Whilst “googling” on product innovation in preparation for a forthcoming “Why PPM for Innovation?” seminar presentation, I came across the following quote by Jeff Immelt, Chairman and CEO of General Electric:
“Neither idea generation nor execution is as important or as tricky as the filtering process that links the two.”
For me this quote perfectly introduces why organizations, currently dissatisfied with the return from their innovation investment, should look to apply Project and Portfolio Management (PPM) in order to improve the performance of their “innovation machine”.
Rather than downplaying the roles of idea generation and product development execution in the overall innovation process, the quote is in fact promoting the importance of the innovation investment decision making and planning processes.
This fully resonates with what I hear on a day to day basis. Consistently companies tell me that they believe they have achieved a level of maturity in the way they execute product development projects, but really struggle when it comes to determining what to develop. “We’re good at product launches…” one senior RD executive remarked whilst extolling the virtues of his product development organization, but without any hint of irony, gave a perfect illustration of the problems many face “…in fact we probably do too many!”
In my last blog “Idea Management: Feeding the Innovation Machine” (http://community.ca.com/blogs/ppm/archive/2011/03/31/idea-management-feeding-the-innovation-machine.aspx) I highlighted that I’m increasingly getting involved in idea generation initiatives, and identified that a vital step in improving the management of ideas is making portfolio management disciplines inherent to the process – the “filtering process” if you like.
Sure idea generation and execution are important but they are not the be all and end all. To remain competitive and achieve performance goals, businesses must ensure that when it comes to innovation they are not only doing the things in the right way (executing effectively) but are importantly investing in doing the right things (having the right mix of products to provide sustainable financial performance). This is where I believe Project and Portfolio Management (PPM) comes in.
So how can PPM help improve your innovation processes?
Usually when I get asked this question (which is often) I bring out my trusted “Innovation Pyramid” diagram (shown below), this not only enables me to explain where PPM can adds value but also the depth of capability that a PPM solution needs to provide in order to successfully support and enhance an organization’s innovation processes.
The fact is PPM facilitates innovation process improvement in a number of ways. Firstly, a PPM solution enables organizations to manage 3 key aspects of their business in one place, namely the portfolio of product and service offerings, the portfolio of development projects (seeing that all products/services start out as projects) and the resources (both people and money) that support innovation activity.
Secondly, PPM addresses the needs of the various innovation process stakeholders at each level of an organization. Typically I characterize an organization as having 3 layers:
- Operations – responsible for product development project execution. The emphasis being on doing projects right i.e. the quality of project execution, reducing cycle time and lowering the costs associated with product development. Here the focus of PPM is on delivering process efficiency and the appropriate level of control in order to ensure a timely, consistent and predictable delivery to the market.
- Management – is responsible for delivery of the strategy laid down by the business leaders. A PPM solution helps to ensure that the development project portfolio is at all times aligned with corporate strategy, and that the right resources are prioritized on to the highest value opportunities.
- Strategic Planning – where the focus is on optimizing the product portfolio and roadmap. By facilitating product portfolio management processes a PPM solution enables a company to better decide on how to invest and optimize its resources, crucial when looking to increasing sales and market share, and accelerate time to value.
Thirdly, PPM improves decision making – addressing the “tricky filtering process”. Organizations’ do not operate in a vacuum. Success mandates becoming more agile, in order to take advantage of new market trends, adapt better to the competition and the impacts of new legislation. Business leaders must be able to make faster more informed decisions. With the right PPM processes and solution, they will not only have a holistic view of the entire innovation portfolio, including new ideas, current development projects and in-market product performance, in order to support better decision making, but will also be better able to communicate strategy and priorities to all levels of the business.
By bringing together strategic product planning and new product development activities, PPM provides businesses the requisite AGILITY, VISIBILITY and CONTROL to become more effective innovators, whilst avoiding stifling the creative process by not placing a management strait-jacket around it.
In short, through better governance and execution of the Product Portfolio, the right PPM solution enables organizations to prioritize the right opportunities, develop the right products in a timely, consistent and predictable manner, using the right resources in order to grow new product revenues, maximize ROI and ultimately accelerate time to value.
For further information on how CA Technologies can help to optimize your innovation management processes please click here.
Article source: CA PPM Blog