Contents
Importance of Innovation 1
Systemic versus Incremental Innovation 2
Creativity and Innovation 2
All Significant Innovations Are Achieved through Projects 3
Structured, Well-Managed Innovation 4
Steve Jobs, the Computer Mouse, and Innovation through Project Management 4
How DARPA and Google Achieve Significant Innovations 5
What All Executives Must Know about Project Management 6
Project Management versus Operations Management 9
Three Underlying Concepts of Project Management 10
First Concept 10
Second Concept 12
Third Concept 13
These Three Basic Concepts Underlie All of the Policies, Principles, Practices of Project Management 14
The Objectives of Project Management Are Two-Fold 14
Strategic Transformative versus Traditional or Routine Projects 15
Strategic Transformative Programs 16
Project-Driven versus Project-Dependent Enterprises 17
Origins of Projects: The Incubation/Feasibility Phase 18
Post-Project Evaluation Phase 19
The Need for Categorizing Projects and Programs 23
Methods of Project Categorization 24
Strategic Categorization by Market Share and Strategic Intent 25
Project Categorization by Scope and Technology 26
The Project Diamond Model to Distinguish between Projects 26
Categorizing by a Project’s Products and/or Other Results 28
Major and Minor Projects within a Category 29
Project Complexity and Risk 33
Strategic Transformational Projects and Programs 33
“Mega” Projects and Programs 33
Types of Project Portfolios 36
Three Types of Innovation Investments 37
Project Portfolio Management Process 38
The Power of Portfolio Management 39
Published Guides and Standards for Project Portfolio Management 39
Project Portfolio Management Information System Applications 40
The Need for One Integrated System 40
The Chief Projects Officer (CPO) Role 44
Implementation and Evolution of PMOs 44
Alternative Charters for PMOs 45
Problems and Pitfalls with PMOs 47
Assuring Success of PMO Implementation 48
The State of the PMO 2014 49
The Project Manager 52
Project Managers as Senior Executives 53
Project Controls 53
Success Driven Project Management (SDPM) Methodology 54
Evaluating Success in Project Management 56
Project Success and Project Value 59
Why Executives Have Failed to Recognize the Vital Nature of Project Management 61
Executives’ Lack of Understanding of Project Management Is a Primary Cause of Project Failures 62
Project Management Maturity Can Be Viewed from Three Perspectives 66
Importance of Measuring PM Capability Maturity 67
2014 Brazil PM Maturity Research Results 68
Origins of Modern Project Management 71
Project Management Associations, Standards, and Certifications 71
University Degrees in Project Management 73
All Innovations Are Achieved through Projects 75
Project Management Concepts 76
Projects and Programs 77
Project Portfolio Management 78
Project Management Offices (PMOs) 79
Managing Individual Major Projects 79
Demanding Excellence in Project Management 81
Maturity of Organizations in Project Management 81
Development of the Profession of Project Management 82
Project Management Is Now a Vital Capability for All Enterprises Desiring to Innovate 83
Appendix: Project Manager Duties and Responsibilities 85
References 91
About the Authors 103
Preface to the Second Edition
The need for executives and their management teams to recognize the vital capability of sound project, program, and portfolio management and to gain a good understanding of how to achieve excellence in these capabilities has been emphasized in the positive feedback received from readers of the first edition of this book. This second edition has been updated throughout to demonstrate even further business value.
Many articles are available regarding the high failure rate of projects. While there are a number of root causes for failures in all project categories, the authors of this book plus others have come to realize that the primary cause of many project failures is the fact that responsible executives, because of their lack of knowledge in project management, and fail to demand that their managers and staffs properly utilize the well-proven, best practices, processes, systems and tools that are now available in this field.
It is equally important that executives who are project, program, and portfolio sponsors (see Chapters 2 and 4) understand how their knowledge of the concepts presented in this book will contribute to the success of their effort. Executives need to be engaged not only in the important beginning and completion of the work but also to understand how key their support is throughout project and program execution.
The intent of this book is to remedy this situation by providing executives at all levels with the understanding and knowledge they need to demand excellent performance in managing the programs and projects that will achieve both the required innovation and the execution of the strategies for growth and improvement within their enterprises. The book will also be of use to all levels of project management practitioners, as it informs them about the demands that their executives must place on their shoulders.
After presenting the needed understanding of the fundamentals of project, program, and portfolio management in the earlier chapters, Chapter 7 presents 31 demands that executives can and must place on their managers and staffs to achieve excellence in the way their programs and projects are created, selected for funding, planned and executed. In this edition Chapter 7 now also identifies the basic reasons for this lack of executive knowledge about the importance of project management.
