2 questions managing change and innovation

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MGMT461Topic6-Implementinginnovations.pptx

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Chapter 2

Innovation & Economics

MGMT 461 Managing Change & Innovation TOPIC 6: Implementing innovations

A/Prof Tatiana Zalan

Where are we in the course?

Foundations:

Introduction to Innovation (T1)

Innovation & Economics (T2)

Developing an

innovation strategy (T3)

Creativity and idea

generation (T4)

Selecting and managing

an innovation portfolio (T5)

Implementing

innovations (T6)

Creating an

innovative culture (T7)

Boosting

innovation

performance (T8)

Funding and fostering innovation (T9)

Platforms & ecosystems (T10)

Innovation & change (T11)

Agenda and objectives

To clarify / explain:

Traditional / Predictive vs agile techniques for project management (PM)

Basic techniques of traditional project management (TPM)

Risk management

Linking customer needs to product design

Managing stakeholders

Managing people and processes in an innovation department

Basic techniques of agile product management

Managing an innovation department

Pizza Hut

7-stage NPD process called the FRPP – the ‘Field Ready Product Process’

Defines the steps that are necessary to develop the recipe, select suppliers, test ‘manufacturability’ and ensure positive customer reactions

Ensures that employees are adequately trained on the new product before its release

Essential to have a reliable but flexible NPD process

Difference between project management and managing innovative projects

Innovation projects tend to start with loosely defined, sometimes even ambiguous objectives that become clearer as the project proceeds. The processes used are more experimental and exploratory and seldom follow strict linear guidelines.

Teams need to be more diverse and have a higher level of trust as they explore new territory where failure is a possibility.

With failure as a built-in possibility, innovation teams are more actively involved with risk management and need to learn to fail fast and fail smart in order to move on to more attractive options.

Innovation projects generally need to be sold to project sponsors and funding committees, a responsibility usually not required from normal project teams.

Source: Wycoff (n.d.)

17–6

Traditional PM versus Agile Methods

Traditional PM Approach (TPM)

Concentrates on thorough, upfront planning of the entire project.

Requires a high degree of predictability to be effective.

Agile Project Management (Agile PM)

Relies on incremental, iterative development cycles to complete less-predictable projects.

Is ideal for exploratory projects in which requirements need to be discovered and new technology tested.

Focuses on active collaboration between the project team and customer representatives.

Project’s phases

Projects are classically considered to have four phases:

The concept phase – the Ideas and Selection Phase of the Pentathlon; ideally ends with all commercial and technical uncertainties removed, so that it can proceed to the next stage without risk of failure

The design phase – sometimes referred to as “fuzzy front end” (often ill done and takes too long)

The planning phase

The implementation phase

Types of Traditional PM Approaches

(with application to software development)

Linear (aka Waterfall)

Originated in construction and manufacturing industries, over a third of software developers still use it

Is completed in order (sequentially) e.g. Scope to Plan to Launch to Monitor and Control and then to Project Closeout.

My First Template

Critical Path Method

CPM is a mathematically based algorithm for scheduling a set of project activities. The essential technique for using CPM is to construct a model of the project that includes the following:

A list of all activities required to complete the project,

The dependencies between the activities, and

The estimate of time (duration) that each activity will take to completion.

Using these values, CPM usually calculates

the longest path of planned activities to the end of the project,

and the earliest and latest points that each activity can start and finish without making the project longer.

This process determines which activities are “critical” (i.e., on the longest path) and which have “total float” (i.e., can be delayed without making the project longer).

My First Template

Critical Path Method

My First Template

Project Triple Constraint

Scope goals:

What work will be done?

Time goals:

How long should it take to complete?

Cost goals:

What should it cost?

Is it what the customer wanted ?

GOALS ARE LINKED

Monitor and Control

Risk

Deliver On Time and within Budget

*** Project must satisfy sponsor, client and major stakeholders to ensure future projects ***

Quality

3Pillars Asia Pacific

NCVER Project Management Principles

November 2010

Project Tradeoffs

Issue	Reduction in project profit
Product introduced 6 months late	31%
Quality problems reduce selling price by 10%	15%
Compatibility problems reduce sales volume by 10%	4%
10% product cost excess	4%
30% development project budget overrun	2 %

Assumes market growing at 20% a year with price fall 12% a year

Timeliness is usually the most important factor in NPD.

