How to manage innovation projects?

Posted on Actualizado enn

Paper selected by the scientific committee of REPM 2018: 1st International Conference on Research and Education in Project Management (Bilbao, February 22-23).

Abstract:

In the present changing environment, a way to keep the competitiveness of companies is through innovative projects. However, in order to manage and ensure the success of the innovation projects, we should take into account its specific characteristics to determine how to apply best practices of project management (e.g. PMBOK©).
It is suitable for every organization, depending on their characteristics, degree of uncertainty and risk to assume, to select the lifecycle (iterative, linear, or a combination of both), as well as most appropriate tools and techniques for its projects.
The presentation deals with the specific characteristics of the innovation projects, as well as the models and trends, and some decision criteria that have proven to be useful.

Keywords: Innovation Management; Project Management; Risk; Stage-Gate; Product Development

1. Introduction

It is evident that Innovation Projects have to be managed, but we should take into account their specific characteristics.
First of all, it is necessary to clarify what is the meaning of “Innovation Project”. We can use the following definition: “an Innovation Project is a group of activities focused on generating knowledge, product, processes, different from those existing in our organizational structure”.
Even though these projects can be quite different, they have some common features:
  • At the beginning, we don’t known in detail the result or the solution we are looking for, therefore there is always a part of exploration, creativity and experimentation, discovery and learning.
  • The results, which are the measure of the project success, in many cases differ from the initial objectives, or simply, those objectives are not achieved. This does not always mean a failure for the Organization, since the process of learning and other discoveries and not pursued results, may still be useful and valuable for the company.
  • They often involve more elements of risk than in conventional projects (market, technology, internal capabilities, associated knowledge, operational, financial, etc.).
  • In many cases, it is useful to apply the scientific method (hypothesis, design, test, measure, learn), in order to verify assumptions, or discard risks through experimentation. We must know how to pivot objectives and the approach, when we are gathering more information and new findings are arisen.
  • Phases of the project should not always follow a linear model (such as when the desired solution is well defined). The phases of Initiation, Planning and Control overlap in many cases. This overlap/rethinking of many aspects (problem, solution, development) may be desirable and useful in innovation projects.

2. Life Cycle

It is appropriate to establish clear decision points throughout the project life, mainly at the beginning, when we are defining the scope/solution, and in other phases which are considered key, in such a way that it will allow us to decide on its continuation, or swing to adapt the project according to the hypothesis confirmed or discarded risks. It is recommended to establish decision points just before the allocation of significant resources/expenses to the project.
Furthermore, it is suitable for every organization, depending on the degree of uncertainty in its projects, to select the life cycle more appropriate (iterative, linear, or a combination of both) for the type of project they tackle, for example the Stage-Gate model for the development of new products.
A Blended Life Cycle (Figure 1) is a very successful method, but it is important to adapt it to each organization.

life cycle

Figure 1. Blended Life Cycle

Given the uncertainty that involves this projects, and the possible iterations between the phases after each decision point, it is recommended only to plan in detail the next steps, and more generally the rest of phases of the project. This can mean frequent changes in cost and duration estimations.
In each of the activities of project management, we should be made special emphasis on various aspects:

3. Initiation phase

Their purpose is the validation of the feasibility of the project. It is a preliminary study that establishes clearly the problems, challenges and benefits to obtain, as well as their connection with the Organization’s strategy. In case of the development of new products/services, it requires a preliminary analysis of the current and future preferences of the market to which are oriented, trends in consumption, etc.
It is also necessary to have a knowledge of the State of the Art where we act (existing technologies that we can use, skills needed, other associated innovations, etc.)
In addition, it is necessary to identify the main risks and difficulties (skills, technology, reaction to the change, etc.). All this elements prepares the team to define the most appropriate solution.
Estimate an initial budget (order of magnitude), which along with other decision criteria (risk..), allow the organization to analyze its feasibility and priority based on the cost incurred.
These elements are part of the Initiation Act (or preliminary study), so with limited resources and efforts, helps the organization to make the decision to continue or not with the project. It constitutes a first control gate before putting more resources in the project.

4. Solution Definition phase

Once understood the challenge (Initiation Act), it is necessary to define the most appropriate solution to tackle it. This is not a trivial issue. It is not just enough to get the customer’s requirements as in other types of projects, there in not an obvious solution, so it is necessary to perform activities of exploration, simulation, contrast to discover / define the most appropriate solution (desirable, feasible, aligned with the strategy) (Figure 2).

Solution Definition

Figure 2. Solution Definition phase

Those activities can involve an interactive cycle, are difficult to plan, and each organization should set appropriate maturation limits and the budget to manager this process.
In this phase could be suitable to apply an agile approach.

