The management and ownership of innovation and portfolio management as two separate functions is not fit for purpose in a world where change is a precondition for business success.

In today’s dynamic business environment, sticking with a rigid project control system is not the way to help organizations embrace and deliver change. The demands set by innovative projects are not simple, and not easily shaped to the traditional processes and rules of the portfolio management office.

Concern about transformation performance is extensively reported. McKinsey reports that 70% of business transformations fail, while Gartner finds that 60% of projects are failing to meet their goals for schedule, budget and quality.

Innovation and Portfolio Management Offices (IPMOs) are a new model for exploiting innovation and transformation opportunities. The IPMO brings two distinct teams together to produce a new department with the creativity of an innovation team and the delivery capabilities of a portfolio management office.

Creating an integrated Innovation and Portfolio Management Office, provides a single entity responsible for end-to-end business transformation. The IPMO presents an unrivalled opportunity for experimentation to flourish, the right ideas to move forward, lessons to be learned, change to be measured on a long-term basis, and innovation to be properly aligned to corporate strategy.
Creating an IPMO is not just about a name change, however. Nor is it about forging one integrated organization from PMOs and Innovation Offices that were conceived and constructed with completely different business objectives and operational cultures.

Tomorrow’s IPMO requires clear recognition of the differentiators that will enable it to succeed where separate entities have failed. This blog looks at four IPMO design principles that need the strongest focus for the future.

Sponsorship and Leadership

“The importance of active project sponsorship is hard to overstate; it was the number-one driver of project success globally” was the finding of the PMI’s 2021 Pulse of the Profession Survey. Yet, many organizations have neither a board level sponsor for Innovation nor Portfolio Delivery functions, let alone one that is responsible for both.

So, what is going wrong? One reason is that many of today’s PMOs and innovation teams are based within functional departments such as IT, R&D or finance. Inevitably, the team takes its lead from the management it reports to, and that management direction is likely to be conditioned by narrow department priorities.

For the IPMO, this is simply not good enough. The very purpose of the IPMO is to be the engine for enterprise transformation, and its operational range must not be constrained by a siloed management approach. It is therefore imperative that the IPMO is led and ‘owned’ by a sponsor at board level, providing enterprise-wide responsibility, and ensuring its work is rooted firmly in the organization’s business strategy.

Having a single sponsor with the authority and mandate to accelerate transformation, who has ownership of both the innovation and delivery functions will ensure that both are linked to strategy, that the right ideas are taken forward, business value recognized, and success communicated.

Communication and Selling

The project management resource specialist PM.com says: “Whether it’s between upper management, middle or with the team, it’s disastrous to have poor communication. Everyone should feel free to come forward to express their concern or give suggestions. When everyone is on the same page and there’s transparency, workflow is at an optimum level.”
Achieving the aims of the IPMO is wholly dependent on effective communication. It must galvanize interest in innovation from employees across the organization, share success stories, and keep momentum going.

If the IPMO is to deliver effective transformation, managers and employees everywhere in the organization need a transparent and up-to-date picture of what is going on, which challenges need solving, what is working well, and when they need to take action.

Culture and Skills

Team culture is central to IPMO success, and must incorporate broad, flexible, and long-term thinking. Recruitment, training and working culture must be underpinned by a commitment to innovation as well as delivery.

Perhaps the most radical requirement for the IPMO team is that expertise and experience must be garnered from outside the traditional project management skillset. Whilst there is still the need for structured reporting and management, that is not enough. To drive this engine of innovation, the team needs a deep understanding of the business, its challenges and objectives, and the corporate strategy it is tasked to achieve.

IPMO team members must be equipped with the business knowhow to grasp the rationale behind submitted ideas, and to advise on shaping the kind of projects that will support them. They also need the business credibility to challenge ideas that cannot be supported, and the maturity to keep colleagues on-side. Above all, team members need to be able to engage and communicate with all levels of the organization.

