By Michael Martin - 21 July 2008
Significant R&D efforts grab the headlines, require substantial budgets, and serve a critical role in the new technology/product continuum. However, do such efforts represent only a fraction of the R&D equation? Do the smaller, more prevalent initiatives play an equally, perhaps greater, role?
"Innovation . . . is generally understood as the successful introduction of a new thing or method . . . Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services.”
-- Luecke and Katz (2003)
It is difficult to derive true numbers for comparison - small R&D efforts compared to the highly publicized mega-dollar initiatives - because the smaller efforts are sometimes hidden (the critical effort could not be funded or is simply not recognized as a worthy endeavor) or poorly defined (teams are engaged in what could be termed R&D efforts, but management and/or the team do not recognize it as such).
This multi-part series will explore several characteristics of innovation, including:
- Definitions of R&D from a traditional perspective.
- Re-defining or broadening the scope of innovation to include hidden and/or poorly defined efforts.
- Evaluating non-traditional R&D efforts from a methodological perspective. For instance, how does methodology (i.e. XP/Agile) factor into or drive innovation? Is a particular methodology better suited to innovation?
- Evaluating the desirability (i.e. goodwill) and cost/benefit of innovative efforts in a non-traditional context.
- Providing the framework to determine if non-traditional R&D already exists (perhaps in a poorly defined way) and if it is appropriate for a particular organization or project effort.
- How do we manage non-traditional efforts to innovate?
"Innovation, like many business functions, is a management process that requires specific tools, rules, and discipline."
-- Davila, et. al. (2006)
Faced with deteriorating economic conditions, technology managers face tough decisions: can we afford the luxury of funding projects that hold promise but have failed (at least in the short to mid-term) to provide expected returns? Given tremendous cost pressures, technology initiatives that have uncertain returns appear ripe for the chopping block. Technology managers, unable to articulate the unrealized value of early-stage projects during a budget storm will likely be unprepared to prevent high-yield efforts from being sacrificed at the altar of cost.
This means that critical projects with the potential to deliver significant return - greater efficiency achieved through process improvement (i.e. re-architecture or re-factoring of a significant code base), or enhanced product/service offering - will never see the light of day. An effort passed over for cost reasons today could very well provide a critical budgetary boost in a time of need. The irony is that a decision to trim the budget via cuts in existing and/or pipelined initiatives can exacerbate the business situation that led to the need to cut budgets in the first place.
“The OECD Oslo Manual from 1995 suggests standard guidelines on measuring technological product and process innovation. Some people consider the Oslo Manual complementary to the Frascati Manual from 1963. The new Oslo manual from 2005 takes a wider perspective to innovation, and includes marketing and organizational innovation. Other ways of measuring innovation have traditionally been expenditure, for example, investment in R&D (Research and Development) as percentage of GNP (Gross National Product).”
So how do we provide technology managers with the tools to more effectively assess the business impact of a diverse range of technology initiatives, thus highlighting – and protecting – crucial innovative efforts?
First and foremost, and core to this series, we must have tools that define and evaluate “innovation” in our business environment. Having such tools enables technology managers to proactively understand, manage and assess emerging initiatives. Of course, these tools are only useful if they are applied from the very beginning of an initiative, and used consistently throughout. By doing so, technology managers will not be forced into making abrupt, error prone decisions at the first sign of economic crisis. This, in turn, minimizes potential for preventable business loss.
R&D initiatives have the potential to provide meaningful returns while helping to shape IT and business strategy. Managers cannot afford and should not tolerate ill-defined initiatives that aimlessly drift about. Therefore, the purpose – and business impact – of various initiatives should be clearly articulated (i.e. is a system initiative experiemental, system maintenance, user driven expansion/modification of an existing system, etc.), with benefits firmly established and ranked or prioritized against competing efforts.
However, in order to effectively evaluate across various types of IT initiatives, we must first clearly define and understand what innovation is. After gaining a sufficient degree of understanding, we (a) further define or broaden the sense of innovation to flush out those “hidden” efforts, (b) evaluate innovation from a methodological perspective, (c) evaluate the desirability (i.e. goodwill) and benefit/cost of innovative efforts in a non-traditional context, and (d) provide the framework to determine if non-traditional R&D exists. By doing this, we have the means by which we can effectively manage a non-traditional R&D effort.
“It’s worth looking more closely at each of the factors that enable innovation within an organisation: Agility, Community and Governance.”
Our first step - and the subject of the next article in this series - is to achieve a greater focus and understanding of innovation. We will also begin to examine various techniques used to identify innovative efforts, along with a proposed framework that will aid technology managers in the pursuit and application of innovation.
About Michael Martin: Michael has 12 years' experience as a technical analyst, business analyst, iteration manager and project manager working on enterprise applications in a variety of industries including leasing, retail, transportation, insurance, government and print media. He also has experience in communication, security and management consulting in the government and construction sectors, and holds a Masters in Information Systems. He is currently a project/program manager working with Fortune 500 clients.