As stated in Chapter 8, project-driven enterprises (discussed in Chapter 2) typically have higher project management maturity, capabilities, and project success levels than project-dependent organizations because the former’s very existence depends on selecting the right programs and projects and executing them effectively and efficiently. Excellent project management is vital to the future of these project-driven enterprises, and most Chief Executive Officers (CEOs) of those enterprises have held program and project manager positions during their careers. Their executives fully understand that project management is a core competence for their enterprises.
Preface to the First Edition
Innovations do not just happen. To make them real, all significant innovations today are achieved through projects and programs.
Executives in all business, industrial, governmental, and non-governmental organizations need to fully understand the differences between operational and project management principles and practices to best take advantage of the power of effective project management and thereby lead and manage innovations within their enterprise.
This book seeks to satisfy that need by presenting concise descriptions of (1) the key concepts underlying project and program management, (2) the important characteristics of projects and programs, (3) how they are best governed and managed, and (4) how to determine if the desired benefits have actually been achieved.
It also describes what executives can reasonably demand of the project management discipline and of the executives and managers responsible for that discipline within their organizations.
We do not attempt to go into the details here of project planning, estimating, scheduling, reporting, and control. A typical description of a project manager’s responsibilities for one specific type of project is presented in order to convey the integrative characteristics of that important role in project management.
We hope this book provides executive teams of all shapes and sizes with an increased understanding of what can (and must!) be done to develop, enhance, and support the important innovations within their enterprises. It is only through innovation that significant changes are made, and organizations thrive ahead of consumer demands. Lead. Follow. Or get out of the way!
Chapter 1 Innovations Are Achieved through Projects
Importance of Innovation
Innovation is the process that transforms new ideas into commercial or other value. It is a vital capability in business, entrepreneurship, design, technology of all kinds, health care, engineering, construction, manufacturing, transportation, communications, economics, sociology—and project management.
Innovation means change—something new and improved—in (1) a business or creative process and/or (2) the output or product of a process.
Forward-looking executives want and encourage their managers to be innovative and to continually improve their processes, products, and services.
Innovate or die! In this Digital Age of technological explosion in every field: all types of human organizations must continually innovate to improve and change both their products and services (their reason to exist) and also the ways they operate—their business processes.
Systemic versus Incremental Innovation
Systemic innovation differs from incremental innovation, which can be accomplished within a single firm context or within a discrete project context.
Prieto (2011) points out that “Systemic innovation is that form of innovation that requires ‘multiple specialist firms to change their process in a coordinated fashion.’”*
“Examples of systemic innovation in the engineering and construction industry include:
◾◾ Integrated supply chain management.
◾◾ Prefabrication of building systems.
◾◾ 3D Computer Aided Design (CAD) virtual design and construction tools.
◾◾ Building Information Models (BIMs).
◾◾ Project Finance Initiatives (PFIs) and Public Private Partnerships (PPPs).
◾◾ Modularization.
Many of these are characteristic of successful large programs.”
Prieto refers to systemic innovation in the largest industry in the world, the engineering construction industry. In the United States this industry accounts for 9% of the Gross Domestic Product (GDP).
Systemic innovation is also required in large, multinational companies as well as in large governmental agencies. In smaller organizations systemic innovation can also produce useful results, but it is more likely that incremental innovation is more frequently used in most situations.
Creativity and Innovation
Innovation obviously depends on creative ideas. This book does not explore the sources of new ideas but rather focuses on how to transform those ideas into desirable benefits.As Michael Ray and Rochelle Myers state in the introduction to their 1989 book, Creativity in Business: “One of the main problems in U.S. business today is that there are too many ideas, not too few. Dozens of solutions appear and disappear in chaotic piles of data, crowds of expert opinion, and a jumble of contradictory statistics and reports on every aspect of every issue. The pressure of limited time is increased by indecision and, beneath it all, the nagging suspicion that others will find your efforts insufficient and the results poor.”
All Significant Innovations Are Achieved through Projects
We hope to persuade the reader of this book that this is a valid statement. When that persuasion occurs, then it is obvious that all executives in every kind of human enterprise need to know the characteristics of projects and how best to govern and manage projects, programs, and their portfolios.
Some notable characteristics of innovation are:
◾ The starting point for innovation is the generation of creative ideas. Innovation is the process of taking those ideas to market or to usefulness.
◾ Innovation concerns the search for and the discovery, experimentation, development, imitation, and adoption of new products and services, new processes, and new organizational arrangements.
◾ Innovation is the conversion of knowledge and ideas into a benefit, which may be for commercial use or for the public good; the benefit may be new or improved products, processes, or services.
◾ Innovation is the process that transforms ideas into commercial value.
◾ Innovation = Invention + Exploitation.
