This third post illuminates a very successful implementation of venture capital approach in a large organization to work around “red tape” and get more risky projects funded.
However, it’s not over! Please check in occasionally for more innovation and intrapreneuring-related posts in the future!
CURE serves as the bioscience cluster of Connecticut, a diverse network of small and large life and healthcare sciences companies, ranging in scope from therapeutics, to healthcare technology, to medical devices. Universities, government agencies, scientists, educators, mentors, students, entrepreneurs, business experts, service providers and investors join in to begin nucleate the breadth of the network.
As participants in CURE, we educate, cultivate entrepreneurship, support the build of bioscience companies and collaborate to ensure a sustainable, high-value bioscience and healthcare community that improves our quality of life and keeps the Connecticut community strong.
When we talk about disruptive innovation, we can easily agree that going from the days of dim candle light and sooty oil lamps to electric light was one of these breakthrough innovations, right? Its icon, the lightbulb serves as our symbol for a great idea today.
When you ask around “who invented the lightbulb?” the answer “Thomas Edison” first comes to mind – and the answer is wrong! Truth is that we can give credit closer to 20(!) inventors of the lightbulb! – How so?
Thomas Edison patented the first practical and commercially viable incandescent lightbulb in 1878 and a revised design in 1879. In addition, he offered the first efficient electricity supply system for households and businesses, which laid the foundation and cleared the path for mass-producing light bulbs in 1880. His design was an evolution from previous, inferior designs and enabled by improved technology.
No worries, we would not stay sitting in the dark. It appears safe to say that even if Thomas Edison was never born, the practical incandescent lightbulb would have been developed around the same time – by someone else.
Looking back in history, Humphrey Davy invented electric light in 1802; more than 75 years before Edison. His “arc light” was unsuitable for mainstream application though it found specialty uses even today. Many more designs for incandescent light and lightbulbs were developed by several inventors, but neither were they practical nor suitable beyond demonstration stage. Prominently, Joseph W. Swan built a working prototype of a “light bulb” in 1850 – well before Edison.
Entrepreneurial Competition
Edison had access to improved technology such as a better vacuum pump for his breakthrough design. This technology was not available to previous inventors. Edison also developed an efficient and economical way to distribute electricity when earlier designs drained batteries quickly. (A nice example, by the way, on how a product can go a long way when bundled with a complementing service.)
On the flip-side, Edison knew of his limitation too. He made carbonized Japanese bamboo glow as filament between two electrodes knowing that carbonized Tungsten was the superior material. However, the technology was not available at the time to produce a thin Tungsten thread. We had to wait for William D. Coolidge to produce the Tungsten filament for General Electric in 1910, which is still the preferred material to illuminate our modern incandescent lightbulbs today.
This situation is typical and comparable to many big ideas that entrepreneurs work on today. There is much competition among entrepreneurs, so every good idea usually has a handful of teams working on it independently and head-to-head at the same time. Thus, it is highly likely that, if not Edison, another inventor would have come up with the lightbulb design we are so familiar with today.
R&D as a Legacy
Perhaps, the even more impactful and lasting heritage of Thomas Edison are not his inventions, useful as they are. His products such as the lightbulb, phonograph, quadruplex telegraph, mimeograph, etc., have been replaced over time by more advanced technology.
Nonetheless, Edison has changed the way we discover concertedly today. Until his time, inventors matched the stereotypical image of a lonely genius experimenting and inventing in their lair burning the midnight oil over some ambitious idea. Edison established the first research and development (R&D) organization in his famous Menlo Park lab, where a large number of researchers worked together in an orchestrated way to find solutions to specific problems coordinated strategically and systematically concerted. Edison has industrialized research!
Until today every research-driven company or organization worldwide follows in Edison’s footsteps! What an impressive legacy!
Summary
Disruptive innovations tend to have their origin in incremental steps and competition among inventors. First working individually and now increasingly in teams or even distributed R&D organizations across country borders.
A key success factor here is building trust and incentives within the team in order for all individual contributors to share information and findings freely.
The broader, cross-functional approach to research helps to identify ideas and technologies from other disciplines that can serve as stepping stones. Edison used a better vacuum pump, which made his design possible. Later, the capability to manufacture a thin Tungsten wire allowed General Electric to take the lightbulb the next level.
As the saying goes, “innovation happens at the intersections of disciplines.” The development of the lightbulb serves as a nice example proving it to hold true once again. Thus, innovation benefits by drawing from advances in other disciplines.
So, is disruptive innovation a myth?
Back to our original question, the story of the lightbulb is a great example for a breakthrough innovation with vast ramifications that disrupted and shaped the we live and work around the globe.
It can, however, not be seen as just one big and isolated scientific step but rather a series of many little steps in combination insights from other disciplines including manufacturing, economics and marketing leading to broad adoption that changed the world.
Only when it all comes together you have a disruptive innovation like Edison’s famous design. And it was still not the end. The journey continued to evolve with a Tungsten wire and later fluorescence, halogen and LED lights.
In this light, every disruption seems as yet another incremental step, doesn’t it?
Join me for eyeforpharma’s Value Beyond the Pill Summit2014 and come to my talk on “Build an intrapreneurial ecosystem to ensure your innovative services deliver the value required by patients” at 2:10PM on December 3, 2014.
Why attend other than hearing me speak? 🙂
The topics are around delivering patient value and reimburse your services by innovating your business model. A new way of healthcare is here; services are now an essential part of patient care and will help the pharma industry to make a bigger impact as a healthcare provider. Learn how to put successful services in place to gain better access, reduce costs and help your end-user, the patient. Find out what the most innovative and forward-thinking companies are doing to differentiate their brand in the most competitive times pharma have ever faced.
The Value Beyond the Pill Summit is held at the Wyndham Philadelphia Historic District Hotel, 400 Arch Street, Philadelphia, PA 19106, USA, on December 3-4, 2014.
See the full speaker line up and agenda in the event brochure.
CURE and Yale, in collaboration with Boehringer Ingelheim, presents “Patients and Big Data in Healthcare: Deriving Value and Accelerating Innovation.” In an increasingly digital age, healthcare stakeholders can access significant amounts of data and knowledge using various platforms. Critically, this “big data,” represents a vast quantity of complex and diverse information. While payers, providers, healthcare experts and the pharmaceutical industry have the capability to analyze this data to gain insight, this information can be overwhelming to patients. This BioHaven event, moderated by Richard Foster, has convened a panel of experts to explore the topic of “big data,” the role of the patient in data analytics, the role of payers and what actionable data represents. Further discussion will explore the state of the art, including discussing national hospital systems using big data and local ones in CT and at Yale. Finally, the discussion will conclude with discussion about effectively incorporating big data into operations and where the field is headed.
Special kudos to my valued colleague Faye Lindsay, who was instrumental in pulling this event together!
Some of the topics the moderator and panelists will consider:
Defining and Exploring the topic
Tell us what “big data” means to you and why it is important. Give us one example which illustrates the best use of big data to date.
What is the role of the patient in data analytics? Does it benefit them? Do they naturally do it? How error prone are the data they provide directly?
What is the role of the payer in all of this. Can they get the data they need to better set rates? Will “big data” help or hurt the payers?
What is actionable data? What are the three major areas where we are making progress?
