Abstract
Innovative products or services are not fruit of randomness. The highly creative world, where start-ups are disrupting and defying established companies with new technologies, is product of efforts to create clusters and promote investment in research and development (R&D). The implementation of different methodologies or approaches has also played an important role to stimulate the creation of these clusters. With this premise in mind, this paper explores some practices that are used as enhancements to deal with the limitations of Project Management, their complementary relationship and its potential symbiosis. This paper intends to attract the attention towards how the project management capability of an organization, its rate of project successes and its level of projectification are related to its innovation competence, and by doing so, give important inputs to help leaders in the essential duty of developing innovative countries, sectors and companies.
Keywords: Innovation, Innovation measures, Projectized environments, Redundancy, Agile Project Management, Systems thinking, Design thinking, Creativity, Resourcefulness
1 Introduction
Innovation is defined as “the multi-stage process whereby organizations transform ideas into new/improved products, service or processes, in order to advance, compete and differentiate themselves successfully in their marketplace” (Baregheh et al. 2009). Multi-stage refers to its iterative nature, organizations are viewed as different entities (defined for the purposes of this paper as countries, sectors, companies) and transformation of the ideas as a reflection of the evolution from conception to delivery.
In this definition, we also could infer that innovation is related with the sustainability of the organization, as a mean to keep its competitiveness, and not only implies the creation of new products. Therefore, innovation is not a process that occur only in the most industrialized countries, in modern industrial sectors like IT or Biotechnology or in multinational companies like Apple or Samsung. Innovation is a need and is present on a day-to-day basis of all kind of business and processes.
There is a common belief that innovation is created by a genius in her laboratory. Perhaps, that was the case in the Middle Age but now in the industrialized world, organizations cannot wait for the occurrence of an ‘eureka moment’. This thought was clearly pointed out by Peter Drucker in (Drucker 2002): “Most innovations, however, especially the successful ones, result from a conscious, purposeful search for innovation opportunities”. Drucker’s words recognized that talent, creativity and knowledge can only lead to innovation if they are going hand in hand with commitment and persistency.
This led us to ask some questions: why is it so difficult to create innovation-friendly environments? Why is it so difficult to be continuously in this purposeful search for innovation opportunities? Many authors have tried to find an answer to this question: Unexpected competitors (Christensen 2013), failure to align strategy with innovation efforts (Pisano 2015) or financial constraints (Mohnen et al. 2008) among others.
In this paper, we seek to contribute by giving some hints to answer these questions and by identifying how the environment (company, sector and country) stimulates innovation and how the application of project management practices and its enhancements can help to overcome its obstacles.
1.1 Indicators of innovation
In the businesses’ world, we might often hear the dogma ‘If You Can’t Measure It, You Can’t Manage It’. Therefore, to manage and foster innovation, organizations need to establish some parameters to determine its levels of innovation and if the actions taken to improve it are making a difference. For Small-medium enterprises (SMEs) these measures are also crucial to access credits from banks, reduce their interest-rate and attract Venture Capital (VC) companies (Pederzoli et al. 2013).
Traditionally, number of patents have been used as indicator of Innovation (Acs et al. 2002). Even though, patents are only an output and do not give any input to assess efficiency, performance or customer satisfaction, moreover, by the definition of innovation that we introduced, not only the creation or modification of products are signs of novelty.
In (Adams et al. 2006), a framework for innovation management measurement is proposed. Their approach looks at different processes and areas of the company: Inputs, Knowledge management, Innovation strategy, Organization and culture, Portfolio management, Project management and Commercialization. It is important to highlight two key points in this framework. First, the focus in project management category of project efficiency, tools, communications, collaboration as measurement areas. Second, the difference between Portfolio and Project Management, separating strategical process as project selection from execution.
Most innovation is produced by R&D projects, however current levels of innovation in countries do not consider project management maturity (INSEAD GII 2017; Mahroum, Al-Saleh 2013). One of the arguable reasons, is that at the country or industry level there is no standard measure of project maturity or projectification. It is significant to mention, that some efforts have done in this regard: at country level (Bredillet et al. 2008; Bredillet et al. 2009; Pinto, Williams 2013), at industry level (Cooke-Davies, Arzymanow 2003; Grant, Pennypacker 2006).