Five elements in TPM essential to project success

Clear and precise aims

A breakdown of the work into sub-tasks

A schedule – all task are undertaken in the right order and at the right times

A resource plan to ensure that people and facilities are available

Active management of stakeholders

Not every aspect of the project must, or can, be specified from the start. However, every innovation project should at least have a clear project charter.

Full specifications may require time and study to complete but it is vital to ensure that they are completed as quickly as possible.

Project Aims

Clear project aims are essential.

For new products:

The key element is the product specification,

But, related tasks (Manufacturing, Sales, Procurement etc.) must also be specified

Key aspects must be clear from the start

Every project should have a project charter

a one-page brief that sets out the purpose and key objectives of the project – i.e., the elements that are essential to success.

Not every aspect of the project must, or can, be specified from the start. However, every innovation project should at least have a clear project charter.

Full specifications may require time and study to complete but it is vital to ensure that they are completed as quickly as possible.

Planning and work breakdown

The first step in planning : break down the work into packages with deliverables whose completion can be tracked

The next requirement is a schedule of when the tasks are to be done.

Next, the requirements for various resources can be assessed  The Resource Plan

The Resource Plan ensures that resources (especially people) are not overloaded

Without step 1, we cannot estimate the time or resources required.

2. Work Breakdown Structure

Project

Main Task 3

(eg marketing)

Main Task 2

(eg implementation)

MainTask 1

(eg design)

Task

Reviewing the WBS (work breakdown structure) is helpful in promoting teamwork.

The personnel required can now be identified

The Critical Path shows the sequence of jobs that define the time to complete the project.

Managing risks

The key risks must be identified and plans put in place to resolve the major ones early (particularly those that may threaten the viability of the project).

A list of risks is the starting point.

Failure Mode and Effect Analysis (FMEA):

can be used to prioritize project risks

Takes into account:

the risks’ likelihood and severity;

the danger that they will not be detected and corrected in time

https://www.youtube.com/watch?v=gogQLQNrDds&feature= youtu.be

Innovation projects may face high levels of uncertainty.

Developing a list of risks: People may be unwilling to express their concerns openly so it may be helpful to use an outside facilitator to collect and clarify them.

Failure Mode and Effect Analysis or FMEA was originally developed for assessing product reliability and can be used to prioritise project risks, taking account of their likelihood and severity; and the risk that they will not be detected and corrected in time (next slide)

FMEA Process

Start with the process map

For each step, brainstorm potential failure modes and effects

Determine the potential causes to each failure mode

Evaluate current controls

Determine severity

Determine likelihood of occurrence

Determine detectability

Determine RPN

Identify actions

FMEA Applied to a Supermarket Checkout Process (assigned on a scale of 1-10)

Failure mode	Likelihood	Severity of impact	Failure to detect	Risk Priority Score	Action
No bar code on product	5	2	4	40	Review process. Consider reward for detection
Bar code reader fails	1	2	1	2
Product wrongly recorded/priced in computer system	3	8	6	144	Special project required
Item not on computer	5	2	1	10
Assistant enters same item twice	2	8	7	112	Investigate software prompt.
Assistant fails to enter item	2	2	9	36	Training
Out of bags	4	8	1	32	Plenty of spares
Item dropped or broken	6	6	1	36	Review flooring

Every part of the project is assessed in detail to determine all the was in which it might fail.

Each failure mode is ascribed a score of 1 – 10, according to how likely it is to happen.

A further score of 1-10 is given to the severity of the impact the failure would have if it happened. Safety issues are usually assigned a maximum score.

A 3rd score is used to indicate the likelihood the failure will not be detected (or corrected in time).

The Risk priority score is computed multiplying the 3 scores. - It gives an overall indication of the risk posed by each element.

