KnowHOWE FRESH THINKING FOR MANAGEMENT Director’s Note It’s always interesting when a research outcome flouts conventional wisdom, teaching us something unexpected and useful. Such were the results of two recent faculty studies into project management, which highlight the kind of fresh thinking we love to include in KnowHowe. Professors Tal Ben-Zvi and Thomas Lechler found when planning a project portfolio, it’s critical to retain a reserve of idle resources at the start. Professor Zvi Aronson found when managers lead several projects concurrently, team culture has less bearing on success than agile managers who instill an organization-wide focus on collaboration. This issue also features two articles by executives, who share valuable experience with internal processes. For ARDEC, Andrei Cernasov describes the IDEA program for taking ideas from early stages to deployment, offering greater detail into a program he discussed at a 2013 roundtable. Meanwhile, Mary Keough and Ryan Hutton explain IBM’s Technology Adoption Program, which encourages community-driven creativity. It’s a deeper look at a concept presented in the 2012 HSATM conference. – Larry Gastwirt HOWE SCHOOL ALLIANCE FOR TECHNOLOGY MANAGEMENT SPRING 2014 VOLUME 17, ISSUE 1 Project Managers Can Boost Value by Building in a Buffer by Tal Ben-Zvi and Thomas Lechler It might sound very basic to say a lack of available resources tends to doom projects. But an examination of why projects miss deadlines and go over budget shows, in a majority of cases, that the problems can be traced back to the planning table. A poor economic climate has forced managers to wear an increasing number of hats as they steer projects from the idea phase to the finished product. To do this, they often must implement as many projects as possible, allocating all the resources they can spare to ensuring the greatest number of opportunities can be addressed. That’s all fine and well — at least, until the unforeseen happens. Suddenly, even minor setbacks cause major backups — projects lack the extra resources to deal with complications and delays, creating a trickledown effect that severely lowers the value produced from the project portfolio. The solution may be as simple as it is unintuitive: In planning projects, managers are better off reserving a bank of idle resources than they are allocating all resources to the portfolio at the start. It A project manager who sets aside resources in the planning phase will have a more valuable portfolio when problems arise. may seem like no way to operate in today’s economy, but in extensive simulation studies, we concluded it’s the best way to ensure a project portfolio stays on time and on budget. Having the buffer of idle resources yields substantially higher value and return on investment, a concept that’s realized when problems crop up. While the buffers prevent the kind of resource diversion that leads to value destruction — both in costs and time — those buffers don’t come without costs of their own. Leaders who install buffers are Continued on next page INSIDE THIS ISSUE When managing multiple projects, it’s the manager, not team culture, that counts ..... Page 3 Having fewer resources doesn’t mean your company can’t prioritize innovation............ Page 4 How IMB TAPped creativity to ensure innovation remains a priority ............................ Page 6 managing project risk by building the costs of additional resources into their budgets, but our research demonstrates those costs are well spent, as the buffer ultimately results in much higher value. In the hypothetical case of no project risk, where future resource requirements are known with certainty, the highest project value is produced, of course, when 100 percent of resources are allocated to every 10,000 KEY No Buffer (100% resource allocation) 8,000 Project Value The chart at right plots value as a function of risk for a simulated portfolio of projects. Risk is represented by the standard deviation of resource requirements. A 0 percent standard deviation represents a case in which resource requirements for every project in the portfolio for each time period are known in advance; a positive standard deviation means resource requirements were not fully known before a project’s implementation, and more resources were needed to satisfy the demand. Obviously, a larger standard deviation means more uncertainty about the demand for resources for each project in each time period. 12,000 6,000 10% Buffer 4,000 2,000 0 0% 5% 10% 15% 20% 25% Risk (standard deviation of resource requirements) project in the portfolio at the start. But in the real world, risk is a given for any project, and value decreases sharply as risk is introduced. Considering the realities in planning projects, we find keeping a 10 percent buffer — allocating resources to 90 percent of the projects — an ideal balance Here’s Howe It all comes down to planning. By reserving 10 percent of resources in the project planning stage, a manager has a ready pool of staffing and money ready to direct at unforeseen delays and problems. This means more work is done on time, as managers don’t need to pull people from one project to another to solve problems — and as a result, cost projections don’t go wildly off schedule. Another benefit to building in a buffer is the discouragement of multitasking. While portfolios with several