State of the Art
Where is the best state of the art in using data to improve outcomes in the US? How do we know that is true?
What hospital systems or MCOs are most advanced?
How are we doing in CT compared to other states? How do we know?
What is the state of the art in healthcare info tech/big data in the US. Where? Why? What do we need to do to catch up?
Unanticipated Consequences
Will all this measurement result in intense, and from time time, unproductive rivalries between docs, or hospital systems?
How can the providers use “big data” and not put at risk the effectiveness of current medical care delivery processes which have takes years to define and perfect?
Specific Subtopics
Big Data and the bottom 5%
We know we spend $1.35 T on 5% of the population. Do we know who they are and how we can best treat them. How much can we expect to reduce the cost, or improve the quality of the health care delivered to these patients?
Big Data and Quality
Integrating Big Data into Operations, effectively
What is coming?
Who is controlling the pace of advance in Big Data these days – Academia (who), the Payers (who?), the providers (who?) the Feds (who and who in HHS/CMS?) What about the role of the National Cancer Hospitals. Or other specialized (by disease/condition) providers (e.g. DaVita)
Moderator:
Richard N. Foster, PhD, Emeritus Director, McKinsey and Co; Lecturer, Yale School of Management.
Dr. Foster is an emeritus director of McKinsey & Company, Inc. where he was a Director and Senior Partner. While at McKinsey he founded several practices including the healthcare practice and the private equity practices, the technology practice and innovation practice. From 1995 to 1998 he led McKinsey’s worldwide knowledge development.
At Yale, Dr. Foster teaches “Managing In Times of Rapid Change” and serves as the Executive in Residence at the Yale Entrepreneurial Institute. Dr. Foster’s research interests are in the relationships between capital formation, innovation, and regulation. Dr. Foster has written two best-selling books: Innovation: The Attacker’s Advantage (1986) and Creative Destruction (2001), both of which were cited as among the “ten best books of the year” when they were published by the Harvard Business Review.
Dr. Foster’s work has appeared in Business Week, the Wall Street Journal, the New York Times as well as several dozen articles in research and popular journals. Dr. Foster was recognized as one of their ten “Masters of Innovation” in the past century. He was the external leader of the Concil on Foreign Relations Study Group on Technological Innovation and Economic Performance which led to the publication of Technological Innovation Economic Performance (2001, Princeton University Press).
Panelists:
Harlan Krumholz, MD, Harold H. Hines Jr. Professor of Medicine (Cardiology) and Professor of Investigative Medicine and of Public Health (Health Policy); Co-Director, Clinical Scholars Program; Director, Yale-New Haven Hospital Center for Outcomes Research and Evaluation.
Dr. Krumholz’s research focuses on improving patient outcomes, health system performance and population health. His work with health care companies has led to new models of transparency and data sharing. His work with the U.S. government has led to the development of a portfolio of national, publicly reported measures of hospital performance. These measures also became part of several provisions of the health reform bill. He is currently working with leaders in China on government-funded efforts to establish a national research and performance improvement network.
Dr. Krumholz is an elected member of the Institute of Medicine, the Association of American Physicians, and the American Society for Clinical Investigation. He is a Distinguished Scientist of the American Heart Association. He serves on the Board of Trustees of the American College of Cardiology, the Board of Directors of the American Board of Internal Medicine and the Board of Governors of the Patient-Centered Outcomes Research Institute.
Rishi Bhalerao, MBA, Director of PatientsLikeMe, a free patient network and real-time health research platform.
At PatientsLikeMe Rishi manages major relationships with industry partners. Prior to joining PatientsLikeMe, Rishi spent several years as a management consultant with the Boston Consulting Group (BCG), and more recently, as an innovation consultant, at a firm started by Prof. Clay Christensen of the Harvard Business School. He earned an MBA from the Ross School of Business at the University of Michigan and also holds undergraduate and graduate degrees in Engineering.
You Xi
Director of Business Analytics at Boehringer Ingelheim Pharmaceuticals (BI)and leads a team of analysts conducting analysis across all BI’s portfolio and communicating findings and strategic insights to internal stakeholders (Marketing, Sales, Managed Markets, Sr. Management etc.).
The key deliverables include using various data sources to measure performance, build promotional mix optimization modeling, behavior segmentation, portfolio optimization, etc. Prior to BI, You was a consultant at ZS Associates and then held various management roles in the pharmaceutical industry including Takeda Pharmaceuticals and Novartis.
Michael Matteo
Mike Matteo is chief growth officer at Optum, where he is responsible for creating and enabling growth across the company. Matteo focuses on the needs and opportunities of Optum’s customers and how the company can deliver creative, innovative solutions that meet their objectives. Prior to bringing his passion for modernizing the health care system to Optum in 2012, Matteo served for four years as chief executive officer of UnitedHealthcare National Accounts, where he expanded the company’s industry-leading position in the large-employer marketplace. Prior to becoming CEO, Matteo led business development efforts for UnitedHealthcare National Accounts, where previously he worked in product development and was instrumental in designing and launching the company’s first consumer-driven product innovations. He joined UnitedHealth Group in 1997 as a strategic account executive, helping many of the company’s largest employer clients meet their health care objectives.
Before joining UnitedHealth Group, Matteo was with Physicians Health Services, where he served the needs of major clients as an underwriting director and senior account executive. He began his career serving in multiple roles with Traveler’s Insurance Companies. Matteo graduated magna cum laude with honors from the College of the Holy Cross, and participated in the Columbia University Executive Management Program. He is on the boards of the MetroHartford Alliance, Hartford YMCA, and Connecticut Science Center, and served as chairperson of the Greater Hartford Arts Council Capital Campaign.
Why is this a billion dollar question? – The traditional business model of the pharmaceutical industry is broken. The focus shifts to incentivize patient-centric outcomes, prevention and behavior change in the global battle against a mounting wave of chronic diseases such as diabetes. In search for a new business “beyond the pill” the pharmaceutical industry joins other stakeholders in the healthcare system to align and pull in this same direction. First data-driven results are highly anticipated – well, here they are, so don’t miss this milestone event!
The awards will be held at an inspiring new venue, 7 World Trade Center, and include the opportunity to explore some of the top corporate innovations in North America, network with innovation leaders, and hear from our guest speaker from Virgin Galactic.
The awards recognize and celebrate the achievements of individuals and teams who are working within large companies to deliver game changing innovation and growth.
The awards will be held at an inspiring new venue, 7 World Trade Center, and include the opportunity to explore some of the top corporate innovations in North America, network with innovation leaders, and hear from our guest speaker from Virgin Galactic.
The awards recognize and celebrate the achievements of individuals and teams who are working within large companies to deliver game changing innovation and growth.
Join me for the Expert Chat on “Prototyping and Pitching” on Wednesday, October 29 at 10am ET. The Social Intrapreneurship for Innovation in Health and Wellness course attracts participants from around the world (23 countries on 6 continents) to develop prototypes for new social intrapreneuring and social entrepreneuring ventures as a collaborative social innovation platform.
Course Description
This 6-weeks online course is facilitated by Joseph Agoada and Megan Coolidge of Ashoka and powered by TechChange, the institute for technology and social change in cooperation with Boehringer Ingelheim.
