Confronting the Risk vs' Innovation Dilemma Don Stanford

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Confronting theRisk vs. Innovation Dilemma
Don Stanford
Cartoons courtesy of Scott Adams
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My approach to this topic

• Draw on my real life experience
• Stick to basic principles
• (most of which you are already familiar with)
• Inject a little humor
• (after all, process discussions can get pretty
  dull after awhile, especially after lunch)
• Try and keep you awake

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My Background

• For 23 years (1979-2002) I was the CTO of a
  publically traded company that grew from 8
  employees to over 5000 (GTECH Holdings)
• Global leader in on-line transaction processing
  for the public gaming industry with 70 market
  share
• Developed, deployed and operated large complex
  systems which handle 100s of billion of public
  funds on behalf of governments in 30 States and
  50 countries
• Highly regulated and audited environment
• High visibility and subject to large liquidated
  damages for non-performance

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What did we do for a living?

• Designed, installed and operated very large,
  secure transaction processing systems
• Integration of
• Proprietary Transaction software
• Proprietary Applications software
• 3rd Party software, middleware
• Various network technologies
• Leased line, Packet, VSATs, UHF Dataradios
• Custom designed POS terminals
• Applications Software
• Firmware
• Custom Devices

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My Qualifications as a Process Advocate

• Absolutely None, Nada, Zilch!
• I have committed all of the cardinal sins during
  my career, but managed to survive and learn from
  them all
• I have plenty of scars from the arrows in my back
• Now that Im retired, its easy to talk about how
  it should have gone down!

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Some Assumptions

• For the purpose of this discussion Project and
  Product are interchangeable since in many cases
  they are one and the same thing
• The customer may be either internal or external
  to the company
• Participants are assumed to be acting in good
  faith and trying to do the right thing until
  explicitly proven otherwise

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Innovation

• We all like to think that we are Innovators
• Innovation is generally associated with New and
  Exciting
• New and Exciting is generally attractive to
  creative and motivated individuals
• New and Exciting holds the potential to be
  attractive to customers
• However, New and Exciting may not be universally
  valued by everyone involved since it is also
  associated with RISK

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Risk

• Risk is generally held in a negative context
• Companies spend a lot of money managing risk
• Risk makes management uneasy and uncomfortable
• Risk needs to be mitigated
• Risk needs to be assessed relative to possible
  gain
• Risk is potentially dangerous for the customer
  and all other stakeholders

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So, how do we innovate and reduce risk at every
step along the way?
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Note Although projects involving innovation
usually incur more risk, risk awareness and
mitigation applies to almost any significant
undertaking
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Lets start by looking at the classic PM model

• Initiation
• Planning
• Execution
• Evaluation
• Correction
• Closure

• Enthusiasm
• Disillusionment
• Panic
• Search for the Guilty
• Punish the Innocent
• Reward the Uninvolved

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Where is most of the risk?

• Initiation
• Planning
• Execution
• Evaluation
• Correction
• Closure

• Enthusiasm
• Disillusionment
• Panic
• Search for the Guilty
• Punish the Innocent
• Reward the Uninvolved

HERE!
So thats were we will focus most of our
discussion!
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Initiation Enthusiasm

• This is where new ideas and concepts are
  born.the fuzzy front end.
• Oftentimes constructed on the back of an envelope
  during lunch or in a bar after 3 Golden
  Margaritas
• At first blush, looks and sounds exciting,
  profitable and a better way to deliver value
• The elevator talk is convincing and quickly finds
  adherents who want to proceed!
• Those who raise questions are quickly labeled as
  dinosaurs and told to get out of the way

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The Business Case a/k/a The Promise
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Over Promising / Under Delivering

• Innovation Projects often over sell themselves
  at the get go
• W set expectations too high before basic planning
  has even begun
• We set the project up for distrust by management
  when unexpected challenges present themselves
  later on
• We put the project team at greater risk and
  stress from the outset (they are in disbelief at
  what they have been asked to achieve)

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What can we do here to minimize risk?

• Conduct an intense evaluative process wherein the
  concept is discussed, examined, beat on, torn
  apart, improved and generally tested by both
  friend and foe
• Construct a rational business case to assess
  value as fairly as possible (best, worst and in
  between)
• Solicit and consider outside opinion from
  external stakeholders (customers, suppliers,
  consultants, etc.)
• Perform all of the above in a timely and unbiased
  fashion without dampening the enthusiasm of the
  champions
• After all, we dont want to discourage
  Innovation!

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Planning Where trouble usually begins..

• The plan is sometimes based on emotion rather
  than reality
• The plan often ignores obvious hazards and
  challenges and is based on unfounded assumptions
• Why are you being so negative?
• Dont confuse winning the job with doing the
  job
• The plan is incomplete and/or generalized and
  doesnt adequately address specific details and
  issues
• Well figure it out as we go along
• The plan is pushed through in spite of warnings
  from knowledgeable sources
• We gotta have this for strategic reasons.
• Dont worry, this is going to be great

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Plan Disillusionment
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Planning Risk Mitigation I

• Requirements, Requirements, Requirements
• Schedule, Budget and Resource allocation are all
  highly dependent upon Requirements, but
  oftentimes dont wait for a rigorous requirements
  analysis
• The Requirements Process needs to answer
• Market (Customer) What are we solving and for
  whom and at what cost in what timeframe?
• Function How will it work? (Feature/Function
  Matrix, Use Cases)
• Technical How do we implement it?