projects invite employees to multitask, our research found this practice actually damaging to overall value. for maintaining value as risk increases. In addition, when a project gets stuck and needs additional resources, buffers can help plug the demand, allowing for better execution. As a result, fewer projects in the portfolio are delayed, helping increase the overall value of the portfolio. Ultimately, it’s higher-level planning and resource allocation by managers that winds up saving costs and delivering more predictable results, leading to projects that are on time and within budget, and that deliver improved returns on investment. Reference Ben-Zvi, T. and Lechler, T. “Resource Allocation in MultiProject Environments: Planning vs. Execution Strategies.” PICMET 2011. IEEE Xplore Digital Library, 2011. About the Authors Dr. Tal Ben-Zvi is an associate professor and the Project Management program director at the Howe School of Technology Management, Stevens Institute of Technology. Dr. Ben-Zvi conducts research that focuses on innovative decision analysis models. His work has resulted in contributions to various publications, academic journals and conference proceedings. Before joining Stevens, Dr. Ben-Zvi served as the Technology and Logistics Unit head in the Israeli Ministry of Defense Budget Department. Contact: [email protected]. Dr. Thomas G. Lechler is an associate professor at the Howe School of Technology Management, Stevens Institute of Technology. His research interests focus on value creation through innovation, with particular emphasis on the management of projects and the recognition and exploitation of business opportunities. He regularly presents his work at leading international research conferences. His work is published in the leading technology management journals and he has published four books. His research has received several awards, including the PMI Project Management Journal Paper of the Year Award in 2010. Contact: [email protected]. 2 Culture Shock: In Multi-Project Scenarios, Team Norms Have a Limited Impact by Zvi H. Aronson Team culture has long been thought to be an important factor in project success. Turns out, that’s not always the case, especially in the increasingly common case of the manager who is leading numerous projects concurrently. In such cases, it’s the talents and abilities of the manager that may matter most. Despite the increasing prevalence of the multiproject framework at a time when resources are increasingly constrained, empirical evidence on this topic has been limited. In the case of single projects, a strong team culture — the behavioral norms and expectations shared by members of the team — drives the success of the work. However, in multi-project situations — in which managers lead several shorter-duration projects, each with its distinct goals and deadlines, concurrently — team culture has little bearing on success. Instead, the key factors are an organizationwide focus on collaboration and agile managers capable of juggling responsibilities. To explore the effect of a strong team culture in the multi-project setting, we surveyed 124 managers who supervised multiple information systems projects or technology initiatives at firms in the financial services industry. On average, the identified managers had 11 years of experience in leading simultaneous projects, and they typically directed three to six such efforts at any given period. Most of the projects were implemented in less than one year, had a budget under $2 million, and required fewer than 20 team members. The study probed the managers on a range of topics related to organizational and team culture, project leader competencies and team building, as well as project outcomes —duration, cost, customer satisfaction and impact. Following a series of regression analyses using Baron and Kenny’s procedure for testing mediation, we found team culture did not significantly affect success in the multiproject setting. One possible explanation is that the unique characteristics of multi-project environments Multiple project management and success: The relevance of team culture Leader Competencies Project Success Team Culture Organizational Culture Limited effect Significant, direct effect Here’s Howe To improve the success rate of a multi-project portfolio, executives must create a company-wide culture of collaboration that goes beyond the bonds established in individual project teams. Senior managers should set an example by sharing information across initiatives and emphasizing their committment to different projects, to encourage employee buy-in. They should promote cooperation and committment, emphasize customer satisfaction, and offer rewards for company-wide performance. undercut the benefits associated with building a strong team identity. Above all, projects launched in concurrence with others will likely be forced to share stretched resources with unrelated initiatives, and receive less individual attention from managers, all of which make nurturing a culture at the project team level more challenging and, perhaps, less germane. While a strong team culture in such settings was shown to be less useful, efforts to build a culture of collaboration on a company-wide basis were found to have a significant and direct effect on project success. Success in multi-project settings was also reliant on project managers who are flexible, and can adapt to different teams and initiatives easily and swiftly. Managers who can be jacks-of-all-trades are indispensable. Managers in multiple-project contexts must be capable of listening, asking questions, communicating — verbally and in writing — and articulating and handling the information, whether it is technical, legal, administrative or interpersonal in nature. Other qualifications found to be crucial to success include the ability to assemble teams rapidly and to delegate authority when necessary. 