Reaching those standards takes time. As well as formal training programs, it requires management commitment to continuous mentoring to broaden the team’s capabilities. Management must also demand more of themselves and of the team in daily operations. It will not be enough to ask IPMO team members tick-box questions like ‘have you done your report?’ or ‘is your project on time?’, with a view to removing projects based on failure to meet their deadlines.

So, the IPMO manager will need to engage much more iteratively with team members, discuss the status of every project, understand why a project is not delivering and what risks are involved in continuing with it, and explore how it might be reshaped in order to achieve its aims.

Processes and Practice

Now, let’s look at the core processes and practice needed by the IPMO. Whilst there are many valid recommendations for both these areas, we would advise reviewing two key sources:

We would recommend reviewing these standards and combining the best of both; while innovation is strong in culture and communication, the PMO is often better with structure and management reporting. A pragmatic approach to understanding both ends of the transformation funnel will improve the conversion of ideas into business value.

PMI’s PMO Frameworks

This PMI document has been developed as a response to many of the concerns expressed in the Institute’s regular Pulse of the Profession research into project management. It makes strong recommendations about how to break down project management silos. It describes important examples of best practice in business relationships between PMOs and other operations: project team members situated side-by-side with operations staff to help develop business cases, providing advice on estimation techniques, and assessing lessons learned at the end of each project.

Amongst its routes to “sustainable and viable PMOs” the PMI document calls for the PMO to be recognized as integral to the organizational structure, stresses how important it is that the PMO measures and communicates project benefits and value as they arise, and that it implements quality education and training for the project management team. This, in turn, will ensure that the fruits of the innovation team’s work will be more likely to go on to create real value for the business.

Many of PMI’s standards, if pragmatically adopted, would relieve the worst practices of PMOs so often voiced over the years, and successfully modernize much of the thinking in the project management space.

The standards proposed in the ISO’s document cover the key areas of innovation practices from culture and collaboration through to leadership, structure and vision and value realization. The guidance also covers in-depth issues relating to planning, resources, and performance improvement.

There are a few clear messages in the standards which may well be familiar to those from the innovation world:
- Innovation initiatives involve risk-taking and not all of these will result in innovation. Discontinued initiatives are an integral part of the processes and sources of learning as input to future innovation initiatives. It is important to recognize that it is OK to cancel an idea or a project.
- A workplace should be characterized by openness, curiosity, and user focus; encouraging feedback and suggestions; encouraging learning, experimentation, creativity, change, and challenging current assumptions; encouraging risk-taking and learning from failure while keeping people engaged.

The guidance emphasizes collaboration within and between departments: highly relevant again for the IPMO team. “Collaboration can support activities such as identifying user needs, expectations, and challenges, sharing of ideas, knowledge, competencies and know-how, accessing infrastructure, portfolios, markets, and users, acquiring new competencies, and resources, and jointly implementing innovation operations.”

Conclusion

Delivering business transformation demands a much more flexible, responsive, and farsighted innovation capture and delivery mechanism than seen in the typical standalone PMOs and innovation teams.

Some of the changes we propose for the IPMO – which you can read about more in our whitepaper - are about adopting stratagems that are commonly recognized in many areas of modern organizations, but seem to have become lost in the transformation space: regular and carefully targeted communication, for example. Other changes, like the need for overarching executive sponsorship and the adoption of a new culture and skills, reflect the deeper and wider role of the IPMO than the entities it replaces.

As the demands on both innovation and project management are far from simple, the IPMO must look to standard-setters for both practices to underpin its vision.

This is a guest post by Ivan Lloyd, CEO at edison365. Connect with Ivan on LinkedIn here. If you'd like to learn how a well-integrated approach to end-to-end business transformation creates widespread involvement in the innovation process, and how to build a team culture that supports an Innovation & Portfolio Management Office (IPMO), join this session with Ivan's colleague Jack Selman as part of Innov8rs Connect on Culture, Talent & Teams, 15-17 March 2022.