanking’ projects just won’t build a balanced portfolio, one that meets a set of competing objectives.  Despite the fact that firms often simply chase those programs with the highest expected returns, PMO’s need to balance a larger set of objectives such as when revenues will start to be realized… when they will peak… team resource utilization… market considerations… existing product  cannibalization… and a whole bunch of risk factors.

“There is nothing worse than doing well that which should not be done at all”   – Peter Drucker

Project portfolio management is about correlating projects based on more than a single objective.   The idea is to create a portfolio that meets the best mix of objectives versus a portfolio based on a single value criteria.

Prioritizing programs simply based on the highest expected return might seem like the most rational approach –  but it rarely is.

 

Kevin Griggs is a technology program manager who helps organizations establish program management offices and manages complex programs across a variety of industry verticals.   Kevin can be reached at kevin@kevingriggs.net.

Is the Future of Enterprise Collaboration Now?

People don’t share enough information.  It’s a well-documented behavior. Sometimes they horde because they have been led to believe that “knowledge is power” and centralizing data access will increase their personal value to the firm.  Luckily, the primary reason for lack of sharing is due to legacy information systems which are sub-optimal for sharing and discovery and not bad behavior.

It’s been two years since McKinsey Global Institute published The Social Economy.   In that research, McKinsey concluded that use of social technologies could provide 2x the value in enhanced communications, knowledge sharing and collaboration within companies over traditional methods.

“By adopting these organizational technologies, we estimate that companies could raise the productivity of knowledge workers by 20 to 25 percent. However, realizing such gains will require significant transformations in management practices and organizational behavior. Social technologies can enable organizations to become fully networked enterprises—networked in both a technical and in a behavioral sense.” McKinsey Global Institute

Most businesses understand that enterprise social networking is one component of a solution to improve workplace efficiency.  And despite that these tools have been around for what seems to be a dog’s age, their adoption has been growing slower than what McKinsey predicted in 2012.

Interestingly, the notion of enterprise collaboration is as old as the enterprises themselves;  however, it is only recently that information technology has been able to support the concept.   In the 1980s, companies began using desktop productivity technology such as word processors and spreadsheets.  The early 1990s was the advent of basic messaging tools such as e-mail and and later chat.  In the 2000s, the capability moved to increased team productivity supported by wikis, blogs, and conferencing facilities.   But true enterprise-level productivity achieved through making the right connections at the right time has remained an elusive ‘holy grail.’

For those of us who design information products for use within companies, it was assumed that McKinsey’s research would cause an explosion of firms looking to capture untapped productivity through using Web 2.0 tools inside the firewall.  Even though the pace of companies embracing enterprise social collaboration has been increasing,  it’s not as rapid as every study I’ve read in the past few years predicted.

But I am sensing a sea change in companies both large and small.   The value of enhanced workplace collaboration is now simply too large to ignore.

And the primary driver is coming from how companies are reshaping themselves.

How you say?

Companies are flatting their hierarchies.  That’s a trend that’s been happening for years.  And the effect of this trend is that ‘management’ decisions must be made by a more engaged, informed and autonomous workforce.   The flatter the organization, the greater the need to share information more broadly throughout the firm.

As leadership functions continue to become more distributed, the workforce will need ever greater access to key information to  make the right decisions without access to line manager authority.  In short, the workforce must become more empowered.   And information DOES equate to power… but only when hundreds of people can find the information they need and can put it to use.

Zappos announced an approach where there are embracing a new management called Holacracy which organizes around the work that needs doing versus around people and titles.  There are a number of these new matrixed workforce structures all of which are targeted at reducing organizational inefficiencies.

And the primary technologies that will make these flatter management structures succeed are precisely the social / Web 2.0 collaboration technologies that McKinsey predicted in 2012 will become pervasive within all successful firms.

So maybe, just maybe… the promise of Enterprise 2.0 is soon to be realized.

Innovation of the Boring and Mundane Product

Innovation is defined as the application of solutions that, 1) provide new requirements, 2) address unarticulated needs and, 3) improve existing products in the marketplace. For most innovators it seems easier (read: less confined to previous product decisions) to innovate a concept that is both new and fresh.

But… what about innovating a mundane product that’s been around for 40+ years with few significant changes? And more challenging; what if the consumer considers the product mostly invisible and doesn’t really want to buy it. Now that’s a product challenge!

The Nest Protect (www.nest.com) is an interesting case study. Nest has addressed all three notions of innovation with their new smoke and carbon monoxide detection. The Nest Protect is an intelligent Wi-Fi aware, network and smartphone-app-linked smoke and CO2 detector. This innovation shouldn’t be in the same category as those annoying and dysfunctional hockey pucks now stuck on your ceiling.

In short, this is a not your grandpa’s smoke detector.

The Nest Protect innovates in a number of ways. The first is that it’s “location aware” and will provide feedback through a number of channels as to where a problem is detected. It knows there’s smoke in the basement and tells you that.

In short, it’s smart. Wicked smart. (Yep, I live in Boston.)

Let’s say you are making (ah-hem, more accurately “burning…”) toast in the kitchen. The Nest unit won’t simply blast that annoying emergency alarm, but will instead provide a friendly nudge and flash a yellow light. A voice will say “Heads Up, there’s smoke in the kitchen!” And to acknowledge that your cooking skills are deficient which can’t be solved with the local fire brigade, you simply wave your arm fully within 2-6 feet of the unit until it speaks, “Alarm Hushed…” No more throwing open doors and windows in a January snow storm coaxing the blasted thing to stop blaring and the dog to stop barking. Eventually. (We’ve all been there.)