Table7.4 above illustrates this analysis applied to the checkout process at a supermarket.

FMEA

Cause & Effect Diagram

Fault Tree Analysis

Bottoms-up approach to failure analysis

Systematic method for identifying all the potential failure modes of a process or product

Creates prioritized ranking of failure modes within a system

Examines a certain failure mode or event and identifies all the possible causes

Causes are grouped into several logical categories

Top-down approach to failure analysis

Starting point is a failure or “undesired state”

Drill down into lower level events leading up to the undesired state

Similar to the 5 Why’s method

FMEA and other risk analysis tools

Linking Customer Needs to Product Features – Quality Function Deployment (QFD)

Identify customer wants / hidden needs

Identify how the good/service will satisfy customer wants

Relate customer wants to product hows

Identify relationships between the firm’s hows

Develop importance ratings

Evaluate competing products

Compare performance to desirable technical attributes

The overall structure is shown in the next slide and analysed in detail in the next 3 slides

Customer needs and importance ratings

Specification

Interaction

matrix

Specification

priority scores

Conflicts

QFD: “The House of Quality”

Identified through empathic design, lead user technique, observation, etc.

Central QFD Interaction Matrix

The Needs may be given different weights.

Features specified for the service are shown on the top.

The features’ impact on achieving the customer Needs is shown by 1, 2 or 3 stars (“impact”).

The relative importance of the Features is found by multiplying the impact score by the weighting for each Need and adding the results.

Outcomes of the analysis:

The most important features (with most scores) must be given priority in the design stage

Those with low scores are candidates for elimination.

The impact scores are usually chosen to be non-linear: 1 star=1; 2 stars= 3; 3 stars=9.

Reliable 7

Daily Delivery 10

Mail not damaged 9

Mail can be diverted 5

Arrangements for absence 4

Low cost 6

Local distribution depots

Staff quality + incentives

Local transport

Address reading system

Sorting process

Customer profile info.

Low cost

***

100

Central QFD Matrix: Illustrating a Postal Delivery Service

* = 1

** = 3

*** = 9

The Needs may be given different weightings (depending on features: basic, performance, delighters)

Features specified for the service are shown on the top

The features’ impact on achieving the customer Needs is shown by 1, 2 or 3 stars.

The relative importance of the Features is found by multiplying the impact score by the weighting for each Need and adding the results.

The impact scores are usually chosen to be non-linear: 1 star=1; 2 stars= 3; 3 stars=9.

The “Roof”: Conflict between Features

Local distribution depots

Staff quality + incentives

Local transport

Address reading system

Sorting process

Customer profile info.

Low cost

The “roof” shows where there are unresolved conflicts between desirable features

For example:

It may not be possible to install address-reading equipment in local depots

holding customer profile information may conflict with the need for low cost.

These conflicts show where innovative new ideas are required.

The “roof” shows where there are unresolved conflicts between desirable features

For example:

It may not be possible to install address-reading equipment in local depots

holding customer profile information may conflict with the need for low cost.

These conflicts show where innovative new ideas are required.

For Final: Also review Service blueprinting & Managing stakeholders (p. 246 – 250)!!!

Element	Key Questions to Ask
The value of the service	What is the customer willing to pay for? What value does the customer gain? What hidden and unsatisfied customer needs are there? Does the customer have to invest too much time or resources to receive the value?
The form and function of the service	What are the key steps in the delivery of the service? What does the service blueprint look like? What opportunities are there to streamline (remove stages that are not perceived as value-adding)? What opportunities are there to add stages that add value?
The nature of the service experience	What are the key steps in which the experience occurs? What is perceived as negative about the experience with current services? How are competitors’ services perceived?
The service outcomes	What tangible and intangible outcomes are there? Are the outcomes clear and tangible? What additional outcomes would be appreciated? How can a superior customer benefit be provided?

