I recently attended a meeting of the PMI Global Corporate Council (GCC), in Palo Alto, CA., US, home of Silicon Valley. The GCC is a council of more than 30 executives representing multi-national firms and federal government agencies throughout the world. These executives are champions for excellence in PM discipline in their respective companies and government agencies. They know what excellence means and have delivered results for their organizations.

At the meeting, I gave a detailed recap of the economy, and my observations of how companies around the world were reacting. All agreed with my observations, with one exception. The consensus was that each of their companies was actually investing in sharpening PM capabilities, varying from maintaining an educated core of project managers, to developing a better discipline in portfolio management. That is not to say that the companies had not restructured, or laid off employees. However, they were not cutting back on any new product development; and those related to federal government spending (stimulus spending in the US, India, and China), were hiring PM professionals. There is no question that the companies have suffered through the economy, but there seems to be a common commitment to making sure that they develop new products and have the team to launch them.

An article in the Wall Street Journal by Justin Scheck and Paul Glader, called "R&D Spending Holds Steady in Slump," supported the concept of continued development in the slumping economy. The article was based on a study conducted by the Journal, comparing 4th quarter 2008 R&D spending to prior year. The study focused on 28 multinational companies, with headquarters in the US (ex: Microsoft, Cisco, Google, Boeing, etc.) It turns out that average R&D spending dropped only 0.7% from the same quarter in 2007, compared to an average drop in revenues of 7.7%.

Although this is great news, we all know that if the economy takes a much deeper dive, many organizations will cut back. However, it still means that we may see continued investment in R&D. Lessons learned from the past, such as with Motorola, indicates that R&D is crucial to future competition. In 2002, Motorola slashed R&D by 13%. In 2004, they were very successful with the new RAZR cellphone, but then failed to follow up with critical new products, and ended up losing market share.

While I was in Brasilia, Brazil, last week, I met Carlos Heinz Loeben, PMO of Mobile Solutions and Services for Instituto Nokia De Technologica (Nokia Institute of Technology). We talked about the economy and its impact on product development. Given that new product lead time (or life cycles) has dropped to nearly 6 months in telecommunications, I was concerned that high tech companies like Nokia would fall behind. He said that Nokia, like all companies, is suffering through the downtown in the global economy, but that they were investing in new applications and new markets, beyond traditional mobile markets, such as healthcare information and data sharing.

R&D and new product launches are critical applications for PM implementation. Applying excellence in this area will only ensure that companies can accelerate out of the bottom of the economic downturn faster than their competition. It is no doubt a careful balancing act for an executive team, but it is clearly a risk worth taking.

Later.

Fredrik Haren, author of The Idea Book, was the keynote speaker at the 2009 PMI Global Congress - Asia Pacific this week in Kuala Lumpur. Fredrik is a provocative speaker, with a tremendous amount of energy. The audience thoroughly enjoyed his presentation.

He has captured and promotes an interesting definition of innovation. A person innovates when:

Two formerly known "things" are joined together in a different and new way.

Well, now, that is as simple as it gets. It is interesting in that I read an article on 6 February in the Financial Times (FT) that addressed this very definition. It was titled "Interoperability: The Great Enabler," by Michael Schrage, a researcher at MIT's Sloan School of Business, and the Imperial College Business School in London. Basically, Schrage supports that the prospect for innovation in the current environment has never been more robust. He attributes it to the fact that innovation is occurring to allow "things to interoperate" or work together.

Interoperability has traditionally been attributed to information systems working together at some scale, such as internet protocols allowing diverse data warehouses to mingle and work together. However, innovation in interoperability has allowed the internet to leapfrog from an information resource to become a telecommunications, multimedia, and multifunctional platform.

This means that products and services, and business processes for that matter, will be able to leverage one another, and, as Fredrik Haren said, join together in a different and new way. Consider the Nike Shoe Accelerometer interfacing with a pacemaker, to ensure that a cardiac patient doesn't over-exercise. Or, a new BMW automobile that will have complete internet connectivity a so that it can get real time adjustments in engine performance directly from the factory.

For the project world, interoperability presents both an opportunity and a challenge. In its purest sense, every PM needs to understand the impact that their project has on its environment. Traditionally, it has meant the immediate "connective surroundings." However, in IT projects, this is not simple. Nor will it be simple as every project is assessed with its interoperability with the environment.

In fact, when I queried Fredrik about advice for project professionals, he said that innovation in project teams will be best suited by spending more time in a rich dialog about what you are supposed to achieve. Ricardo Vargas, 2009 PMI Board Chair, interprets this as spending as much time on scoping as you do on any other part of the project. In fact, he believes that the real payoff in any project is robust development of both scope (requirements planning) and a risk plan. If we look to the interoperability of any project to its environment, there is a real opportunity for a breakthrough in project performance.