3 Reference Aronson, Z.H., Shenhar, A.J. and Patanakul, P. “Managing the Intangible Aspects of a Project: The Affect of Vision, Artifacts and Leader Values on Success in Technology-Driven Projects.” Project Management Journal, 44, 1, 35 – 58, 2013. About the author Dr. Zvi H. Aronson is an affiliate assistant professor in the Howe School of Technology Management, Stevens Institute of Technology. His research interests center on the behavioral aspects of innovation and technology management. His research is focused on the behavioral features of project leader and team performance, and on the role played by culture in project-based contexts. His work has been published in many journals, conference proceedings and books. He has received the Howe School Faculty Oustanding Research Award several times. Contact: [email protected]. An IDEA that can help commercial organizations by Andrei Cernasov put an emphasis on innovation Imagine driving a tank into a modern battlefield. A decade ago or so, it’s not a hard thing to picture. But today’s conflicts are increasingly urban, and defense has shifted to include prevention of not just physical attacks, but cyber warfare. What inspired pride and power in years past has less practical use in war today, and that’s why innovation has always been a top-line concern for the U.S. Army. Today’s Army also is being forced to do more with less. U.S. defense spending has dropped three consecutive years amid federal budget pressure, while the commercial market is in the midst of a wave of mergers, acquisitions, divestitures and commercial spinoffs. That means fewer resources to innovate both in the military and the private sector — an unacceptable risk to the Army, which relies upon technological superiority. But by creating a strategy to foster innovation, ARDEC — the U.S. Army Armaments Research, Development and Engineering Center, where most of the equipment used by the Army has been designed, built and tested — has added 300 ideas to its pipeline, nearly doubled its patent output and is seeding a growing number of innovation projects. And it’s a strategy that can work for smaller companies with fewer R&D resources, too. Five years ago, ARDEC created IDEA — Innovative Developments Everyday at ARDEC — with a modest budget and a mission to create a culture of innovation that would permeate every aspect of the organization. The strong preliminary results show that the right support network, training and rewards can help foster innovation and bring ideas from the early stages to development and deployment. Being able to innovate consistently is a requirement in today’s Army, which like many companies is forced to accomplish more with fewer resources. The efforts of those champions are supported by “innovation catalysts,” who protect the interests of inventors and innovators. Catalysts are well versed in the intricacies of the enterprise, so they can effectively guide inventors from concept to funding. The decision of which ideas become projects is the result of interactions between the inventors and their catalysts on one side, and the innovation champions on the other. Key to those interactions is the first step in the ideation process: The creation of a secure ideas database that allows idea ownership to be tracked. This is a critical step to fostering collaboration while still recognizing an inventor’s work, leading to more productive idea exchanges. When an IDEA started with the creation of its own idea is sufficiently evolved, it is evaluated office, which allowed innovators to have a by a subject matter expert and, from there, dedicated place — away from their workspaces an idea evaluation committee, which can — to generate ideas, do data searches or recommend the idea be patented. IDEA other innovation activities. Three senior-level recognized early on that some ideas — managers joined the team on a part-time especially of a highly technical nature, basis; those managers became “innovation or else very dependent on customer champions” who represented the interests preference — might need additional and priorities of IDEA, and defended it from vetting. That led to the creation of five naysayers who wanted its funds reallocated. innovation hubs, where the inventor can 4 gather information, build prototypes or conduct focus groups. IDEA also supports innovation and inventors in other key ways: Training. The program emphasizes both how inventors can think innovatively and how managers should change their approach when running innovative, as opposed to routine, projects. Eight-hour training courses are available in a number of topics and emphasize lesser-known, but valuable, techniques. Metrics. IDEA tracks typical benchmarks, like resources used and patents received, but also the number of ideas entered in the database and the rate of their conversion into