And in case you aren’t home, you’ll receive a notification of any activity on your smartphone, so that you can take action before an issue becomes a problem.

That intelligence carries forward into monitoring the health of the unit’s sensors and remaining battery life. And how much would we pay to stop that incessant but undiscoverable ping in the middle of the night from a battery slowly dying? (We’ve all been there too…) The Nest Protect sends an alert message to your smartphone whenever the battery is getting low, and will continue to remind you, so that you can change the battery before your midnight ride around the house on the step stool searching for the culprit.

And whenever you are roaming around the house in the dark, the Nest Protect senses your presence as you approach and will turn it’s green “all okay” glow to a white light in order to light your way in the dark.

And if the emergency is more than just burning toast… the Nest Protect will flash red, announce where the fire is located and will provide clear instructions on all attached smartphones as to steps to take as well as place an emergency call with a single button press.

The Nest Protect addresses a number of annoyances with “modern” smoke detectors while responding to a number of unarticulated needs such as the ability to shut down non-emergency situations, identification of WHERE and WHAT issues have been detected, and remote notifications and system health monitoring via a simple smartphone interface.

Nest has taken the boring and mostly annoying home emergency detector and created a much more useful appliance. Don’t think that Nest is marketing a smoke detector, they are selling greater peace of mind.

So who says you can’t build a better mousetrap?

How Sticky are your Products?

Why do some ideas succeed while others fail?

Stanford professor Chip Heath has spent the last 10 years asking that very question. I just finished his book (co-authored with his brother Dan who owns a business that specializes in innovation) in which Heath published his findings.

The ability to create winning products (note: products are manifestations of IDEAS) may sometimes feel like dumb luck but there are patterns in why some are more successful than others. Heath’s book, Made to Stick: Why Some Ideas Survive and Others Die, identifies six traits that help ideas endure.

Jack Welch is renown for communicating ideas that inspire and yet other business leaders are often frustrated that their ideas are too soon forgotten.

What is a “sticky” idea?

A sticky idea is one that everyone understands when they hear it… is memorable… and changes some fundamental concept. While sticky is a straightforward concept, it doesn’t happen too often. (Think back to the last presentation you saw… How much do you remember? Did it change your behavior in any way? Probably not.)

I liked Heath’s example of an abstract message “employees should maximize shareholder value.” ( Okay, we’re all on board… that sounds like a good thing for employees to do.) But what specific behaviors should employees change to respond to this message?

Contrast the message statement above to an example of a FedEx driver who couldn’t open one of his pickup boxes since the key was back at the office. His deadline was tight and he knew that he wouldn’t have time to go back to the office and return with the key to make the deadline for the plane. So he got a wrench, unbolted the whole box and slid it into the truck. He knew he’d be able to unlock it back at the office.

Telling FedEx drivers to “maximize shareholder value” just leaves them hanging. But a story gives them a visualization of what the message really means.

Here are Heath’s six traits for sticky ideas:

1. SIMPLE – Messages are most memorable if they are short and thoughtful. Proverbs are short but also deep enough to guide behavior.

2. UNEXPECTED – An idea that sounds like basic common sense won’t stick… it must be unique.

3. CONCRETE – Anything abstract doesn’t leave sensory impressions… only concrete images do. Compare “get an American on the moon in this decade” with “seize leadership in the space race through targeted technology initiatives and enhanced team-based routines.”

4. CREDIBLE – Will it sell in Toledo? Trying to convey an idea which is outside the listener’s realm of experience won’t stick… even if experts are used to validate the idea.

5. EMOTIONAL – Case studies that involve people are sticky. Heath says that we are wired to identify with people… but yet have no emotional attachment to ideas.

6. REPEATABLE – We use stories every day to convey ideas. Why? Heath says that rehearsing a situation helps us perform better. Stories that are easily repeated act like a mental flight simulator, preparing us to respond more quickly and effectively.

As you develop your products, try using these concepts. It just might help make them a bit more sticky.

What’s your pledge?

With the undeniable spirit of optimism that swept our country this week as part of the inauguration of President Obama… this post is dedicated to advancing this sense of renewal.

As our new President challenges: “…let us summon a new spirit of patriotism…of responsibility… where each of us resolves to pitch in… to look not only after ourselves… but each other.”

what are YOU going to pledge?

Share your pledge below… I’d like to know.

Then go make something happen.

In today’s Economy… is “Tactical” more important than “Strategic?”

Are companies delaying strategic product investments (i.e., where product returns are realized in future years) for investments that provide returns in 2009?

Tom Nicholas from the Harvard Business School published in The McKinsey Quarterly an article which says that executives who take a “wait and see” approach to innovation investment during downturns may be putting their firms at a competitive disadvantage. “Companies that delay these investments may forego significant growth opportunities when uncertainty subsides and the economy recovers.”

In the 1930’s, DuPont R&D produced synthetic rubber and nylon. Radio Corporation of America (RCA) focused on a new technology called Television… And Hewlett Packard and Polaroid were start-ups back then.

The lessons on innovation investment in downturns is very pertinent today. The market will improve and those firms that continue to invest strategically in the down economic cycle will likely see a product advantage over competitors once the cycle improves.

So, are strategic investments taking a back seat during this downturn?