As the world rapidly changes new employer and employee skills such as changemaking, teamwork, empathy and leadership are fundamental to an institution’s ability to innovate and grow into the future. Ignoring the need for these new skills leads to loss of opportunity and competitiveness, along with increased redundancy and inefficiency. Social intrapreneurship is a methodology for sparking, cultivating, advancing and scaling social innovation within institutions by capitalizing on trends such as technology advancement and globalization, deploying agile and start-up strategies and building the core changemaker skill set. Check out why Forbes is calling the Social Intrapreneur the Most Valuable Employee of 2014.
Ashoka, the world’s largest network of social innovation and entrepreneurship, has teamed up with Boehringer Ingelheim, a world leading pharmaceutical lab with a corporate vision for “value through innovation”, to create a six-week online course in social intrapreneurship for innovation in health and wellness. In this course, you will connect with participants from institutions across the private, public, and nonprofit sectors and convene to learn entrepreneurial and start-up strategies for creating positive social and business impact in the health and wellness space.
In this course you will:
Prepare for a lead or supporting role in developing a health and wellness innovation with social and business impact
Gain skills and strategies to garner internal and external support for innovative projects
Learn how to collaboratively advance innovation in a bureaucratic setting
Connect with a network of intrapreneurs and innovators to share ideas, make critical connections, and get continuous support and feedback
Complete a final group prototype project using Ashoka’s innovative concept formation and collaboration techniques
Through an online dynamic learning environment, which utilizes Ashoka’s and Boehringer Ingelheim’s knowledge and networks in intrapreneurship, students will join facilitators and leading experts in the field to discuss case studies, major trends and social business ideas to keep you on the cutting edge of intrapreneurship.
Course Topics:
Week 1: The Business Case for Social Intrapreneurship
Week 2: Selecting and Framing an Intrapreneurial Problem Statement
Week 3: Strategies for Advancing Social Innovation Within Your Institution
Driving Innovation & Measuring ROI While Ensuring Risk AvoidanceLearn actionable best practices and get thought provoking advice on how to overcome the challenges that arise from the constantly evolving multi-channel marketing and social media world including:
Navigating the roadmap to a successful social media strategy
Leveraging the power of mobile to improve ROI & increase employee engagement
Creating a patient-centric digital experience
Measuring the ROI of a digital marketing campaign
Winning buy-in from patients, physicians, and payors
Identifying your brand through social media and digital media
Understanding the public health imperatives of social media
Identifying the five keys to creating highly trusted, shareable content
Implementing adherence programs to increase patient engagement
Tapping into patient communities to learn more about needs concerns
Integrating digital media into your overall marketing plan to maximize brand impact
As the world rapidly changes new employer and employee skills such as changemaking, teamwork, empathy and leadership are fundamental to an institution’s ability to innovate and grow into the future. Ignoring the need for these new skills leads to loss of opportunity and competitiveness, along with increased redundancy and inefficiency. Social intrapreneurship is a methodology for sparking, cultivating, advancing and scaling social innovation within institutions by capitalizing on trends such as technology advancement and globalization, deploying agile and start-up strategies and building the core changemaker skill set. Check out why Forbes is calling the Social Intrapreneur the Most Valuable Employee of 2014.
Ashoka, the world’s largest network of social innovation and entrepreneurship, has teamed up with Boehringer Ingelheim, a world leading pharmaceutical lab with a corporate vision for “value through innovation”, to create a six-week online course in social intrapreneurship for innovation in health and wellness. In this course, you will connect with participants from institutions across the private, public, and nonprofit sectors and convene to learn entrepreneurial and start-up strategies for creating positive social and business impact in the health and wellness space.
In this course you will:
Prepare for a lead or supporting role in developing a health and wellness innovation with social and business impact
Gain skills and strategies to garner internal and external support for innovative projects
Learn how to collaboratively advance innovation in a bureaucratic setting
Connect with a network of intrapreneurs and innovators to share ideas, make critical connections, and get continuous support and feedback
Complete a final group prototype project using Ashoka’s innovative concept formation and collaboration techniques
Through an online dynamic learning environment, which utilizes Ashoka’s and Boehringer Ingelheim’s knowledge and networks in intrapreneurship, students will join facilitators and leading experts in the field to discuss case studies, major trends and social business ideas to keep you on the cutting edge of intrapreneurship.
Course Topics:
Week 1: The Business Case for Social Intrapreneurship
Week 2: Selecting and Framing an Intrapreneurial Problem Statement
Week 3: Strategies for Advancing Social Innovation Within Your Institution
German researchers Philipp Gellert and Martin Müller of the Business Innovation and Change Management Dept. of the University of Applied Science in Munich, Germany (Hochschule München) published their international business consulting study “Konzept für Führungskräfte zur Implementierung einer Innovationsstrategie” (in German language only) in summer 2014.
The otherwise mostly self-explanatory graphics (see below) shows how different approaches increase employee innovation mindset (vertical axis) with long-term impact (“Langfristig”) in the upper right. The study implicitly confirms the power of intrapreneurial and disruptive approaches. Note that it explicitly mentions several intrapreneurial approaches I developed and also covered in my www.OrgChanger.com blog in more detail:
Innovation Lab (“Innovationslabor”) – not yet covered on www.OrgChanger.com
Graphics on page 57 shows “School for Intrapreneurs” and “Angel Investing” as long-term shifters of employee innovation mindset in the upper right corner!
Innovation projects are risky explorations. Disruptive innovation projects even more so, and individual projects can be quite a gamble. So, how can you limit the risk across your portfolio of innovation projects? The goal is to increase the likelihood for the portfolio to succeed overall even if individual projects fail.
(Quick note for project management professionals: I am deliberately not differentiating terms like “portfolio” and “program” here. My goal is to get the basic idea across. More particular definitions don’t add value here.)
In mature organizations, incremental improvement can easily be and often is interpreted as ‘innovation’, which makes sense when optimizing a production environment, for example. Here, at the back-end of operations, big “elephant” projects tend to bind the organizations resources (How to grow innovation elephants in large organizations). The innovation project portfolio I am referring to, in contrast, aims at the disruptive end: the “small elephant projects” with higher risk but the potential of extraordinarily high returns if they succeed.
Why to manage risk
In large organizations you hardly get a “carte blanche” to manage just highly risky projects. With a corporate focus on predictable, short-term results there is too much concern of the portfolio easily becoming an unpredictable money pit. You are likely to get shut down after playing around a while without demonstrating clear success in terms of return-of-investment. Thus, you will need to come up with a strategy on how to compose your project portfolio to keep your stakeholders happy and your experimental playground open.
Risk Categories
Managing risk across a project portfolio comes down to finding the right blend of high-risk/high-return projects and lower risk projects that come with less impressive potential for revenue or savings. You also want to include a few projects that produce returns short-term to demonstrate you are making progress and reap some quick wins for impatient stakeholders while the longer-term projects need time to mature.
A common way to approach categorizing projects into into Core, Adjacent and Transformational based on their risk and return profiles:
Core projects are merely optimizations to improve the existing landscape of systems, processes, assets or products in existing markets and with existing customers. These incremental improvements are the “safe bet” and “next small step” that, typically, comes with low risk, predictable outcomes but also limited returns. They do not need high level sponsorship, are easy to predict and plan resources for, and so they are the favored playing field of mature, large organizations. These can often be ‘large elephant’ projects seen as ‘necessary’ that the organization more easily buys into.