Service Concept Writing short descriptions of the service

Service Blueprint for Consultancy Services A flow diagram of critical interactions between the service provider and the customer

Can be combined with observation / ethnography to arrive at the ‘moment of truth’

The blueprint can be discussed with the customers

Roles exist in every project, examples include the following

1. Project Sponsor / Management : authorising the project at the start and accepting project completion.

2. Project Manager / Project Lead : developing the roadmap of where to go and how, monitoring and control

3. Project Team: executing and implementing the tasks on the project plan or task list

4. Project receivers / Users (stakeholders) / Functional leads: providing input into scope, checking and testing deliverables including final project

Quality and Project Boards: stage gate approvals and accepting project.

6. Vendors, suppliers, contractors and sub-contractors assist with project implementation

Project Stakeholders and Roles

3Pillars Asia Pacific

NCVER Project Management Principles

November 2010

Managing Stakeholders – Stakeholder Mapping All significant innovations involve ‘disruption’ of the status quo, so individuals may be resistant to change – need to gain their understanding and support

Dark Lords Keep satisfied	Key Players Inform Involve Consult
Bystanders Mostly ignore	Spectators Inform

Interest

Power

High

Low

Adapted from Johnson and Scholes

Key players - High power, interested people: these are the people you must fully engage and make the greatest efforts to satisfy.

Dark lords - High power, less interested people: put enough work in with these people to keep them satisfied, but not so much that they become bored with your message.

Spectators - Low power, interested people: keep these people adequately informed, and talk to them to ensure that no major issues are arising. These people can often be very helpful with the detail of your project.

Bystanders - Low power, less interested people: again, monitor these people, but do not bore them with excessive communication.

Stakeholder categories

3Pillars Asia Pacific

NCVER Project Management Principles

November 2010

Adapting to Change – a need for new approach?

More and more projects have requirements that are subject to change as the project progresses, sometimes to keep up with the market conditions.

In these cases, with TPM approach, is not possible to take full advantage of the opportunities that may arise.

Projects associated with high level of uncertainty (such as research and development, software development), or in highly volatile industries (such as IT or oil and gas industry), can benefit from alternative (Agile PM or other) approach.

My First Template

Agile PM

"Agility is the ability to both create and respond to change in order to profit in a turbulent business environment. Agility is the ability to balance flexibility and stability." –Highsmith, 2002

Traditional Project Management versus Agile Project Management

Traditional	Agile
Design up front	Continuous design
Fixed scope	Flexible
Deliverables	Features/requirements
Freeze design as early as possible	Freeze design as late as possible
Low uncertainty	High uncertainty
Avoid change	Embrace change
Low customer interaction	High customer interaction
Conventional project teams	Self-organized project teams

17–34

Agile Project Management

Agile PM

Is related to the rolling wave planning and scheduling project methodology.

Uses iterations (“time boxes”) to develop a workable product that satisfies the customer and other key stakeholders.

Stakeholders and customers review progress and re-evaluate priorities to ensure alignment with customer needs and company goals.

Adjustments are made and a different iterative cycle begins that subsumes the work of the previous iterations and adds new capabilities to the evolving product

https ://www.youtube.com/watch?v= DvBKevrItcc

https://www.youtube.com/watch?v=- UUrLxNBK_g -Scrum at Microsoft

When Scrum is used

17–36

Advantages of Agile PM:

Useful in developing critical breakthrough technology or defining essential features

Continuous integration, verification, and validation of the evolving product.

Frequent demonstration of progress to increase the likelihood that the end product will satisfy customer needs.

Early detection of defects and problems.

17–37

Popular Agile PM Methods

Agile PM Methods

Crystal Clear

RUP (Rational Unified Process)

Dynamic Systems Development Method (DSDM)

Scrum

Extreme Programming

Agile Modeling

Rapid Product Development (PRD)

Lean Development

17–38

Agile PM in Action: Scrum

Scrum Methodology

Is a holistic approach for use by a cross-functional team collaborating to develop a new product.

Defines product features as deliverables and prioritizes them by their perceived highest value to the customer.

Re-evaluates priorities after each iteration (sprint) to produce fully functional features.

Has four phases: analysis, design, build, test

17–39

Key Roles and Responsibilities in the Scrum Process

Product Owner

Acts on behalf of customers to represent their interests.