At company level, the maturity of project management can be assessed using any maturity model, but there is not enough data available to determine a relationship between project management maturity and innovation capability.
1.2 Innovation in projectized environments
Organizational context and culture has an impact in the project success. Size of the company, information management, communication and project mission were identified as critical success factors (Hyvri 2006). A successful project is what could differentiate a company which has ideas or the one which make them a reality. Therefore, a space that with high rates of project success might have also high innovation capability.
Projectized organizations invest most of their resources in projects, give high level of authority to project managers and use virtual collaboration techniques (Project Management Institute 2013). In this section, we introduce some analysis that pretend to explain the atmosphere that projectized organizations provides that could benefit or harm innovative projects.
Projectized environments, due to the ‘discontinuous and temporary’ nature of projects, have been seen as an impediment to assimilate the new knowledge that is created in the organization (Gann, Salter 2000). Also, the established criteria to control and evaluate projects (time, cost and scope) can deter innovation, cause the early shut down of projects and, as a natural consequence, lead to low uncertain projects (Keegan, Turner 2002; Kapsali 2011). Innovation should be generated and guided by a strategic process, but is a process that requires a risk-taking attitude and investment that will only be recovered in a long-term period.
Even though project-based organizations face these challenges, the situation is not better in a functional structure. A projectized organization are incubators of new structures that are needed to execute the projects and are based and flexible according to specific products and customers (Hobday 2000), while its implementation is recommended as innovation and agent of cultural transformation (Martinsuo et al. 2006).
In recent years, different approaches have been proposed to create more innovative-friendly environments. Knowledge sharing can be improved with a Project Management Office (PMO) (Pemsel, Wiewiora 2013). The role of PMO as a principal generator of companies’ strategy has been accepted in the past few years. PMO should communicate and explain the strategy, define KPI’s accordingly, prioritize projects and programs, all with the high-level vision in mind (Project Management Institute 2014).
Other approach focuses on relational learning, under the hypothesis that social integration mechanisms are crucial for information sharing and building a “competitive spirit”, not only within the organization but with suppliers, customers and partners too (Leal-Rodríguez et al. 2014).
Knowledge redundancy, understood as the training of staff to execute multiple jobs, while might be seen as opposed to efficiency, can also promote a more flexible environment. Decentralization of innovation, open feedback, and other not efficiency-driven indicators can be used to assess performance and by this way, foment creativity in multi-disciplinary teams. (Keegan, Turner 2002; Dybå et al. 2014).
In section 3, we will discuss further proposed practices applicable within the limits of the project to deal with innovation efforts.
2 Project management in innovative environments
Having explored innovation as the result of a strategic process and how a project-based organization can develop this strategy, we would like to examine project management practices in innovation projects giving a classification per their orientation.
Strategy oriented
To have an edge over the competitors, innovation is one such segment or area which could give you strategic advantages. Here we list out few of the mechanisms mentioned by Tidd, Bessant in (Tidd et al. 2005).
Mechanism Strategic advantage
Novelty in product or service offering Offering something no one else can
Novelty in process Offering it in ways other cannot match- faster, lower cost, more customized and much more
Complexity Offering something which others find difficult to master
Legal protection of intellectual property Offering something which others cannot do unless they pay a license or other fee
Add/extend range of competitive factors Move basis of competition- e.g. from price of product to price and quality, or price, quality, choice, etc.
Timing First- mover advantage, first-follower advantage
Robust/platform design Offering something which provides the platform on which other variations and generations can be built
Rewriting the rules Offering something which represents a completely new product or process concept
Reconfiguring the parts of the process Rethinking the way in which bits of the system work together
Transferring across different application contexts Recombining established elements of different markets
Table 1. Strategic advantages through innovation. (Tidd et al. 2005)
Various factors like resource allocation, risk management effect the organisation’s growth and longevity are introduced in (Ahn et al. 2010). In order to differentiate, prioritise and select projects numerous models are applied by companies. (Ahn et al. 2010). Organisation’s portfolio management determines the best possible way or approach to put the set of projects under scrutiny and draft a best mix out of it, which not only lead innovation but also results in successful products. (Ahn et al. 2010).