projects. The goal is to eventually add a new metric — the percentage of ideas converted into deployed systems. Rewards. Recognition is a key part of the equation, as inventors and innovators tend to contribute more to the advancement of the organization than other employees. At ARDEC, inventors receive a monetary award for each patent applied for and for each patent they receive, as well as recognition from peers and managers. Workshops. The Osborne brainstorming process (idea quantity over quality, deferred judgment, encouragement of unusual ideas, combination and spiral improvement of ideas) can be useful in innovation, but is less useful at ST&E (science, technology and engineering) organizations like ARDEC. Instead, problem-solving workshops are conducted in “focals,” deeply immersive ideation session that focus on opportunities. The IDEA program is executed via three main processes: idea management, described earlier; inventor support; and invention on demand. The inventor support process starts with the assignment of catalysts to promote promising ideas. With the help of catalysts and innovation champions, the inventor generates a business plan detailing potential clients, development plans and costs for the proposed project. If successful, the funded projects are handed over to project teams, of which the inventor may become a part. The invention on demand process starts with a request-for-innovation call from a high-level manager or a client. The innovation office estimates the mix of talent and resources needed to address the issue, and conducts a series of information sessions, workshops or focals to resolve the problem or exploit the opportunity. IDEA’s success so far has exceeded expectations, and with many companies operating under the same pressures as ARDEC, the good news is it can be replicated at cost-conscious, profit-driven companies in any industry. Many elements described above are optional or scalable: Hubs can be outsourced, managers can be part-time innovation catalysts and innovation-specific classes can be taught by local faculty. The critical components are the office for innovation, a well-maintained ideas database, a senior-level manager to run the program — preferably an experienced innovator — and a strong internal communications program that lets inventors know where to find help. But the most important factor is the continued and longterm support of top management. About the author Dr. Andrei Cernasov is associate director for innovation at ARDEC’s Munitions Engineering and Technology Center. He manages ARDEC’s IDEA program. He holds a B.E.E. from the City College of New York and a Ph.D. in physics from the City University of New York. Cernasov holds 30 patents in hightechnology areas. ARDEC is a Howe School Alliance for Technology Management member. Keeping Alliance Members Ahead of the Digital Curve Alliance members probably didn’t read a recent New York Times report on bolstering smartphones’ defenses against breaches. The reason? They’d heard it in a roundtable meeting six years ago, before media warnings about BYOD, or bring your own device. It’s just one example of HSATM members gaining insight into important issues before they become part of conventional wisdom. At that September 2008 roundtable, Don Gulliksen, senior scientist and policy adviser for Johnson Technology Systems, outlined the coming BYOD and social networking revolutions, and raised the challenges connected with deploying social nets in business. 5 A participant at that roundtable remembered the “incredulous reaction” from participants: “Business life as we knew it was about to change, and many found that hard to believe. What a great role for the roundtables to have taken on over the years — shocking our participants into new ways of thinking about the future of their businesses.” A Way to Put Innovation on TAP What if your IT department encouraged you to create and share your own software and technology on your corporate network? Calling that a role reversal would be an understatement. As gatekeepers against countless digital threats, managers cringe when it comes to the consumerization of IT — the technical term for when employees ask about putting Dropbox on a company PC or connecting an iPad to the network. But almost 10 years ago, executives at IBM saw an opportunity in opening the walled garden of their network to allow employees to write their own software. And today, the Technology Adoption Program — better known as TAP — has created a community that’s improved technology adoption, encouraged employees to think innovatively about how they work with technology and provided insight into future market trends. And it can be replicated at just about any company that’s established a culture of innovation. How it works TAP is a network of IBM employees consisting of software developers and early adopters, all overseen by a community manager. The creators write software to help manage any number of internal processes, Some of the apps TAP has fostered include instant messaging software and file management tools. from instant messaging software to tools that manage file sharing. Much like consumers on an app store, the early adopters can download software they find interesting, then rate it, offer suggestions and recommend it to others in the company. Developers then refine their software as they go. by Mary Keough