4.1.         Development of the conceptual solution

In addition to good understanding of the problem/challenge, we should take into account all the elements involved.
Since they are projects that tend to work in unknown areas, it is convenient a deep analysis on the State of the Art in the areas involved (technology, processes and products, patents, market, benchmarking, etc.).
In this phase, the creativity and the collaboration of multidisciplinary teams are essential for establishing the solution requirements to develop (functional and operative).

4.2.         Pre-development/tests

It could be necessary the construction of prototypes, models (3D printers), simulations, and trials, which allow us a quick and cheap way to test the solutions.
This allows to valid assumptions and hypotheses, to eliminate risks, and to acquire more expertise within the sphere of activity.

4.3.         Validate the solution

The defined solution is contrasted against the problem/challenge, and proved that meets the established criteria (reliability, efficiency, robustness, cost savings, ease of use, etc.).
In the case of several solutions, we need to analyze and select the most suitable alternative.
In the case of new products to launch into the market, the validation of the solution may involve the contrast with the market and the analysis of its commercial feasibility:
  • Identification of the niche market,
  • Quantitative evaluation in relation with the key factors and criterion of purchase,
  • Position with respect to the competence solutions,
  • Advantages that could add our solution,
  • Contrast with pilot customers, etc.
All of this provides information to decide whether the solution is accurate and we can produce it, or it is necessary to refine the solution, or directly, to cancel the project.
Each of the iterations, provides more information, so we can validate hypothesis and remove uncertainties, before committing more resources (investment team, etc.) to advance in the next phase.
Throughout this iterative cycle, the agility, creativity and passion of the team should dominate over the detailed planning of tasks.

5. Implementation Phase

At this stage we are carrying out the “construction” of the validated solution. Here we can use  a linear structure of activities (waterfall life cycle) , with a detailed planning, that will allow to improve efficiency through the establishment of the resources, timelines and budget required.
In addition to the activities associated with the generation of the validated solution, that is to said, the creation of deliverables that make up the solution (which could apply PMBOK best practices), we should enhance some activities and key deliverables in this kind of projects:
  • Plan of launch/industrialization of the solution in the organization.
  • Identify and analyze new associated risks of the solution (commercial, technological, economic, regulation, etc.).
  • Plan results protection,
  • Plan to register for use (where required),
  • In new products, create the business and marketing plan to define the way of exploiting/ implement the results,
  • Search for funding (Investment Plan, public financial assistance, etc.),

6. Monitoring and Control the project

Apart from the typical monitoring and control activities, deliverables, time and costs (the baseline), it is advisable to take into account:
Especially in the definition of the solution, it is more important to focus on the encouragement and motivation to the team, that the control of deviations in efforts and costs.
Track of the identified risks, the assumed scenarios, and watch out for new risks, in order to adopt quickly and flexibly the necessary changes in the project:
  • Continue aligned with the strategy?
  • Are maintained the expected benefits?
  • Other projects are pressing for resources?
  • Legal changes?
  • Is still there an opportunity in the market?
  • Positioning of competitors?
  • Product substitutes?
  • Technology surveillance (watch for changes in technology that can leave obsolete our solution, ). For example, to anticipate and address new technology in order to react with the minimum loss
  • Effects on other products/items of the company,
  • Problems of supply, etc.

7. Closing

In addition to the traditional tasks of closing a project (delivery of the solution, lessons learned, etc.), and although they are sometimes considered outside the project, the project team can have an important role after the project:
  • Support in the manufacture, launch and marketing of new products,
  • When appropriate, protect the results obtained, etc.

8. Conclusion

In many innovation projects, where there is an initial lack of requirement definition and when abundant changes are expected (adaptive environments), it is necessary to understand and analyze carefully their specific context and characteristics.
The Project Manger must know and adapt good project management practices to the unique nature of the project. This implies establishing the most appropriate life cycle, identifying the decision-making points, exhaustive risk analysis, and using the techniques that have proved to be useful for this type of projects.

Bibliography

  • Spanish standard UNE 166001: R&D&i management: Requirements for R&D&i projects. (AENOR-Spanish Agency of Standardization)
  • Enric Bayó, ACCIÓ, “Como llegar a ser una Empresa Innovadora”. 1ª Edition 2015 (Generalitat de Catalunya).
  • “A Guide to the PROJECT MANAGEMENT BODY OF KNOWLEDGE (PMBOK® Guide, 6th Edition 2017)”. PMI® Project Mangement Institute, Inc.

Fernando García García

E-mail: fernando.garcia@kamein.com

KAMEIN Consulting: http://www.kamein.com

es.linkedin.com/in/fernandogarciafgg

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