Adjacent projects come with more uncertainty and risks as they usually extend existing product lines into new markets. Though not an entire novelty it is may be new territory for your company. Sometime, ‘imitating’ a successful model in a different industry does the trick (read also: Imitators beat Innovators!).
Adjacencies add to the existing business(es), which requires a higher level sponsorship (such as Vice President level) to move forward, to allocate resources and to accept the risk to fail.
Transformative projects are experimental and risky. They create new markets and customers with bold, disruptive “break-through” products and new business model. While the risk to fail is high, the returns could be huge when you succeed. Highest level (C-level) sponsorship and support is crucial for this category not only to persist and get resources during the development phase but also for the mature organization to adopt and support it sustainably.
Finding the balance
When you manage a portfolio of disruptive (read: transformative) innovation projects, you should expect projects not to succeed most of the time. Instead of calling it “failure,” see it as a learning opportunity. As Thomas Edison put it so famously referring to his experiments leading to the invention of the light-bulb: “I have not failed. I’ve just found 10,000 ways that won’t work.”
The common rule for playing a safe portfolio is a 70-20-10 mix, i.e. 70% core, 20% adjacent and 10% transformative projects. This way, many low-risk/low-return core projects keep the lights on while you play with few high-risk/high-return transformative projects.
Experiences
From my personal experience with the portfolio I manage, I leans towards accepting more risk, so you would expect and be comfortable with a lower success rate as a consequence but also higher returns. To my own surprise, we completed 55% of our projects successfully and ended up discontinuing 26%. Fortunately, also the average ROI from our “small elephant” projects is substantial and pays the bills for many years out. Thus, for my portfolio, the 70-20-10 mix is too conservative.
Before re-balancing your portfolio in favor of a majority of risky transformative projects, however, make sure you have continued high-level sponsorship and alignment with strategy and organizational culture of your organization. – If culture, strategy and sponsorship don’t align to support your innovation portfolio efforts, your risk increases for painful learning without sufficient business success.
One of my favorite and most successful approaches to building a powerful intrapreneuring ecosystem is internal corporate venturing!
It is an exquisite tool to cut through the crust of ‘red tape’ that bureaucracy builds up over time. Internal corporate venturing or “Angel investing” allows for nimble decision-making with a lean process to give disruptive innovation ideas a chance again in a large company.
How does it work? Think of becoming a venture capitalist within the company: You invest in ventures within the organization and help building ‘intraprises’ in contrast to funding start-up enterprises outside the company. The difference is a you don’t venture for your own profit but for the better of your organization.
The idea here is to seed-fund promising disruptive ideas that otherwise would not be implemented or even seriously considered. These opportunities –typically‑ were rejected by the ‘corporate immune system’ previously, when an employee with an idea approached their line manager or a governance committee of sorts requesting approval to ‘try something out.’
Often enough, there is no clear return-of-investment (ROI) predictable for these early ideas. What you may be looking for is rather risky and experimental, a proof-of-concept (POC). The metrics for payoff and ROI of disruptive ideas does not follow the same approach we are used to measure the more predictable returns of common cost reduction and incremental improvement projects. Disruptive POC projects often don’t have an ROI projection when you explore technology of sorts or its application that may become a game-changer for our future business.
In my experience, communicating the POC nature of the project over focusing on ROI can actually help! It prevents the ‘organizational immune system’ from kicking in early on, since there is little threat to established practices. Why? It does not come across as competing with ‘big elephant’ projects over significant amounts of governed resources following the conventional processes of the company’s machinery. Instead, we just try something out! It’s a little experiment that doesn’t change anything, so it poses no threat to established practices, investments or the power-base of individuals defending their fiefdoms.
Having said this, there is of course a commercial end to all projects. After all, we have no resources to waste and will have to demonstrate down the road that our ‘experiments’ pay off somehow. Our working assumption is that the disruption should lead to a ten-fold (10X) payoff – at least.
Personally, I prefer aiming at a bold 100X ROI target; two orders of magnitude, that is. It sets an ambitious target and -if things work out- a great success story. It’s a powerful point to make for disruptive innovation as part of our innovation ecosystem and shifting the mindset within an organization. Sharing these success stories with executive stakeholders is crucial (for future support) as well as with employees (for future ideas).
Interestingly, what employees are looking for more than funds is authorization to do what is right and worthwhile for the company. Often, the obstacles are perceived and only exist in peoples’ minds. These barriers are formed by many factors over time, such as the management style they experienced and organizational silos that mold a company’s culture as well as the employees’ mindset.
In this particular company, a lean oversight board makes funding decisions. It is composed of a diverse team of more forward-thinking executives and a very lean decision process. The team acts as enabling ‘go-keeper’ for accelerated innovations instead of pushing the breaks as ‘gate-keeper.’
The little monies offered for trying something new only help smoothen the path for innovators in the company. The most important part is them feeling empowered and “authorized” to take action that overcomes complacency, inertia and organizational paralysis. On the spectrum of strategic innovation roles, the board serves as a “sponsor” and sometimes as a “coach,” when an idea aims to overcome internal barriers to increase efficiency, for example.
The purpose of this governance board is to enable the exploration of disruptive ideas by giving internal innovators a chance. The focus is on projects that can be characterized as early stage experiments to explore transformative enabling technologies and value-adding services of higher risk or less predictable outcomes than conventional project portfolios in the mature organization would feel comfortable with.
Naturally, this approach comes with an elevated risk of failure when projects do not produce profitable outcomes or simply prove infeasible or poorly timed. This ‘price’ is accepted as long as it generates learning.
The potential damage is low, since we are talking about swift and low-cost experimentation: try often and fail fast. Thus, these risky projects complement regular and more conservative project portfolios in the various businesses of the organization. In addition, the innovation project portfolio is somewhat risk-balanced, which avoids having too many high risk projects that may jeopardize the likelihood of profitability across the portfolio. Reality is that also the disruptive innovation project portfolio has to demonstrate tangible returns over time, so the mature organization sees the economic benefit of experimenting and not shut down this ‘playground.’
Branding the projects as experiments with a proof-of-concept (POC) endpoint helps to calm the ‘organizational immune system’ and to argue that these risky ‘small elephant’ projects complement the other ‘big elephant’ project portfolios across the organization.
Here are my experiences as an internal corporate venturer or ‘angel investor’ from the past years: First of all, I don’t have much money to spend. The budget I have for this kind of ventures is pathetically meager – and I overcommit it all the time! Nonetheless, I came in under budget once again by 46% last year. It sounds like an oxymoron, and since I don’t have a money tree growing in the backyard, how does this work?
The secret is in the psychology of acting as the “first investor.” Think of this way: when someone wants you to invest into their idea first with nobody else having made an investment before you, you are skeptical and most hesitant to put down your money, right?
All I do is to commit paying for an idea in full to overcome this initial threshold and get things started. What typically happens next is that an executive from the business affected by or potentially benefiting from the project hears of my investment, reconsiders and wants to get on board too – as a second investor. Once the ‘innovation guys’ have put money down first, the investment in the idea appears less risky to the business executive, so either we split the bill or the business takes on the cost completely!