Well, that what I think today. Read the article for yourself and let me know what you think.

More later.

Today I'm talking with Ricardo Vargas, Chair of the PMI Board of Directors and the manager of an $18 billion portfolio for Sonangol, an oil and gas company in Angola. Ricardo has worked around the world and sees huge opportunity for project managers who are willing to focus on risk management, be flexible and offer creative solutions that promote innovations for their companies. He is convinced that a disciplined approach to project management will emerge as a key driver for change and that executives will begin to identify project management as indispensable for business results.

Click the play button to listen to my discussion with Ricardo.

It is late, nearly midnight, and I just returned from the The Economist  magazine's Innovation Award Ceremony, here in London, England. I am here because PMI is a co-sponsor of the event. Specifically, we sponsor the award on Innovation in Business Processes. It may surprise you, but the recipient of that award was Jimmy Wales, founder of Wikipedia. Interesting guy...he invented the third most sought after website in the world. Yet, the business model was to make a product from a not-for-profit organization. Yep, he runs a not-for-profit with an annual budget of $4 million USD. Remarkable innovation, considering it is now in 250 languages (all active languages) with more than 100,000 volunteers managing over 10 million articles.

What was so amazing about Jimmy Wales (other than the fact that he was born, raised and educated in Alabama, in the USA!) was that he is well known for innovation, yet he didn't invent technology. In fact, he himself admits he invented a new way to "socialize." He considers his creation of Wikipedia as a social network invention.  He could easily have won the Social and Economic Award tonight. Yet I think when most people think about innovation, they think about technology first: electric vehicles, mobile communications devices, cures for cancer, etc.

In fact, one of the most fantastic innovations ever was the micro-loan. Economist Muhammad Yunus came up with the idea of micro-credit in 1974, after giving a woman in the village of Jobra, Bangladesh, $27 from his own pocket to help her make bamboo furniture. Previously, women in a village like Jobra either had no access to capital or they had to pay usurious rates to local loan sharks. Realizing that poor women were actually excellent credit risks and that giving them small loans could transform an entire local economy, Yunus formed Grameen Bank in 1976 to institutionalize what he called micro-credit. The bank has now loaned more than $6 billion to more than 7 million borrowers, and Yunus took home a Nobel Peace Prize in 2006 in recognition of his innovative efforts

John Kao, the noted author and lecturer on innovation (Jamming: the Art and Discipline of Business Creativity; and Innovation Nation) spoke about this at the recent Forbes Magazine Leadership Network meeting in Palo Alto, California, in the USA. He stressed that innovation must go beyond technological constraints and consider all disciplines. He also stressed that innovation was about implementation (Go Project Management!). 

More importantly, he stressed that the next version of innovation ("game changing" innovation) needed to tackle what he called the list of "wicked problems," such as AIDS, climate change, energy independence, etc. To do so, he said we needed a really high-level strategic road map, one which only nations could develop, and in some cases, only leagues of nations. In other words, nations need to develop strategies that embraced innovation, specifically targeted at "wicked problems." The reason, John explained, was to ensure that we could take the "big bets" and the "very high risk" solutions to solve the problems. He said -- and I agree -- that the world has the creative talent and technology now to attack the wicked list of problems

Tonight, there were many examples of great innovation leaders that received awards. However, something different struck me during the program that related back to what John Kao said. More specifically, an individual and a company received awards that had several things in common. The individual was Matti Makkonen, creator of Short Message Service (SMS) protocol, while the company that received the award for a sustainable innovation culture was Nokia. The first thing that they had in common was that they both represent the telecommunications industry. In fact, Matti, after spending much of his career with Sonera (Formerly P&T, the telecom and postal authority of Finland), went to work for Nokia.

However, there is another important factor that they have in common: their home country of Finland. You see, Finland is a unique country in that they have a national strategy for innovation. John Kao repeatedly used Finland as an example of a nation that literally builds innovation into its culture, and they provide the policies and infrastructure to encourage companies and individuals alike to push the envelope of change. Remember too that it was Finland that "gave" (literally) the world a Global System for Mobile communications (GSM) in 1985, and empowered Nokia to go on and become the world's leading supplier of cellular communications devices producing more than 500 million handsets per year. UNBELIEVABLE!

Yes, we need innovation as a strategy, especially to tackle our problems. And we need Project Management to make sure that we deliver on this strategy. No one at the ceremony avoided the importance on execution of strategy and delivering the innovation.  And yet, I am both excited and worried at the same time. Will this financial crisis be the great global distraction that I mentioned before? There are already signs that projects are being pulled back and budgets cut. I hate to think that we will take our eye off the prize, focus on cost rather than value, and stop thinking about innovation...taking the low risk path. Do we have that much time to wait to solve the "wicked list" of global problems?

More tomorrow.