and Ryan J. Hutton Most of the technology developed in this community is popular with a few hundred users for a few months, then sunsets, so the IT department doesn’t have to develop systems to support it. But some successful longer-lasting initiatives have been born out of TAP, too. Sametime, IBM’s internal messaging client, has its roots as a TAP app, and four other tools have been absorbed and expanded by the company’s Connections unit, including technology that shares online bookmarks and one creating a more social corporate directory that allows for internal networking. Of the thousands of functional apps built on TAP, only a handful have been runaway successes. But even software that isn’t a home run isn’t a failure — given how expensive technology projects are, it’s helpful to identify projects that don’t work or aren’t useful before significant resources are invested in them. Why it works How does this spur innovation? A system like TAP gets employees thinking less about problems with the technology in the workplace and more about the opportunities that might exist. Such entrepreneurial thinking is useful at a big company like IBM, but it’s critical for all companies to have employees who can think about how customers engage with their products. Here’s Howe Whether a program like TAP can work in your office depends a lot on your culture. Some questions to ask yourself before starting: Does your top executive care about innovation? Sometimes, the hard, honest question to this answer is no. That’s a larger problem TAP won’t solve — and it won’t succeed in such a company, either. How tech-driven are employees? If they want to use their own iPhones and propose specialized software to use on the job, that’s a good start. If there’s hesitation to adopt new technology introduced by the IT department, you won’t get many takers. How will the community be built? If you build it, they might come — but they won’t stay. You’ll need buy-in from the top, a dedicated manager to encourage creation and adoption of apps, and a feedback system that allows apps to be refined and shared. 6 The important thing about a program like TAP is that it can’t work in a vacuum. IBM was able to encourage this kind of creative thinking because innovation is a core value of the company, one it stresses from the top down. That means the message of moving quickly, taking calculated risks and thinking entrepreneurially has to be emphasized from new-hire orientation through messages from the CEO and interaction with managers. Also critical is a collaborative atmosphere, with the tools and culture to ensure cooperation among employees — which also provides a place for employees to discover the tools available through TAP. A good understanding of employee behaviors also is key. At TAP, IBM has eschewed a formal permission process that might slacken interest; employees fill out a single sheet of paperwork to enter the program. Furthermore, employees have high expectations of how technology should perform at work. They bring their own devices to the job and request access to specialized software that improves their capabilities in and out of the office. At the same time, IBM employees realize TAP is beta software — they’re willing to point out bugs and work together to suggest fixes, and don’t expect the kind of polish a professional software suite would have. Encouraging employees to think entrepreneurially about their challenges with technology at work also plays a role in retention of key talent. Star employees who may have aspirations of leaving to launch their own businesses may instead direct their energies to “startup” problems like those that TAP encourages solutions to. Making it work The right tooling is an essential part of what makes a program like TAP successful. And companies with limited technical budgets won’t be intimidated by the investment — all it takes is a centralized “sandbox” allowing software developers to bring their idea to life on a virtual machine before sharing it. Recognition is important for innovation, and that’s true of a program like TAP, also. While certificates or other awards are useful in providing recognition, the people creating the technology say the rating and feedback system used by their colleagues is more valuable. It gives creators a chance to understand the demands of their audience, engage with people using the tools and think in a more nuanced way about the problem they are trying to solve. That plays into the importance of the network TAP has fostered, also. Community members from around the globe interact to recommend apps, features, fixes and the like, and thanks to internal communications — like videos and newsletters — that development community is able to thrive. The rapid march of technology means understanding and delivering what your employees need is not enough. A company like IBM may not have a crystal ball, but by observing and adjusting to the needs demonstrated by the technologies in TAP, it can get a sense of where current trends are headed. Whether they come from an official CIO project, a research team, an early IBM product version or an employee during spare time, such technologies provide immediate value on TAP, and are vetted out efficiently in the program. About the authors Mary Keough leads innovation programs for IBM’s CIO office, including the Technology Adoption Program, Innovation