I’ve seen it happen many times with managers turning around 180 degrees after they had rejected the idea previously. This is how to deal with them: to save (their) face, don’t point out their earlier resistance but rather thank and recognize them for their support and foresight as valued contributors to change and success for the organization. Celebrate them as enablers, win them over as allies and keep the connection for future collaborations!
Alignment and validation
Don’t be mistaken, funding by the business is not only crucial given the fact that my funds are few. It is even more important because it validates that the idea makes sense to the business. It aligns with strategy and goals of the organization but also helps implementing it once the business has ‘skin’ in the game! Otherwise, even if I funded a project alone, the intrapreneur running it would have a hard time getting it implemented without the support of a business sponsor.
So all it takes is making it easy for business executives to invest in a good ideas by making them feel comfortable not to invest first, which reduces their perceived risk and lowers their threshold to act.
Key Learnings
The lean innovation governance board is an instrument for reasonable oversight that benefits from diverse perspectives.
The “Go keeper” instead of “Gate keeper” process is crucial as is the willingness to accept risk of failure for disruptive projects.
The model proves highly effective to get around a convoluted “red-tape” bureaucracy as well as generating a surprisingly high return-of-investment (ROI) – even without the latter being the primary focus.
The “first investor” psychology validates the alignment of ideas with business needs and strategy while opening the flow of funds from the businesses and facilitating the implementation.
This internal corporate venturing or “angel investing” approach became a beacon of hope for employees and a very profitable innovation engine for the organization that starts to change the organizational culture to the better.
Driving innovation in large organizations is like herding elephants. Big and small elephants. – How so?
Elephants come in different sizes
Big Elephants in the Back-Office
In large organizations, departments gravitate to sub-optimize their core business. Silos form under local management to run their department more efficient – following the old mantra: do more with less.
(Read more about silos forming at Leadership vs Management? What is wrong with middle management?)
Although all business functions are affected, corporate Information Technology (IT) departments often lend themselves as best examples for a “big elephant” world: they are critical enablers in a pivotal position of every modern organization. Even though the success of practically every business function hinges on IT, also IT is not immune to this silo-forming phenomenon in large organizations.
Over time and with ‘organizational maturity’, the IT department tends to end up focusing on what they do best: large back-office projects that cannot be funded or run by any business function in isolation, since they span across disciplines or impact the entire enterprise. Just one examples for a “big elephant” project is implementing a comprehensive Enterprise Resource Planning (ERP) system across multiple locations internationally.
This is the back-office domain and comfort zone of IT with technology know-how, big budgets, long duration, high visibility, rigid governance and clear processes to follow.
Small Elephants in the Front-Office
In contrast, the front-office typically comprises Marketing, Sales and Product Development. Here, a small tweak or agile change (that requires some IT input) can go a long way and have significant impact on organizational effectiveness and business results. – These micro-innovations are “small elephants” as recent Gartner research coined them.
These little disruptions to the slower-moving big elephant world easily trigger the “corporate immune-system” that favors large elephants and suppressing small emerging ones.
Typically, most projects in large organization aim to reduce cost in some way. Only a minority of projects address new business and growth opportunities that tend to come with uncertainty and greater risk.
While big elephants are typically incremental improvement project to save cost, it’s the small elephants that are more likely to be disruptive drivers of growth and future business opportunities: the much needed life-blood of sustaining business and future prosperity.
Barriers in the Big Elephant World
IT departments tend to struggle the farther they move away from their ‘core competency’ meaning leaving the big-elephant back-office and dealing with the myriad of small needs of the customer-facing units in the small-elephant front-office.
Many reasons contribute to say “No!” to emerging small elephants:
Small elephants are disruptive to the big elephant world, perhaps even threatening to the establishment
It is hard for the back-office to accept that there cannot be much standardization around these small small elephant solutions by the very nature of their scope and scale
It is cumbersome to plan and manage resources scattered across small projects that pop up left and right without significantly impacting big elephant projects. Unfortunately, pressure to save cost only fuels the focus on fewer, bigger elephants.
Gartner brings the dilemma to the point: “[..] the focus on optimization, standardization and commoditization that underlies IT’s success in the back office is contrary and even detrimental to the needs of the front office.”
Insights in front-end processes and customer needs are essential (and not usual IT back-office competencies) to seize small elephant opportunities, which are often disruptive and driven by the agile intrapreneurial spirit that makes full use of the diversity of thought and understanding customers deeply.
– See also The Rise of the Intrapreneur
On top of it all, the challenge for IT is to understand the potential and pay-off for initiatives that rely on IT in a domain outside of IT’s expertise: In the mature world of big elephants, ROI projections are demanded upfront and based on models that apply to mature organizations. These models typically do not apply well to measure project ROI in the emergent worlds of small elephants, which puts the small elephants at a disadvantage; another disconnect that easily leads big elephant organizations to reject proposed small elephants.
As a bottom-line, for large IT departments it is simple and convenient to say ‘No!’ to requests for “micro-innovations” coming in from employees scattered across the front-offices. And, sadly, often enough this is exactly what happens. Despite the lasting impact of “No!” (see also How Intrapreneurs avoid “No!”), turning ideas and proposals down too fast also leaves out opportunity for huge innovation potentials (see also 10x vs 10% – Are you still ready for breakthrough innovation?).
What happens to IT without small elephants?
Ignoring the need for micro-innovations and notsupporting them effectively will not serve IT departments well in the long-run. With only big-elephant focus IT departments are at high risk to lose sight of the needs of their internal customers. Consequently, IT undermines and finally loses its broader usefulness, acceptance and footing in the business functions they intend to serve.
When small elephants are neglected or blocked, it practically forces the front-office to look for other resources sooner or later in order IT-services providing resources to get their needs taken care of. Over time, the big IT department drifts to become more and more obsolete, and finally replaced by agile and responsive agencies and contractors that deliver on their front-office customer needs.
After all, IT’s general role is one of an enabler for the core businesses rather than being perceived by its customers as a stop-gap.
How to raise Small Elephants
So, what can a mature yet forward looking IT organization do to support micro-innovations – or ‘balance the herd,’ so to speak, to include a healthy number of small elephants in the mix?
Brad Kenney of Ernest&Young recommends limited but dedicated resources (including time) for micro-innovations in Ernest&Young’s 2011 report “Progressions – Building Pharma 3.0”;
for example, dedicate 10% of the expert’s time to implement micro-innovations
Test changes in emerging markets first, if possible, where agility is high at a lower risk of jeopardizing the bottom line or threatening the established organization and its investments in mature markets
Establish effective collaboration platforms that make it easy for employees to openly and conveniently share content among each other as well as with external parties.
How Intrapreneuring helps
A systematic approach to Intrapreneuring can go a long way to help move these micro-innovations forward. It starts with systematic intrapreneurial skill-building for employees across all levels of hierarchy and includes:
Understanding how innovation happens in large organizations, i.e. large and small elephants and the need for both to exist
Helping employees become aware of and overcome their own mental barriers and silo-thinking
Attracting, inspiring and engaging employees to take their idea forward knowing there are obstacles in their way
Training skills that help to frame, develop and pitch ideas to potential supporters and sponsors
Building and presenting a business case for review and improvement by peers and management
Enabling and empowering employees to bring their small elephants to life and sharing the story of their success to inspire others
Working to gradually change the mindset of the organization, its culture, as needed, to become more balanced on the elephant scale, to unlock the resources within the own workforce and to seize opportunities for growth and the future of the business.