Companies stand out from the rest based on their hassle-free integration between various processes like Technology management, and portfolio management. (Ahn et al. 2010). In the era of cut throat competition, the effective evaluation and prioritization of the best innovative entries help the organization to manage their scarce resources better. (Ahn et al. 2010). In project management terms, the innovations that end up being a revolution in terms of product or services would be front-runners and face of the company on the long run. (Christensen 2013).
According to studies in the recent past, organisations have failed to spend wisely and not put the money on the right jockey and had put at risk their financial situation eventually. (Kutsch, Hall 2005; Luna-Reyes et al. 2005). The Project Management literature suggests two broadly used approaches to select projects viz., financial (payback period, net present value or discounted cash flow, net annuity value, and internal return rate (Huang 2007)) and strategic alignment models (scoring models (Meredith, Mantel 2012), goal programming, fuzzy theory, 0–1 integer linear programming (Dey 2006)). (Rad, Levin 2006).
Having an aligned strategy with innovation, as we mentioned before, facilitates innovative management processes. Finding consensus to assign resources, have the high direction on the same page, and make them conscious of the importance during budget assignment for the sustainability and growth of the company (Zwikael, Linenberg 2000).
A tool to strategize and prioritize projects within a portfolio, is the Diamond model. It is the most widely used instrument for project classification. (Shenhar, Dvir 2007). It is also known as NTCP (Novelty, Technology, Complexity, Pace) model.
Along with the model, the authors also include some interesting approaches to be considered. Customer, one of the primary stakeholders has to be satisfied with the deliverables in terms of quality even if the project does not meet the time and budget. Here, prototyping is one possible solution to keep the customer updated with the proceedings and to keep a timely check of project’s direction. Contingency plans are another viable solution to strategize for any foreseen or unforeseen incidents (Shenhar, Dvir 2007). The more the customer is aware of the project details, the smoother the execution plan and delivery will be. Simultaneously, constant trainings and knowledge sharing could help maintain the level of competency of the team even if the resources are reshuffled or moved to other high priority experts.
Fig 1. Modified diamond model for technology management profiling. (Ahn et al. 2010)
Firms handling innovation projects should focus to get the mandatory details like, level of innovation, relation between product innovativeness and step to opt in/ opt out of the project and lastly find the correlation between the innovation and performance. (Danneels, Kleinschmidtb 2001). Danneels and Kleinschmidtb talk about five dimensions of product innovativeness highly correlated to prioritizing projects and its performance namely, “market familiarity, technological familiarity, marketing fit, technological fit, and new marketing activities”. (Danneels, Kleinschmidtb 2001)
This kind of models are of the great utility, if we consider, that it is an uphill task for senior managers and managers, to get the right flavour in terms of freedom, flexibility and the conventional processes and control mechanisms of project management for new product development (NPD) projects. (Bonner et al. 2002). Moreover, even after getting the right balance, they have steer the projects in the right strategic direction inline to the organizational goals. (Bonner et al. 2002). Any mistake would result in restricting team’s creativity, slow down the progress and hamper the overall performance. (Bonner et al. 2002).
During the develop of new products, target- performance analysis and control mechanisms, which comprises measures to examine completeness of quality, time, budget achieved should be constructed by the team. (Bonner et al. 2002). One should also measure the proportionality between abiding by such measures and the degree of innovation in the project. (Bonner et al. 2002). Processes should be made as interactive within the organisation’s boundary, i.e., by involving higher management in developing a strategy prior to the project kick-off and giving veto power in having the last say in the critical decisions. (Bonner et al. 2002)
(Danneels, Kleinschmidtb 2001) mention in their paper a framework that distinguishes client and company perspectives concerning product innovativeness as a practical tool to make decisions regarding new products. While for customers “innovation attributes, adoption risks, and levels of change” are signs of novelty, a more systematic vision is contemplate for the firm, including aspects like “environmental familiarity and project-firm fit, and technological and marketing aspects” (Danneels, Kleinschmidtb 2001).