Development Team

Is a team of five-nine people with cross-functional skill sets is responsible for delivering the product.

Scrum Master (aka Project Manager)

Facilitates scrum process and resolves impediments at the team and organization level by acting as a buffer between the team and outside interference.

Scrum overview

Scrum roles

Who is using Scrum – by industry

17–43

Limitations and Concerns of Agile PM

It does not satisfy top management’s need for budget, scope, and schedule control.

Its principles of self-organization and close collaboration can be incompatible with corporate cultures.

Its methods appear to work best on small projects that require only five-nine dedicated team members to complete the work.

It requires active customer involvement and cooperation.

Cultural aspects of Agile PM - Values

Commitment – Be willing to commit to a goal. Scrum provides people all the authority they need to meet their commitments.

Focus – Do your job. Focus all of your efforts and skills on doing the work that you have committed to doing. Don’t worry about anything else.

Openness – Keep everything about the project visible to every one

Respect – Individuals are shaped by their background, and their experiences. It is important to respect the different people who comprise a team.

Courage – Have the courage to commit, to act, to be open, and to expect respect.

Managing an Innovation Department

NPD Reviews

All innovation projects need periodic formal reviews

to check they are proceeding to plan

and to introduce changes if necessary

Most companies have a staged process for handling new products.

This consists of a series of standardised review Gates at which all aspects of the innovation (not just the product design) are reviewed.

This is a vital management tool and develops in time to embody the learning of the organisation.

BUT managers must resit the temptation to add too much complexity, or the process may become to be seen as unnecessary bureaucracy

A key role of phase-gate process is to prevent the projects from rolling steadily forward when they actually contain serious problems not addressed and perhaps not fully acknowledged.

Phase review meetings: Require a formal & objective review of the progress

Serves to identify problems and plan the next steps

Gives management the opportunity to update their understanding of the project & its effects on the wider organization

Give an opportunity to review the environment of the project to check whether there have been any changes that might affect its viability

They are formal decision points: if all is well, formal approval is given to go on to the next phase; if not, the project is stopped or at least delayed until the deficiencies are corrected.

Acquire additional information and formulate into:

Prelim. Market Assessment

Prelim. Technology Assessment

Project Plan

Business Plan

Project Management Manual

1. Proposal

6. Launch

5. Validation

4.Development

3. Investigation

2. Scoping

Stage

New product or product/ process development idea

Proposal originator draws up Business Opportunity Proposal

Activities

Compile MRS and place under issue change control

Compile PRS and place under issue change control

Complete Market Assessment

Complete Technology Assessment

Complete Design Documentation including Bill of Materials

Carry out System Test to show design meets PRS

Compile Technical Publications, Manufacturing Plan, Launch Plan and Validation Plan

Carry out validation to show that product meets MRS and that processes are capable

Monitor project performance against key performance indicators

Identify outstanding support issues

Review Risk Assessment and Budget, detail Project Plan for next phase, review Business Plan assumptions

Common Stage Activities

1. Proposal Review

6. Project Review

5. Pre-launch Review

4. Development Review

3. Investigation

Review

2. Project Start-up Review

Gate

Have required activities and documentation been completed satisfactorily? Does proposal meet

following criteria: commercial success, technical viability, fit with company strategy, fit with available resources

Go/kill/recycle/ delay decision

Use of Risk- Attractiveness Model

Identify information required to make go/kill decision and plan to acquire this

Additional activities

Allocate resources or stack

Ensure all new technologies have been acquired and principles proven

All business areas prepared to have product and processes validated

All business areas prepared for launch

Plan for Product Handover

Disseminate key learning points

Update PCP

Agreed deliverables, attendees and date for next PCP gate

Updated PCP Documentation in Project Management Manual

Common Gate Outputs

Stage Gate Process for New Product Development

The activities expected in each phase are summarized in the upper section.

The scope of the reviews at each gate are shown in summary below.