Just as out there in the wild, without raising small elephants the life-span of organizations with only big elephants is limited.
Can strategic innovation rely on creative chaos? – To make a long story short, the answer is: No! Read what it takes to consistently innovate and give you a very cool example too.
2. How to become the strategic innovation leader? (part 2 of 3) What is an innovation leader? Is this role similar to an innovator? (The answer is ‘no’.) – Recognize the three key roles in innovation, how to find an approach and avoid critical pitfalls.
Not everything new is an innovation and some is more renovation than in innovation. Here is a framework that helps to distinguish an innovator from a renovator and works for entrepreneurs and intrapreneurs alike. It is important to understand which role to play and when; it all depends on what you need to achieve and what is critical to reach your goal!
Creating value through new products is not enough. Capturing the value requires equal attention on the innovation process. Focusing on creativity and neglecting execution along the value chain is a costly mistake.
5. Why too much trust hurts innovation Most managers understand that trust is a key ingredient to effective collaboration and innovation. Yet, few actively try to cultivate and nourish trust in their own organization to achieve the right mix between trust and constructive tension.
6. Imitators beat Innovators! You thought Facebook was the original? Or YouTube? Or LinkedIn? – Get ready for your wake-up call! Break-through innovations are over-rated! Imitators are successful by combining someone else’s innovation with the imitator’s advantage and by doing so they can become innovators themselves!
7. Boost ‘Group Intelligence’ for better decisions!
Group intelligence can be increased and lead to better decision-making – or why not to rely on a group of geniuses! New research breaks the ground to understand collaborative intelligence and the – but how to apply it to the workplace?
8. Collective Intelligence: The Genomics of Crowds Group intelligence beats individual brilliance – and businesses are willing to pay for the crowd’s wisdom in the social sphere. The MIT’s ‘genetic’ model allows combining social ‘genes’ to harness the collective intelligence of crowd wisdom successfully and sustainably; areas of application are scientific research or business/employee resource groups, for example.
In IBM’s 2012 CEO Study, top leaders identified openness and collaboration as the critical areas to master change in the coming years – how do leadership and employees prepare for the new challenges?
About the CEO study
IBM conducts a ‘CEO Study’ every other year, interviewing more than 1,700 CEOs and public sector leaders from around the world on their views. The top leaders identified openness and collaboration as the critical areas to address and master our ‘connected economy’ over the coming years.
This year’s CEO Study looks into the future of 2015 to 2017. The focus shifts to leveraging the softer factors, namely people and innovation, to navigate and connect in an increasingly technology-driven world that reshapes the workplace and the marketplace. The CEOs agree that change is the only constant. There is no ‘normal’ anymore – say good-bye to a stable status quo and expect unpredictability!
Let’s look at some key findings:
Pivotal technology
Technology is the enabler for relationships and collaboration in the new age. What has changed is how people interact with others as well as with and within organizations. Technology now ranks number one of all external factors that influence organizations – surpassing people skills and market factors, which reflects a dramatic shift over the past years. This makes technology the driver and single most important differentiator for successful organizations as 75% of CEOs agree – and a field that organizations cannot afford to fall behind in.
Outperforming organizations prepare for the convergence we see in the “digital, social and mobile spheres – connecting customers, employees, and partners in new ways to organizations and to each other.” Thus, the driving forces for success in organizations remain with innovation and people to master and leverage technology.
Future leadership traits
What does this mean for leaders? What are the traits looked for in leaders to master the challenge?
Organizations look for leaders that inspire. Leaders who are obsessed with understanding their customer as a persona and what drives their individual behavior. Leaders who work as a team across the C-level suite to align and combine the organization’s assets and strengths.
Half of the CEOs expect social channels to be a primary way to engage customers. No wonder that outperforming organizations are those who have the ability to translate data effectively into insights and insights into action, or so 84% of the study responders believe.
These organizations manage change better. They are open to venture into other industries or explore even more disruptive innovation by creating entirely new industries and business models. Strong analytical capabilities to uncover patterns are only one side of the coin, where the other is creative and connected minds that can answer questions no one thought to ask in the first place.
Innovation dilemma
But what if your organization is not the out-performer? What does it take your organization to get there?
It is no secret that large companies tend to lose their innovative momentum; see Starting an ERG as a strategic innovation engine! (part 3 of 3). To compensate the lack of creativity within, they buy start-ups, for example, or focus on hiring only the best and brightest (a.k.a. ‘war on talent’) to fuel their future idea and product pipelines.
What happens in reality, however, is that hiring managers like to look at the ‘odd-ball’ applicant, the out-of-the-box thinker they acclaim to look for, but then play it safe when it comes to decision time and go with a ‘lower risk’ candidate instead.
This leads to the next dilemma: Job applicants noticed the trend and adapted. There is new truth to the survival of the fittest: When you look at applicants for management positions, you may notice that their resumes and interview responses became increasingly similar over the past years. They present themselves homogenous and ‘smooth’ with as little personal ‘edges’ as possible that may stick out and cause controversy. The common theme you hear is the mistakes the candidates would not make – rather than articulating what they would do in their new role.
Risk-avoidance wins over leadership taking charge. This mindset works its way down the hierarchy and across the organization. You can notice it in narrow job descriptions, many detailed rules, and processes full of ‘red tape’. It does not surprise that innovation perishes in large organizations and management turns to buy fresh ideas from the outside in one way or another.
Innovation from within
Innovation means taking risks; yet we tend to hire ‘safe’ and complacent managers and leaders that don’t rock the boat too much. What we get in the end is a somewhat harmonized workforce that lacks diversity of thought ‑ despite possibly matching more visible and publicly promotable diversity criteria (see also How to create innovation culture with diversity!).
Reinventing innovation from within an organization is not always easy. It requires top management commitment to build a strong internal framework and foster intrapreneurship throughout the workforce. It takes establishing a reliable, predictable, and continuous innovation process with room to experiment and learning from failure. For a simple reason, all this is necessary to succeed: you cannot leave your workforce behind if you seek creative ideas that lead to the next discovery and breakthrough. – Read more on How to become the strategic innovation leader? (part 2 of 3).
Employees of the Future
Ever-new technological advances shifted change to the unpredictable: pervasive smart-devices, mobility, virtual social networks and the ‘big data’ flood this combination generates, new business models they enable, and so on. Organizations cannot even anticipate anymore what skills their workforce will need in only three or so years from now.
Consequently, rather than looking for specific skills (which is the starting point for the “war on talent”) they look for flexibility in employees to create and respond to disruptive innovations and change to new businesses and business models. The most valued future employees must be comfortable with change and ambiguity, able to adapt and even reinvent themselves while leveraging their personal networks for professional success. This is why human capital is seen most important (by 71% of CEOs) to make connections that fuel creativity and innovation for sustained economic value and growth.
The 2012 ‘Pulse of the Profession’ study by Project Management Institute (PMI) comes to similar results from a project management perspective: It notes that organizations seek to become more agile by placing more importance on change management and project risk management as well as on talent management to grow and conquer new markets.
Lead with openness and values
It requires more than inspiration to tap into employees effectively and on a deeper level than what their job description outlines. Setting tight rules proves counterproductive, since the surrounding ambiguity makes it impossible to foresee and regulate all possible cases.
