Portfolio Innovation

5 Reasons Project Management Isn’t Enough to Drive Innovation Success

Learn how graduating from project management to outcomes management can help you de-risk your innovation portfolio and knock your objectives out of the park.

Imagine you’re starting a coffee truck business in your neighborhood. You decide on a balanced menu featuring lattes, cappuccinos, americanos, homemade donuts, bagels, and scones. Then, you use a project management tool to map out all the steps and expenses required to get your truck up and running:

• Securing a permit

• Hiring drivers and baristas

• Hiring a freelancer to create your logo and design coffee-themed decals for your truck

• Partnering with suppliers to purchase ingredients & disposable cups in bulk

• and more.

Two weeks post-launch, there’s a problem: to your surprise, you realize there just aren’t that many coffee drinkers in your neighborhood. In fact, most of the customers who swing by your truck end up buying homemade donuts and nothing else. You’ve blown most of your budget on ingredients, supplies, and designs that aren’t relevant to your customer base after all. Now what?

When it comes to linear project management, challenges like these happen all too often. In the coffee truck example, the entrepreneur took a project management approach — starting with specific requirements and executing them step by step. But since they didn’t have all the answers, an outcomes management approach would have made more sense. On an outcomes management journey, you move through stages of maturity — from validation to prototype and beyond — and make decisions along the way about what’s viable and what’s not.

By some estimates, failed IT projects cost the U.S. between $50 billion and $150 billion each year, and up to one in six of those projects are “black swans,” missing their budgets by 200% and their schedules by almost 70%. Sure, there’s nothing wrong with creating a detailed plan of action and sticking to it when you know what steps to take to complete the project. But when you’re venturing into new territory, you need systems for navigating uncertainty and experimenting with multiple solutions. Otherwise, you’ll be unpleasantly surprised when you hit bumps in the road and don’t have enough resources to switch gears.

Here’s why project management tools and methods aren’t enough to drive innovation success — and how graduating to outcomes management can help. Let’s dive in.

1. Project Management prioritizes requirements over outcomes.

Let’s start with a quick definition. Gartner defines project management as “the application of knowledge, skills, tools and techniques to project activities to meet the project requirements.”

Whether you’re writing code or installing coffee machines in a food truck, managing a project is about starting with a detailed picture of the desired result — including constraints like time, cost, quality, scope, benefits, and risks — then helping stakeholders meet those expectations. A lot of this is possible with software. Using project management tools like Asana, Monday, Trello, and Jira, you can follow a similar process for any job:

• Build a project timeline/schedule

• Assign tasks, subtasks, and deadlines

• Manage milestones and dependencies

• Assign a priority level to every task

• Measure time spent on tasks/subtasks

• Create budgets and allocate resources

• Track progress in a calendar, kanban, Gantt chart, or list format

But what if you’re navigating a new problem? The project planning & management features we just touched on can keep you organized, but they won’t tell you whether a certain deliverable actually supports your desired outcome. This leads us to reason #2.

2. Project Management works best for familiar workstreams.

The linear plan-then-execute approach makes sense when you’re doing familiar work. Let’s say you’re a marketing team at a large company putting on a conference for the 10th year in a row. It isn’t your first rodeo. You have a playbook for success — you know what works and what doesn’t, what risks to keep in mind, what methods and materials you need, and what stakeholders to involve in the process. Because the work at hand is so familiar, you can confidently chart a detailed path to success, identifying the tasks and subtasks you plan to complete and leveraging estimation methods to keep the project within your organization’s budget.

But this isn’t the case when you’re operating in unfamiliar territory. Whether you’re applying existing ideas and skills to new contexts, applying new ideas and skills to existing contexts, or researching and discovering new ideas and skills in new contexts, traditional project management won’t give you the tools you need to manage risk and uncertainty. What I call outcomes management is more than just project management. It’s about leveraging innovation methodology to advance towards your org’s goals, all while factoring unknowns into your workflow and keeping the cost of failure to a minimum.

3. Project Management assumes all projects should succeed.

To revisit Gartner’s definition, project management is about meeting project requirements. You assume the task at hand is a worthwhile one and focus on building agreed-upon deliverables on-time and on-budget. Some project portfolio managers might use scoring or financial data to prioritize certain projects over others. But once a project begins, stakeholders expect you to get the job done according to plan. This linear process makes sense when you’re working on something straightforward.

But when you’re navigating novelty, it’s risky to assume that all your efforts will succeed. With outcomes management, you can run an efficient innovation process by making consistent, objective decisions about which projects should stay in your portfolio and which ones should go, all based on whether they show traction over time. Instead of putting all your eggs in one basket, you’re making a range of bets, only one or two of which will turn into big wins that pay for the rest of your portfolio.

4. Project Management tools aren’t designed to progress projects through maturity stages.

If you’re dealing with novelty and uncertainty, you need ways of working that take unknowns into account. When you know your desired outcome but don’t yet know the optimal means of making it happen, you can use outcomes management to develop and evaluate LOTS of ideas concurrently. Here’s what I recommend:

First, choose your target. Nail down the outcome(s) you’d like to achieve. Then, set up maturity stages for your innovation projects. Here’s a template to get you started:

Stage 1: Align on problem to solve and value of solution
Stage 2: Test desirability, feasibility, and viability of solution
Stage 3: Test solution in specific use case for outcomes (prototype!)
Stage 4: Sustain solution in specific use case and test solution for broader use

Build decision criteria for each maturity stage. That way, you’ll have a system for knowing which ideas in your pipeline are mature enough to keep funding and which ones are on the chopping block. Why create detailed project requirements upfront for a single approach that you aren’t even sure will work? By stage gating your innovation portfolio, you can make multiple bets at different levels of certainty, then grow your investment in certain bets over time if they show evidence of success.

5. Project Management tools don’t facilitate barrier resolution.

Tools like Asana, Monday, and Jira are ideal for getting visibility into the status of a project. At a glance, you can understand a project’s health — often by skimming for red deadlines and other visual cues that a project is off-schedule or over-budget.

Outcomes management tools, on the other hand, do more than diagnose problems. They help innovators drive solutions by escalating project barriers to leadership. And in the best-case scenario, these tools serve up relevant templates or blueprints to help teams overcome barriers in real time.

The case for outcomes management

The difference between project management and outcomes management is like the difference between following a recipe for chocolate chip scones and creating a coffee truck menu that customers love. In the first scenario, you’re starting with specific requirements and executing them step by step. In the second scenario, you’re working towards an outcome without having all the answers. Since the optimal solution isn’t clear from the get-go, you need to test multiple ideas, see what works, and invest in the solutions that show the most traction.

It can be tricky to decide when to leverage project management tools and methods vs. when you need to embrace outcomes management to balance risk and reward across your innovation portfolio. But in a world of exponential change, it’s an important choice to make — especially when time, money (and even national security!) are on the line.

Still wondering how to choose between project management and outcomes management? Here’s a simple flowchart to help you out:

Project Management vs. Outcomes Management Flowchart by Productable. Download here.
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