Hubs and IBM ifundIT — IBM’s internal crowdfunding platform. These programs offer IBM employees around the globe the opportunity to drive innovation and change across the company. Mary has a long history of supporting innovation at IBM, including the creation of Extreme Blue, IBM’s worldwide internship program offering top computer science, engineering and business students the opportunity to work on innovative projects. Contact: [email protected]. Alliance Firms Can Seek Aid from Howe’s MBA Students Distinguishing the value of an MBA program isn’t always easy, especially when virtually every business school offers one. But at the Howe School of Technology Management, the MBA program’s continual refinement has led to the creation of a Field Consulting Program that provides companies with help in solving a problem. The program is just the latest way HSATM partner organizations can tap the technologyfocused training that’s at the core of every Stevens program. And the program is offered to Alliance members at a significant discount. Students are wrapping up a project for Pershing LLC, which provides services to financial organizations. The company was eager to gain insight from students as to how its business might be affected by the rise of computer-enabled systems that use intelligent algorithms to automatically manage an individual’s finances. Findings were to be presented later in May, but so far, Rich Bingham, a director in Pershing’s Global Strategy, Marketing and Communication Group, is pleased. The students, he said, “are very engaged, very energetic. They ask a lot of good questions.” “We’ve long recognized Stevens as one of the better colleges for producing people who understand innovation,” Bingham said. Dr. Murrae Bowden, the MBA program director at the Howe School, said the Stevens MBA is unlike “vanilla” programs at other universities. Ryan J. Hutton supports online publishers’ use of ad products at Google. Prior to joining Google, he worked as program manager of TAP at IBM. He holds a BA in communication from Marist College. Contact: [email protected]. “We recognize that technology is an important component in any business, and have tailored our core to include courses on technology and innovation management, as well as entrepreneurship,” Bowden said. The TAP model was presented at the 2012 Howe School Alliance for Technology Management Conference, in Hoboken. 7 HOWE SCHOOL ALLIANCE FOR TECHNOLOGY MANAGEMENT 22 Years of Sharing Best Practices UPCOMING EVENTS HSATM Director Dr. Lawrence Gastwirt HOWE SCHOOL ALLIANCE FOR TECHNOLOGY MANAGEMENT 23rd Annual Conference The Emergence of Social Data Analytics as a Powerful Driver of Innovation Thursday, June 26, 2014, 8:45 a.m.-4:45 p.m. (Continental breakfast 8:00-8:45) Director, Mgt. Technology Transfer Dr. Lemuel Tarshis Babbio Center, Stevens Institute of Technology, Hoboken, NJ Organizations that don’t see beyond the communication opportunities of social media like Twitter and Facebook — regarding them simply as platforms for locating and interacting with customers, and for stimulating collaboration among employees — are missing a major possibility for advantage. Cutting-edge analytical and statistical techniques are allowing savvy companies to leverage data from social networks to quickly understand what’s influencing the behavior of their customers and to improve decision-making all along the value creation chain — from product development to marketing, competitive analysis, pricing, problem anticipation, fraud detection, enterprise risk management and beyond. This level of analysis means the information derived from social media can directly and quickly drive innovation. That’s the theme of this conference, which will demonstrate the creative ways organizations are leveraging activity on social media to create bottom-line results, and will build on previous conferences on Big Data and social media, and their impact on innovation. Professionals working in product development, customer support, marketing, business development, business intelligence and analytics, and information technology will find the session highly rewarding. Machine Learning in Digital Marketing Claudia Perlich, chief scientist, Dstillery Using Social Media to Create Content in the New Information Landscape Mor Naaman, associate professor, Cornell University; chief scientist and co-founder, Seen.com Understanding Your Workforce Better Through Social Analytics N. Sadat Shami, team lead, workforce social analytics, IBM Using Unstructured Data from Social Media to Enhance Predictive Capabilities Pedro Desouza, EMC Corp. HSATM Partners Alcatel-Lucent AT&T Horizon Blue Cross Blue Shield of NJ Connectivity Infineum Group Johnson Technology Systems John Wiley and Sons Stryker US Army Armaments Research, Development, and Engineering Center US Navy Strategic Systems Program Verisk Analytics To register, visit www.stevens.edu/howe/conference2014 INFORMATION For further information on HSATM activities or to submit an article, contact Dr. Lawrence Gastwirt at (212) 794-3637 or [email protected]. Visit the HSATM website: www.stevens.edu/howe/partnerships/hsatm Wesley J. Howe School of Technology Management Stevens Institute of Technology, 1 Castle Point on Hudson, Hoboken, New Jersey 07030 Sharen Glennon (201) 216-5381 or [email protected] ©2014 Howe School Alliance for Technology Management