Quite the opposite is needed: opening up and establishing a framework of values that guide employees in their response and dealing with unforeseen situations and customer interactions. This value framework provides a bed for ideas to flow freely but also to connect with employees and let them to bring their whole self to work ‑ including their social networks.
Yet, in an increasingly connected world, innovation cannot come from inside of the organization alone. Out-performers take risks by accepting and inviting innovative sparks from outside their own organization in ‘win-win’ partnerships that amplify innovation for growth. Within, they communicate a clear purpose and mission with ethics and values that resonate with and guide their staff while fostering a collaborative environment.
Innovation Partnerships and Alliances
Many have tried to make it to the top alone but only few organizations truly understood how to integrate and control their entire value chain in sustainable ways. As a lesson to learn from, Apple stands as an example for a company that was close to losing everything but learned from its mistakes. Apple famously re-invented itself to become to most validated company worldwide (read more how Apples did it in Innovate to Implement!)
Success requires a broad organizational open-mindedness and flexibility to think and act disruptive were needed. The CEOs see the future in innovation partnerships and close alliances where organizations share their data and collaborate on a deeper level than before without holding tight control.
Vasa’s historic project management lesson Building a battleship is a huge project today as it was hundreds of years ago. Yet, as project managers, do we learn from the past or stumble into the same pitfalls over again? ‑ Learning from the ‘Vasa’ project disaster, the grandest battleship of its time sank just minutes into her maiden voyage!
Sweden’s Great Power period
In the 17th century, Sweden was at the top of its game. It emerged as a leading power in Europe during the so-called ‘Great Power period’ (1561–1721) characterized by a constant state of war with its neighbors in the Baltic Sea.
King Gustav Adolphus of Sweden
When King Gustavus Adolphus (1611-1632) inherited the Swedish throne, he was out to change naval warfare entirely earning him the later title “father of modern warfare” for revolutionizing naval tactics.
In those days, boarding was common practice, i.e. pulling side by side to an enemy ship, enter it, and fight man-to-man to take over the ship. The King found these tactics outdated. It was time for a new era of large battleships, which demand the enemy’s respect, serving as firing platforms for mighty cannons to fight from a distance, and project Sweden’s power even beyond the Baltic Sea. The firepower of its guns would now decide the outcome of the battle at sea and bring victory. Thus, the ambitious Gustavus Adolphus needed a new class of heavy ‘ships-of-the-line’ to exchange devastating salvos from afar.
Setting sails to a new era!
After severe setbacks in the war with Poland, Sweden’s naval superiority in the Baltic Sea was in jeopardy. In 1625, the King commissioned the Royal War Ship ‘Vasa’ as the first and grandest of four ships of the new era. The Vasa was planned with an overall length of 69m (226ft), 1,210 tons displacement, 10 sails, dozens of cannons and the capacity to hold 450 men (150 sailors and 300 soldiers). It was a bold statement: the Vasa was the most powerful battleship of its time, no expenses spared!
Vasa model
Spoiler alert, the unthinkable happened: Three years later, on 10 August 1628, the Vasa sank just minutes and a mile into her maiden voyage with over 100 men aboard; over 50 sailors perished.
Putting on the Project Manager’s hat
From a project management perspective, building the Vasa was the most expensive project ever undertaken by Sweden and it was a total loss. – What had gone wrong?
Humankind throughout history has undertaken large and innovative construction projects many times and with success. It is safe to assume that the people in charge applied the best project management practices known at the time to increase the likelihood of project success, i.e. delivering a product to the sponsor’s satisfaction.
Naturally, it is easy for us standing on the ‘hill of the presence’ and look back down into the ‘valley of the past’. Today we have access to sophisticated and detailed procedures for project management, which are generic and serve as a guide to run projects of any nature and size successfully. For example, the Project Management Institute’s Body of Knowledge, PMI’s PMBOK is such a general and proven framework that everyone can learn and follow.
Starting a project
In my experience, it is important for a project manager to have strong sponsorship commitment and ability to control the project scope.
The king himself was the principal stakeholder and sole sponsor of the projects to construct the Vasa and the other three ships to follow with all power and wealth concentrated in the sovereign’s hands. What a great prerequisite to getting the project moving! On the downside, however, this powerful sponsor can also take more influence over the project than is good for the end product, the Vasa.
Therefore, managing the scope is crucial. It includes clarifying the project scope up front and controlling possible changes to the scope throughout the project. Controlling scope does not mean that no changes are possible after the project starts – this would be unrealistic. It means that foreseeable risks and impact on resources, time, quality and other factors need to be evaluated and made transparent to the stakeholders for their approval. It means avoiding ‘small’ changes finding their way into the scope without evaluating risks and adjusting for impact. This communication is a major aspect of the project manager’s job.
As a rule, changes late in the project will increase the cost dramatically, so avoiding ‘scope creep’, i.e. uncontrolled changes late in the game, is crucial.
Stakeholder influence and Cost relation
Scaling up
In January 1625, King Gustavus Adolphus commissioned four new ships over the next years in two sizes, the longest keel length measuring 41m (135ft) and shorter one still an impressive 33m (108ft) keel. He entrusted Admiral Fleming to oversee this program, as the King himself chose to tend personally to the ongoing wars abroad instead. Hybertsson, a competent and experienced shipbuilder was put in charge to manage the Vasa project as the first ship to be built.
The wood for Vasa had already been cut to size when a devastating storm destroyed 10 Swedish ships. Facing his losses and struggling to fill the gap, the King changed his order: He now wanted the smaller ships first to replenish his fleet faster.
This way the Vasa started out to as a smaller ship with a 33m/108ft keel in 1625 but -as we will see- became as a scaled-up vessel again with a long 41m/135ft keel over the course of the project. This was just the first of the King’s frequent and profound design changes during the construction phase and after the keel for the Vasa had been laid. Like the foundation for a house, the keel is a most critical part of a ship’s design; it sets and limits many following structural and other technical characteristics.
Building up to the tipping point
Time pressure from the King and a constant stream of significant alterations continued. Hybertsson did not seem to find time to get the plans for the ship adjusted and re-drawn every time anymore. With the ship’s dimension increasing again over time and adding innovative specifications, Hybertsson left his known terrain and ventured into the unknown of ship-building. Faltering under time pressure, the layout for a smaller ship was simply scaled up to become a larger frame to house the newly specifications. Changes hardly found their way into documentation anymore.
The changes affected not only the length but also the width of the ship. It had to be widened to accommodate more superstructure, another innovation that shifted the ship’s critical center of gravity higher making it less stable at sea. Given the original shorter keel layout, there was simply not enough space to add ballast to give the ship the stability it needed to counterbalance its increasingly heavy top.
Bringing in heavy artillery
The situation got worse. Sweden struggled to win the upper hand in the ongoing war when news arrived that rivaling Denmark planned a large battleship too. The King swiftly ordered adding a second gun deck to triple the armament from initially 24 to now 64 heavy guns plus some smaller guns! The center of gravity rose even higher with the second gun deck, the widened hull, and the added weight of the heavy cannons.
Only 48 of these guns were on board during the maiden voyage ‑ because the gun manufacturer was running behind schedule as were the shipbuilders.