Helpful to have reviews performed by independent peer –reviewers not affiliated with the project.  a fresh perspective

Post-Project Reviews

Project members discuss how the project was conducted and what could have been improved.

Key points to consider when conducting a PPR:

Timing

Learning from success and failure

Learning at different levels

Dissemination of results, etc.

Every innovation management process should include Post Project Reviews (PPR)

Timing: must be held relatively soon after project completion

Learning from success & failure: both provide valuable lessons

Learning at different levels: all aspects of the project should be reviewed

Dissemination: key findings must be efficiently disseminated and available when needed/relevant for other projects.

Stay clear of reports. Instead opt for something more user-friendly (brief video, short checklist for each gate to remind people of problems to avoid, etc.)

Summary

In implementing innovations project management techniques are vital but must be augmented with special processes for managing uncertainty and learning.

Formal and careful risk appraisal is vital.

TPM techniques are more suited to problems with a historical precedent; agile PM techniques are best suited for truly novel products.

Care must be taken to manage all stakeholders who may be affected by the project.

A disciplined management process with clear review points (e.g. “Stage gate”) is required.

Summary

House of Quality Example

Your team has been charged with designing a new camera for Great Cameras, Inc.

The first action is to construct a House of Quality

House of Quality Example

Customer

importance

rating

(5 = highest)

Lightweight 3

Easy to use 4

Reliable 5

Easy to hold steady 2

Color correction 1

What the customer wants

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

House of Quality Example

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

Low electricity requirements

Aluminum components

Auto focus

Auto exposure

Paint pallet

Ergonomic design

How to Satisfy

Customer Wants

Lightweight 3

Easy to use 4

Reliable 5

Easy to hold steady 2

Color corrections 1

House of Quality Example

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

High relationship

Medium relationship

Low relationship

Relationship matrix

House of Quality Example

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

Low electricity requirements

Aluminum components

Auto focus

Auto exposure

Paint pallet

Ergonomic design

Relationships between the things we can do

House of Quality Example

Weighted rating

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

Lightweight 3

Easy to use 4

Reliable 5

Easy to hold steady 2

Color corrections 1

Our importance ratings 22 9 27 27 32 25

House of Quality Example

Company A

Company B

G P

F G

G P

P P

Lightweight 3

Easy to use 4

Reliable 5

Easy to hold steady 2

Color corrections 1

Our importance ratings 22 5

How well do competing products meet customer wants

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

House of Quality Example

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

Target values

(Technical attributes)

Technical evaluation

Company A 0.7 60% yes 1 ok G

Company B 0.6 50% yes 2 ok F

Us 0.5 75% yes 2 ok G

0.5 A

75%

2’ to ∞

2 circuits

Failure 1 per 10,000

Panel ranking

House of Quality Example

Completed House of Quality

Lightweight 3

Easy to use 4

Reliable 5

Easy to hold steady 2

Color correction 1

Our importance ratings

Low electricity requirements

Aluminum components

Auto focus

Auto exposure

Paint pallet

Ergonomic design

Company A

Company B

G P

F G

G P

P P

Target values

(Technical attributes)

Technical evaluation

Company A 0.7 60% yes 1 ok G

Company B 0.6 50% yes 2 ok F

Us 0.5 75% yes 2 ok G

0.5 A

75%

2’ to ∞

2 circuits

Failure 1 per 10,000

Panel ranking

22 9 27 27 32 25

Physical

Evidence

Customer

Actions

Front

office /

visible

provider

actions

Back

office /

invisible

employee

actions

Support

Processes

Need for

consulting

/ internet

Website

-Design

-Information

-Case studies

-Testimonials

Servicescape

-Parking

-Office

-Staff dress

Phone

discussion

-Connection to

expert

-Needs clarified

-Appointment

Call to

company

Visit to

company

Receive

proposal

Desk research

-New client’s

business

-Sector trends

-Competitors

Preparation of

proposal

-Further analysis

-Customized

offer

Line of interaction

Line of visibility

Line of internal interaction

Databases

Welcome

-Discussion

with consultant

-Tangible value

-Agreed steps

Proposal

-Format

-Content