Creativity oriented
On analysing the concepts, techniques discussed by other scholars, to put the theory into action, we came across few structured approach towards creativity. They will be discussed in detail below:
1. Spider Diagrams: They are based on Venn diagrams, building a system, which is interactive, visually appealing. Initially intended for logicians, now is widely used for idea generation in diverse industries. (Burton, Howse 2017)
2. Mind Maps: Two intellective processes are regularly considered to kindle creative imagination and lay the foundation for knowledge activation and conceptual combination. Mind- map technique drives the knowledge activation. Researchers have seen an abrupt increase in creativity level with the help of such tools. (Malycha, Maier 2017)
3. Laddering: They are sub- divided in two categories- soft laddering and hard laddering. This aims to study the subjects based on various KPIs. It has resulted in gaining genuine experience and in cultivating idea generation and creativity. Moreover, it leads to the epitome of self-accomplishment. (Lin, Lin 2016)
4. Brainstorming: It is one of the old conventional yet popular and effective tools to foster idea generation. It helps to link between creativity and innovation if the questions asked lead to the right direction. This technique aids in promoting non-evaluative and non-critics discussion and developing an idea repository to steer in fruitful directions for innovativeness. (Gilson, Litchfield 2016)
5. Six Thinking Hats: Lateral Thinking is the big thing in today’s modern globalized world. Six Thinking Hats is a lateral thinking method to analyse a concept, situation, or problem, idea or a model. In this technique, different thinking approaches are used in an pre-defined order clubbed with set of guidelines called the coloured hats. This helps to analyse the situation from different angles and perspectives. White looks for evidences and facts, Red for emotional aspects, Black for logic, Yellow for positive outcomes, Green for creativity, Blue acts as anchor and interchanges with other colors. (Dr. P. S. AithalSrinivas Institute of Management Studies, Pandeshwar, Mangalore, Karnataka, Dr. P. M. Suresh KumarSrinivas Institute of Management Studies, Pandeshwar, Mangalore, Karnataka 2017).
6. Soft Systems Analysis: Soft Systems Analysis technique helps understand problem associated with coordination between soft skills and technical hard skills. Based on its principles, we can develop a plan to deal with the issues arising in such situations. (Mello et al. 2016)
In the following sub-sections, we would like to give some insights to understand the different contexts through one case to foster innovation in each level: country, sector & company. This exercise will give us notions of tools or methods that we can use in innovative projects.
2.1 Country level
Governments all around the globe have developed different policies to be competitive through the generation of innovations. We will introduce some of the policies that help Finland to improve its competitiveness since 1990 based on the book Sustainable innovation: A new age of innovation and Finland’s innovation policy (Hautamäki 2010).
Finland increased the investment in R&D from 2.5% in 1995 to 3.5% in 2000 of the GDP, and has kept this value over 3% since then, with exception of 2016 when had a reduction to 2.9% (Eurostat 2017). With this investment, Finland followed these key steps: 1) Creation of Strategic Centres for Science, Technology and Innovations (SHOKs), 2) University reform, and 3) Conception of a new innovation strategy (Hautamäki 2010).
These steps helped Finland to establish a bridge between top research and capital. Universities became more independent, enabling them to respond promptly to changes. The total number of students, masters and doctoral degrees have increased at a rate between 30 and 40%, while the research personnel did at 70% (Hautamäki 2010).
Considering the lack of disruptive innovations, ambition of entrepreneurs, and impact of Finnish research, additional policies have been studied, including: 1) the localization of innovation, moving from the national system to a small units that attend regional needs, 2) funding and motivating entrepreneurs, 3) a system of incentives for research excellence in universities (Hautamäki 2010).
Other aspect that is pertinent to mention, is the fact that by looking at the indexes of innovation that measure innovation in countries (INSEAD GII 2017), we will see that at least the top 10 countries and most of them are developed countries, which have the financial resources to invest in R&D and successfully obtain patents. With the idea that emerging economies, are also capable of develop newness, a categorization of innovation is proposed that take into consideration geography (Corsi, Di Minin 2014).