Next, the King ordered hundreds of artisan outfitting sculpted in heavy oak wood and painted lavishly to impress with splendor. It made making the Vasa not only the most impressive and expensive ship of its time but also added more to its instability at sea.
In summary, frequent change orders were issued under time pressure. Changes remained undocumented and without deeper consideration of their consequences. The project schedule and milestones slipped, while the Vasa became larger and heavier than her layout could safely support.
From bad to worse
By now, the project was in serious peril. ‑ But wait, it gets even worse!
One year before completing, the shipbuilder Hybertsson fell ill and died. His assistants, Jacobsson and Ibrandsson, would share the responsibility to continue but only after a period of confusion on who was in charge and direction the workforce of now 400 men. The project management was already poor but suffered even more in the vacuum of accountability and the continued absence of reliable plans and documentation.
Stability is critical for the seaworthiness of every ship. Unfortunately, knowledge and underpinning for reliable calculations for stiffness and stability were not yet developed. The only way to find out if a ship would heel over and sink or not was to try it out in as so-called ‘lurch’ test: 30 men ran from one side of the ship to the other back and forth to make it rock. It took only three runs for the Vasa to rock so violently that the ship risked tipping over – the test was discontinued.
Now, due diligence was obviously applied as good as possible by conducting the stability test as an experiment with observable outcomes. – Having a previous post in mind, “How to apply metrics?” this experimentation deserves a heartfelt “Bravo!”
The circumstances of the test, however, also tell the story of lacking communication and coordination within the project team and with stakeholders: While Admiral Fleming and Hannson, the future Captain of the Vasa, were present during the test, while the shipbuilders, Jacobsson and Ibrandsson, were not present. They were not even informed about the outcome! It raises the question if the builders even knew the test was conducted in the first place. Yet, the Admiral insisted the ballast was too heavy, as it pulled down the hull with the gun-ports coming dangerously close to the water line.
Modern calculations confirmed that the ballast was only half of what was needed to stabilize the ship, but proper ballast would also have drawn the lower gun-ports under water.
The impatient King did not come in person to inspect the Vasa project progress (or its issues) but simply demanded challenging results from afar: He set the deadline for the Vasa launch to late July 1628 and threatened subjects who would not comply with his royal demand ever increasing the pressure.
The bitter end of a prestige project
The day of the maiden voyage came in mid-August 1628, several weeks after the King’s final deadline had run out. The outcomes were horrifying for the King’s prestige project: Just a mile or so into her voyage a light gust of wind caught the sails. The Vasa heeled over on its side and water poured in through the gun-ports. The mighty ship sank on the spot in Stockholm’s harbor ‑ a total and tragic loss of ship and lives.
Vasa capsizing
From a project manager’s perspective, just about every error imaginable was made over the course of this doomed project: ‘Scope creep’ from frequent change requests, no process to address the consequences of the changes, a distant yet overpowering sponsor, intense time pressure on the project schedule, poor communication all around, a lack of documentation, unclear responsibilities, ignorance of risk and impact of unfamiliar innovations, disregarding (or covering up?) results from the failing stability test, and so forth. The absence of project documentation leaves many details in the dark to date.
Following our human nature, whenever a project fails the search for a scapegoat begins: Captain Hannson was jailed immediately. However, the following investigation concluded that nobody was to blame! No reasons were specified for the sinking of Vasa. Perhaps even more interesting, the question was never raised during the investigation whyVasa became top-heavy. It reflects a negligence to learn from past failures for future success, so the fate of ships and crews were left to trial-and-error.
Scope, Change, and Communication
Coming back to the earlier discussion on what is most important to control as a project manager, major issues in the Vasa project arose specifically from:
Stakeholder (dis)engagement – The stakeholder’s perception from afar is prone to dis-align with the situation the project manager faces on the ground. This gets amplified easily by poor communication between sponsor/stakeholders and the project manager, whose primary task is actually communication over anything else – quite contrary to common belief.
The King gave orders from afar without visiting the construction to connect with key players and make more informed decisions; apparently, also his communication with the Admiral, the King’s representative ‘on the ground’, was not effective either.
Admittedly, in those days consequences for failure could be severe and go far beyond what we can imagine today in a corporate environment. The pressure felt by the Vasa‘s project manager and reluctance to speak up may be hard to fathom today.
‘Scope creep’ – The project plan for Vasa was established with a schedule and a projected timeline by when the product would be available; in this case, when the Vasa would swim and be ready for battle. Typically, early estimates found on or favor best-case scenarios. They are outdated only a few weeks into a project of the Vasa size. They need to get updated periodically taking account of changes requested and unforeseen obstacles encountered. A specific finishing date should not be offered at the beginning of the project without careful communication about the associated risks, so as not to nurture unrealistic expectations by sponsor and stakeholders. It needs to be closely managed, adjusted and communicated transparently by the project manager.
The King demanded significant changes throughout the project’s duration that translated into time and money lost. Bear in mind that the King does not know every task that goes into each change and the risks it induces. It demonstrates, even more, the importance of a controlled change management process that reflects the impact of each change transparent and realistically. This gives the sponsor or stakeholders a chance to reconsider whether the change should then be approved or not. As an iron rule, you cannot have it all: cheap, fast and with high-quality, so it is important to choose accordingly.
Unrealistic expectations – The common belief prevailed for several hundred years that a bigger ship, tall and impressive, carrying more guns, etc. would also be ‘more indestructible’. – Too much ambition and the deceiving belief of ‘too big to fail’ sank also another world’s largest ship marking a superlative disaster in 1912: the Titanic.
Nowadays, a project management office (PMO) can help to define project management standards and processes to achieve consistency across projects, which also helps to educate the sponsor on risks and help them set expectations realistically.
After the Vasa disaster
Today, scientific methods, as well as refined and formalized project management methodologies, exist, such as the PMI’s PMBOK, which prepare project managers to deliver the project results reliably and with satisfying scope, time, and quality. However, there is no silver bullet for project success since we are all humans prone to make mistakes often based on assumptions, beliefs, and unhealthy ambition. Even the best method is only as good as the degree to which it is applied and enforced!
In the end, large and heavy double-deck gunships were built and launched successfully. They ruled the seas for a long time, among them the USS Constitution. This ship was launched in 1797 with firepower comparable to the Vasa but nearly twice the displacement of 2,200 tons. This well-measured ballast made the ship safe, seaworthy and successful. With reconstruction completed in 1995, the USS Constitution is on display in Boston today as the world’s oldest commissioned naval vessel still afloat.
USS_Constitution
The Vasa today
The Vasa lay in the shallow waters of Stockholm harbor for centuries. Early attempts to salvage it remained fruitless. The wreck was located in 1956 and finally raised in 1961, a full 333 years after Vasa sank.
Usually, organisms such as worms eat away the wood of ships over time but not so the Vasa. It remained in the same condition it sank due to the inhospitable waters off Stockholm. The adverse environment preserved the Vasa so well that it was even able to float with its gun-ports sealed and after water and mud were pumped out of the hull!
Vasa salvaged
The Vasa is on now display in Stockholm and housed in a dedicated museum specially built for it. Around 30 million people visited the Vasa as one of Sweden’s most popular tourist attractions – a late glory for the grandest battleship that never saw a battle.
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