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Planning Risk Mitigation II

• Requirements review, agreement and signoff by all
  stakeholders is mandatory
• Marketing, Engineering, Proj Mgmt, Finance,
  Manufacturing, Senior Mgmt., etc.
• A less than rigorous requirements process almost
  always results in an unsatisfactory project that
  misses one or more of its benchmarks
• Very importantly, requirements define a projects
  Scope, and Scope drives schedule, budget and
  resources required
• The people who plan the project should also be
  intimately involved in DOING the project

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Risk Mitigation III

• Reduce Complexity (KISS Principle)
• Complexity is the enemy within
• It undermines the best efforts of all players
• It is hard to understand, even harder to fix

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Execution

• The Death March Begins

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Execution Risks Panic

• Inadequate resources
• Wrong skill sets
• Incomplete understanding of the requirements and
  objectives
• Inefficient decision making process
• Lots of Silos and Handoffs
• Organizational discord
• Bad Behavior No Team ethos
• The Email culture
• Environmental and Geographical Issues
• Lack of accurate and reliable feedback and data
• No end to end accountability
• Requirements Change, Scope Creep

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Risk Mitigation in Execution I

• Identify the best resources early on in the plan
  and ensure that they include the right skill sets
• Remove the resources from their departments and
  create a multi-disciplinary team that is largely
  self managing and free of any departmental
  politics or agendas (eliminate silos and
  handoffs)
• Provide the team with leadership, not
  management
• Every project should have an executive sponsor
  whose job it is to clear roadblocks, eliminate
  bureaucracy and support the team
• Ensure that the project bonuses are shared by the
  whole team and contingent upon clearly defined
  and articulated success criteria
• ( we succeed or fail together)

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Risk Mitigation in Execution II

• Bad behavior not permitted, no email flaming, no
  personal agendas tolerated
• Maintain an open and honest line of
  communications between the team, the leadership
  and senior mgmt.
• (no surprises, dont shoot the messenger,
  listen, listen, listen)
• Ensure that there is clear shared accountability
  among the team members, their leader, and the
  corporate sponsor (brothers keeper)
• Guard the requirements with your life! Scope
  changes require approval by all stakeholders and
  appropriate changes to the plan!
• Continuous evaluation of performance against the
  plan and adjustment to account for intangibles or
  the unexpected
• Keep management informed! No surprises late in
  the game!

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Risk Mitigation in Execution III

• Distance is NOT your friend!
• Provide a work environment where the team can
  operate and communicate effectively with minimal
  wasted time and effort
• Put as many members of the team as possible in
  close physical proximity to each other
• Eliminate lots of meetings since impromptu
  discussion between members should occur at any
  time
• Avoid situations where geography and time zones
  separate the critical team members
• Knock down the walls.physical as well as
  psychological
• Breaking down barriers, real or imagined,
  allows
• Innovation to thrive!

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An Example of Workspacetransformation to improve
project performance
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Anti Collaboration Space
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Knocking Down Walls!
Ice cream party where employees got to
participate in wall breaking in preparation
for a workplace transformation
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Going from this
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To This !
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No High Walls
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Easy to communicate No place to hide..
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Bad things can and will happen!
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Anticipate the Unanticipated

• Sht happens on every innovation project
• Contingencies need to be part of the initial plan
• Risk assessment must be updated and communicated
  regularly based on actual results
• Dont use this as an excuse, after all, you
  committed to managing the risk!
• Dont ever be afraid to ask for help.

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Search for the Guilty
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Evaluation Search for the Guilty

• By the time we get here, the project has either
  substantially succeeded or already failed to
  deliver on its promises
• Rework at this stage is expensive but sometimes
  necessary
• A comprehensive Project Post Mortem is almost
  always useful to identify the processes that
  worked and those that need improvement
• Conducting a witch hunt is almost never
  productive and does nothing to improve future
  project performance

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Correction Punish the Innocent

• Correction should be focused on improving the
  processes that were identified as having failed
  earlier in the project
• Projects should be documented as their own Case
  Studies so that they can be used as training
  tools for the future
• Institutional Memory is an incredibly powerful
  resource but it is only useful if it is recorded
  in a manner that is made accessible to current
  and future project leaders and team members

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Closure Rewarding the Uninvolved

• Rewards must be bestowed on those who
  successfully achieved or exceeded expected
  results in projects, especially those involving
  innovation and risk
• This sends a clear signal to the organization
  that taking on risk and controlling it while
  achieving extraordinary results is a cherished
  core value
• It may even get the uninvolved involved in the
  future

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Final Thoughts

• Keep the project team led, lean, mean and focused
  on the mission
• Run interference for them so that they are not
  distracted or frustrated by bureaucracy,
  politics, etc.
• Keep them together, mentally and physically
• Base their rewards on the collective achievement,
  not individual heroism
• Celebrate the small victories along the way
• Constantly communicate with all stakeholders
• Have some fun along the way..

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My List
The UGLY
The Elegant

• The Big Dig (Boston)
• Denver Intl Airport
• Windows OS
• (all versions)

• The Chunnel
• Boeing 777
• The Macintosh and Mac OS
• The iPod (all versions)

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Thank you.. Questions?