2.2 Sector level
At sector level, we decide to show the formation of a cluster of biotechnology industry in San Diego, California. Information is taken from the article How do technology clusters emerge and become sustainable? (Casper 2007).
Clusters’ efficiency as innovation generators is explained by the knowledge sharing that decentralized social networks and labour market mobility caused (Casper 2007). In this case, a region with no biotechnology industry started a social network of twelve managers and after a 27-year period, the network became a vibrant community with hundreds of members working across 120 companies (Casper 2007).
One of the reasons of its success, was Hybritech one of the first companies in the sector which could attract VC in an early stage and formed by a high-performing team. In its initial stage, Hybritech had a high-mobility and most of its former managers founded new start-ups; thanks to their credibility and capability of attract new talents (Casper 2007).
High-Tech start-up companies are normally project-based, looking for talented scientists working in multiple tasks to achieve a specific goal. This brilliant team of pioneers own the company with a VC firm in most of the cases, there is a high risk that the company fails or that the VC decides to change the employees (Casper 2007). The success of the cluster lie in the facility with which scientist and engineers can move from job to job, companies and peers should not see high mobility as an indicator of bad performance, otherwise they would not risk jobs in traditional companies to work in a start-up (Casper 2007).
2.3 Company level
For company level, we chose a case that created disruptive innovation in its business model, rather than with develop of products. The idea behind is to show how new companies adapt quickly and learn by doing.
Airbnb, started as an alternative option for people looking for accommodation during events or seminars in 2007. After an unexpected success and being confident of having a good business idea, the owners found financing to relaunch their site in 2009. This time, offering a more general service extended to tourists. Since then, Airbnb has become a good option that balance economy and comfort (Guttentag 2014).
This peer-to-peer accommodation works thanks to the technology that enables hosts and guests with the possibility of verifying each other identity to establish trust (Guttentag 2014). After this new model was proved to be successful, many other similar have been created. It is in the moment when competitors are arriving, when a company must show its innovation capacity.
Airbnb is offering new services, as the promotion of accommodation for business trips, creating a culture of diversity and acceptance (Beer 2017) and facilitate volunteers and refugees a platform to create connections and find new places to live (Reader 2017). These innovative ideas seed an environment of togetherness and collectiveness proper to expand Airbnb business model as “Network Orchestrator”, which has been proved to create more value, higher annual growth rate and profit margin (Libert et al. 2014).
3 Enhancements in innovation projects
Project management academics in their tireless work of improving current practices and increase the odds of project success, have presented numerous and novel ideas to deal with the constraints mentions in section 1.2. In this section, we show a selection of them with a focus in innovation management.
Project managers might still consider projects as isolated entities and are planning and designing them under a rational perspective using operative tools suitable for more low uncertain activities without considering that they are the means to accomplish strategical goals and their management requires a holistic view of the organization (Kapsali 2011).
Due to these boundaries of projects, strict change management, separation of project managers between decision makers, some out-of-the box techniques have come into use to give some flexibility to the systematic, rational and logical project management theory and its shortcomings.
Finding a balance between formalization and flexibility in different kind of projects depends on their levels of uncertainty and communication complexity (Kapsali 2011).
In some industries, like Software Development, the implementation of agile project management has become a trend as an alternative to traditional approaches. Agile project management is based on three basic realities: short time between planning and execution, planning cannot contain all the details and the indispensable necessity of creativity and learning (Dybå et al. 2014).
More recent, design thinking has been introduced to management science as a paradigm broker. When lack of information impedes the application of science, design can be a great tool to understand and solve problems. In project management arena, exploration phase, stakeholder management, project strategy and reuse of knowledge have been identified as potential processes where design thinking tools (visual or narrative elements, user oriented approach, collaborative work, prototyping and field experiments) could contribute (Ben Mahmoud-Jouini et al. 2016).
Scope creep is defined as “The uncontrolled expansion to project or product scope without adjustments to time, cost, and resources.” (Project Management Institute 2013). The PMBOK guide also suggests as best practice the creation of a scope management plan, create a WBS (Work Breakdown Structure), which is the main ingredient to build the schedule, budget, and identify risks. It is clearly stated that as project managers we are supposed to “reduce the risk of scope creep” (Project Management Institute 2013).
