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10/30/2013
10:49 AM
Chris Potts
Chris Potts
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Innovation Stalled? Bad Culture Defeats Good Strategy

Your project managers' focus on meeting budgets and deadlines may be the root of your innovation stagnation. Here's how to change that culture.

Why do some organizations succeed at innovation more than others? It's because the winners at innovation focus their strategies on the culture it takes to succeed, more than the structure itself.

Innovation leaders know, for example, that copying someone else's organization and process has little real impact if their culture doesn't know how to invest in innovations -- or doesn't want to. Winners know how to diagnose their investment culture, fix those aspects that are broken and resolve cultural paradoxes -- contradictory patterns of behaviour that damage the probability of success.

"Culture eats strategy for breakfast" is a quote attributed to Peter Drucker. Yes, it does. Culture is not the soft stuff. Culture can easily defeat strategies that are unable to turn this principle to their advantage. Culture is often both the toughest part of strategy and the reason a strategy works.

Sustained innovation is rooted in an organization's culture for investing in change and for exploiting the changes they invest in. This is the sweet spot of an innovation strategy. Get this aspect of corporate culture working -- paradox-free -- and your strategy has a fighting chance of success.

[ For more on building a value-driven IT culture, see How To Budget Your Way To Irrelevance. ]

Here's an example of a common cultural paradox, based on working with organizations around the world. People focus on business benefits, costs and return on investment (ROI) when proposing and selecting innovations for investment. Yet, once approved, the innovation is assigned to a project manager who is motivated and rewarded based on a successful implementation, not a successful investment. Delivering the implementation on time, to scope and on budget becomes the primary consideration. Delivering business benefits -- the ROI -- on time and within budget becomes secondary, an afterthought or even forgotten.

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To resolve this particular paradox, organizations need project managers who are focused on, measured by and rewarded for delivering a return on investment. If they aren't, those project managers could forget about ROI in the upfront investment decision -- an approach definitely not recommended. These investment project managers have different motivations and skills from implementation project managers. The two complement each other and represent a constructive conflict of interests. Ultimately, however, for innovations to succeed it's the investment project manager who must prevail.

Introducing investment project managers into a culture that is not used to having them is itself an innovation, and risks them being eaten for breakfast. They need to be backed by a robust board-level strategy. The example above is not the only potential paradox in an organization's culture. There can often be others, requiring different solutions. The organization's ability to deliver value through innovation depends on diagnosing cultural gaps and paradoxes, and fixing them in ways that changes the culture for the better.

Chris Potts is a keynote speaker at the TechTomorrow conference Nov. 14 in Columbus, Ohio.

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timconstan
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timconstan,
User Rank: Apprentice
11/16/2013 | 8:21:38 AM
Great!
Chris, you're the first person that I've heard publicly point out this critical project management paradox: "People focus on business benefits, costs and return on investment (ROI) when proposing and selecting innovations for investment. Yet, once approved, the innovation is assigned to a project manager who is motivated and rewarded based on a successful implementation, not a successful investment."

A software development project usually begins with a promise that the organization will be better off as a result of the project. Typically the business case captures that promise and represents it as the rational for initiating the project.  During the chaos of the project there are many activities and corresponding measurements that can provide the illusion of progress toward fulfilling the promises in the business case, but in fact they do not provide or measure progress toward the promise of the project.



Project success should be measured against the promise of the project.

 
rradina
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rradina,
User Rank: Ninja
11/5/2013 | 3:22:35 PM
re: Innovation Stalled? Bad Culture Defeats Good Strategy
As the article implies, it has to be part of a culture that empowers and rewards more local decision making. So far I've yet to see a formula from the CFO that always results in the correct decision. Of course this also has risk because those close to problems sometimes lose objectivity and formulaic guard rails serve to keep them from stepping off the curb in front of a speeding truck.
moarsauce123
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moarsauce123,
User Rank: Ninja
11/5/2013 | 12:16:08 PM
re: Innovation Stalled? Bad Culture Defeats Good Strategy
The death to good product and quality are arbitrarily set deadlines that are hammered into stone way before scope is clearly defined. Eventually we will tell you what you need to do, but you only get three months...unless we change our minds and cram in more features in less times. After all, we can always cut testing. Two weeks end to end testing is what the government recommends....
konatech
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konatech,
User Rank: Apprentice
11/5/2013 | 1:50:20 AM
re: Innovation Stalled? Bad Culture Defeats Good Strategy
Very good points but how do we get the "powers that be" to understand this concept?
rradina
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rradina,
User Rank: Ninja
11/4/2013 | 1:10:27 PM
re: Innovation Stalled? Bad Culture Defeats Good Strategy
Incentives are nice and I certainly enjoy them too. However, does that really mean there's a better product or more satisfied customers?

Consider the incentive for a highway contractor to finish a job early. Do we really get a better road if they "hurry" and perhaps cut a few corners here and there to get it done before the deadline (like perhaps pouring concrete when the temperature is not optimal)? A recent project in my state comes to mind where a new bridge was built. Instead of being a seamless ribbon of concrete, driving on the bridge it's incredibly rough. When called out by the local media, the state DOT claims the bridge is within their specifications. 10 years later the bridge is a quilt of patch work across its entire span. Remember, the contractor was rewarded for this behavior!

Now consider a sales associate that is rewarded based on the sale. They are motivated to make the sale and far too often imply or even verbally promise things the organization cannot deliver. They get their incentive and proceed to the next sale. The customer ends up angry and disappointed.

Finally consider IT. Time and time again I've witnessed things that could be fixed relatively easy but as with all things, there was some risk that they were bigger and more disruptive than their surface suggested. Despite a judgment call by someone with 30 years of experience in IT, the PM and manager didn't want to even engage the discussion with the business. They had already told the business its out of scope and that it would have to be prioritized later. Meanwhile the CURRENT product isn't meeting expectations and the business could care less about the next feature that's coming. They want the NOW to work properly. However, addressing the issue would have delayed delivery of new features and PMs and managers have incentives that measure on-time delivery.

Hopefully you see a pattern. Incentives require goals. Goals require measurements. The measurements then become paramount.

We've also seen these examples in education where aptitude scores are the measure and folks study to make great scores regardless of true learning.

While I realize incentives, goals and measurements are important because we cannot just wander around behind the little animals as in Jim Stafford's famous song. However, they are not a cure all. That's why it's important to have a culture that is enabled and rewarded to do the right thing even when it's counter to those "measurements".
jries921
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jries921,
User Rank: Ninja
11/2/2013 | 6:06:46 PM
re: Innovation Stalled? Bad Culture Defeats Good Strategy
Maybe it should not just be managers that are rewarded for meeting the actual objectives of a project. Just maybe that should extend to all employees.
RobPreston
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RobPreston,
User Rank: Author
10/31/2013 | 2:48:28 PM
re: Innovation Stalled? Bad Culture Defeats Good Strategy
Another InformationWeek columnist reaches a similar conclusion -- focus on achieving results and outcomes, not just managing cutting costs and meeting deadlines -- but he's looking at things from a budgeting perspective: http://www.informationweek.com...
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