How Does an Organization Change and Innovate?

“It isn’t just about math and science anymore. It’s about creativity, imagination, and, above all, innovation. Organizations cannot compete on cost alone; innovation is CEO’s #1 priority.”

-Business Week Special Report

As the above quote demonstrates, the industry trend has transitioned from the knowledge economy to the innovation economy. In our last post, we demonstrated that adaptability is the key trait for organizations to survive turbulent times. But change and innovation aren’t just a simple “choice.” Many organizations have tried to implement changes, only to see no improvements. Others have been convinced of the importance of change, but remain fearful that they’ll cause a revolution instead of an evolution. Still others have decided to focus on innovation and are left with the question: “Now what?”

This post brings good news to those organizations. There is a formal method for change.

Vision, Implement and Adopt.

Our last post compared business success to the evolutionary concept of Survival of the Fittest. However, evolution is not a perfect model for navigating turbulent times. In evolution, change occurs haphazardly, through random mutations that have no “end state” in mind. There was not a single human ancestor who decided to have genes that allowed for the development of a brain that was better fit for problem solving. It happened by a complete chance of genetic mutation, but once the strain appeared, the survival of such an advantageous quality was inevitable.

Organizations, on the other hand, should take a lesson from intelligent design. You take chance out of the equation by taking deliberate steps to avoid extinction through planned change. You ought to be moving purposefully toward an end state that makes you best adjusted for the business environment.

This process is the Visioning step of the change methodology. In this stage, you:

1. Assess the current state,
2. Define your desired future state, and
3. Build a business strategy (a plan for change) that will bridge the gap between the two.

The current state assessment is as much about evaluating the business environment as it is about examining your own organization. Given the conditions of the economic climate, what types of organizations are going to survive? What qualities will be favored? Which of these essential qualities is your organization lacking?

The answers you collect from this assessment should lend directly to defining your desired future state. This is the part of the process that that should resemble intelligent design. Now that you’ve researched the climate, know what resources are available, and are familiar with what types of organization are the fittest for the environment, you can move forward with an end state in mind.

To continue with the biology analogy, this is where you decide whether you are best suited to have fur or not—or if conditions are so volatile that only those who use clothing will be able to keep up with the climate. What diet ought you employ? Do you need to acquire largesse to become king of your domain, or is it more sustainable to be small and dependent on a smaller access to resources?

Once you know where you are and where you would like to be, you need to decide how you will get there: you need to develop a plan for change.

Some examples of plans for change include:

• Increase sales
• Meet profit projections
• Acquire new customers (increase share of the market)
• Innovate product offerings
• Hire and retain top talent
• Expand into new markets
• Cut costs.

You implement these plans via tactical initiatives that support the strategy. This means that projects are the vehicle for change in your organization. Companies who can’t consistently perform projects on-time, on-budget and on-spec, cannot effectively innovate. In other words, project management is how you change the way you change.

So if you plan the initiatives right and execute the initiatives properly, then what step could possibly be left? Well, by the time you map out your plan, develop the initiatives and complete the projects, things change: the economy fluctuates, technology progresses, opportunities to be first to market are missed, scopes creep, etc. You need to have a continuous adoption strategy in place to continue to adapt all the way through the initiatives.

Many organizations still only review and analyze their slate of projects once a year in an annual budgetary cycle, but organizations must adapt incrementally, reacting to change in an ongoing way. As we covered in our New Year’s Resolution post, improving your Project Portfolio Management (PPM) is an excellent way to achieve this adaptability. New projects are “spawned” through ideation, the project population is “culled” through project selection, and then malformed projects are “killed” through continuing governance. Unnatural laws may also permeate; for example a “pet project” that isn’t aligned with the corporate mission survives longer than it should. The natural laws should prevail, though, to weed out these bad projects.

So as difficult as change can be, and as disconcerting as it is to hear that it is an organization’s best hope for surviving these volatile times, there is a Change Methodology. Committing to the process of Vision, Implement and Adopt will ensure that your organization takes on meaningful change endeavors that succeed and pervade.

Our comprehensive white paper on resolving the challenges of project and portfolio management is available for free here.