Analysing these efforts, we find that they are directed to the decrease in control in the scope or in other words, flexibilization of change management. To manage an always changing scope without losing track of cost and time dimensions, improvement of communications and tools of simulation or prototyping naturally will come into the picture.
This would seem as a paradox, on one hand scope is the building block of the project, and on the other that might create a limitation to develop innovation and promote learning within the project boundaries.
4 Discussion
The purpose of this paper is to emphasize the importance of innovation and ways to provide fuel to keep it up and running. In today’s fast moving world, if firms do not consider innovation in the prime game or goals, they are likely to turn obsolete and diminish to a point. There have been some great success stories in the past but not to forget the failure stories which costed the companies big time and turned into nightmares. For instance, Kodak not understanding the market and its trend did not consider it important to turn digital and introduce a new segment with equal importance to the conventional cameras and films ended up losing market share and lost a lot of money and face. If ever it was the case, today is the time to cease the moment and integrate the success mantra of project management with innovation. It is important to understand the fact that innovative ideas cannot be selected or prioritized without having PM processes associated with it.
To give an overall idea of the different tools that we study to create innovative environments (section 1.2) and manage innovative projects (section 2 and 3), we show in the table 2 a summary classified by the challenge or limitation (discussed in section 1.2) in which each tool could be of use:
Shortcomings Level of application Tool/Method
Knowledge sharing
Country, Sector, Company Social Networking
Company Project Management Office
Traditional control and monitoring
Company, Projects Agreed with team indicators
Company, Projects Knowledge redundancy
Company, projects Systems thinking (equifinality)
Company, Projects Agile methodology
Risk-taking avoidance Country, Sector, Company, Project Decentralization of innovation
Company, project Design thinking (Prototyping & Field experiments)
No financial support
Company Innovation measures
Company Diamond model
Table 2. Authors’ classification of proposed tools
These classifications of tools and the ones presented to incentive creativity in section 2 intends to come in handy by project managers and strategy makers.
It is of our special curiosity that innovation or innovative projects seem not to be discussed in the Body of Knowledge of the PMI (Project Management Institute 2013). While the Individual Competence Baseline version 4 (ICB4) consider on competence related with innovation and creativity, called resourcefulness, defined as the “ability to apply various techniques and ways of thinking to defining, prioritizing, finding alternatives for and dealing with or solving challenges or problems” (International Project Management Association (IPMA) 2015). Resourcefulness is seen as necessary to develop creative environments, define strategies, analyse trends and find alternatives, and improve decision-making (International Project Management Association (IPMA) 2015).
We expect that the coming standards practices of project management include more innovative-oriented approaches and that a symbiosis between innovation and project management guide the future of both disciplines.
5 Conclusions
Innovation reminds us of a famous saying, “Rome was not built in a day”. Ideas do not turn into reality overnight. There is a lot of hard toil behind making it a success and game-changer. Various events of the past like, Newton and apple falling from the tree, Edison and the invention of bulb, Tesla and the introduction of alternating currents shout aloud that innovations either evolve slowly or with help of set processes and constant monitoring and controlling of the same. These buzzwords ring a bell and hint the indirect involvement of project management in every simple job that we perform. Then how can there be a pool of innovation without PM concepts. Inclusion of stakeholder management in current version of PMBOK (Project Management Institute 2013), emphasis on change management, seminars and talks on design thinking, ever changing and continuously evolving project management areas indicate that the only thing constant in this globalized world is change.
This leads to another aspect which is integral in driving innovation is having right people and the right place. Human resource management still holds the key to generate ideas and execute the plan. Every industry is looking for unicorns who can generate ideas and then can sell them too. Lot of investment is happening to cultivate the soft skills. Researches are getting carried, papers are getting published to act as a positive catalyst and to support the buzz around project innovativeness.
By the help of this paper, we the authors point towards innovation being a process, innovation being carried out as projects, correlation between innovation and project capability, various set of tools that foster creativity and facilitate idea generation. Further research based on qualitative and quantitative aspects should be performed to support this idea with facts, figures and experiences.
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