Transcript Confronting the “Risk vs. Innovation Dilemma” Don Stanford Cartoons courtesy of Scott Adams My approach to this topic     Draw on my real life experience Stick to.

Confronting the
“Risk vs. Innovation Dilemma”
Don Stanford
Cartoons courtesy of
Scott Adams
My approach to this topic
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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
My Background
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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 $100’s of billion of public funds on
behalf of governments in 30 States and 50 countries
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Highly regulated and audited environment
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High visibility and subject to large liquidated damages
for non-performance
What did we do for a living?
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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
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Leased line, Packet, VSATs, UHF Dataradios
Custom designed POS terminals
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Applications Software
Firmware
Custom Devices
My Qualifications as a “Process” Advocate
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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 I’m retired, it’s easy to talk about how it should
have gone down!
Some Assumptions
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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
Innovation
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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
Risk
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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
So, how do we innovate and reduce risk
at every step along the way?
Note:
Although projects involving innovation usually
incur more risk, risk awareness and mitigation
applies to almost any significant undertaking
Let’s start by looking at the classic PM
model
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Initiation
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Enthusiasm
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Planning
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Disillusionment
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Execution
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Panic
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Evaluation
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Search for the Guilty
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Correction
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Punish the Innocent
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Closure
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Reward the Uninvolved
Where is most of the risk?
HERE!
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Initiation
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Enthusiasm
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Planning
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Disillusionment
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Execution
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Panic
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Evaluation
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Search for the Guilty
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Correction
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Punish the Innocent
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Closure
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Reward the Uninvolved
So that’s were we will focus most of our discussion!
Initiation – “Enthusiasm”
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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
The Business Case a/k/a “The Promise”
Over Promising / Under Delivering
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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)
What can we do here to minimize risk?
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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
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After all, we don’t want to discourage Innovation!
Planning – Where trouble usually begins..
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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?”
 “Don’t confuse winning the job with doing the job”
The plan is incomplete and/or generalized and doesn’t adequately
address specific details and issues
 “We’ll 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….”
 “Don’t worry, this is going to be great”
Plan – “Disillusionment”
Planning – Risk Mitigation I
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Requirements, Requirements, Requirements
Schedule, Budget and Resource allocation are all highly
dependent upon Requirements, but oftentimes don’t
wait for a rigorous requirements analysis
The Requirements Process needs to answer:
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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?
Planning – Risk Mitigation II
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Requirements review, agreement and signoff by all
stakeholders is mandatory
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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 project’s Scope,
and Scope drives schedule, budget and resources
required
The people who plan the project should also be
intimately involved in DOING the project
Risk Mitigation III
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Reduce Complexity (KISS Principle)
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Complexity is the enemy within
It undermines the best efforts of all players
It is hard to understand, even harder to fix
Execution
The Death March Begins
Execution Risks – “Panic”
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Inadequate resources
Wrong skill sets
Incomplete understanding of the requirements and
objectives
Inefficient decision making process
Lot’s 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
Risk Mitigation in Execution I
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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 multidisciplinary 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)
Risk Mitigation in Execution II
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Bad behavior not permitted, no email flaming, no personal agendas
tolerated
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Maintain an open and honest line of communications between the
team, the leadership and senior mgmt.
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(no surprises, don’t shoot the messenger, listen, listen, listen…)
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Ensure that there is clear shared accountability among the team
members, their leader, and the corporate sponsor (brother’s keeper)
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Guard the requirements with your life! Scope changes require
approval by all stakeholders and appropriate changes to the plan!
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Continuous evaluation of performance against the plan and
adjustment to account for intangibles or the unexpected
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Keep management informed! No surprises late in the game!
Risk Mitigation in Execution III
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Distance is NOT your friend!
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Provide a work environment where the team can operate and communicate
effectively with minimal wasted time and effort
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Put as many members of the team as possible in close physical
proximity to each other
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Eliminate lots of “meetings” since impromptu discussion between
members should occur at any time
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Avoid situations where geography and time zones separate the critical
team members
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Knock down the walls….physical as well as psychological
Breaking down barriers, real or imagined, allows
Innovation to thrive!
An Example of Workspace
transformation to improve
project performance
Anti Collaboration Space
Knocking Down Walls!
Ice cream party where employees got to participate in wall
breaking in preparation for a workplace transformation
Going from this……
To This !
No High Walls
Easy to communicate
No place to hide…..
Bad things can and will happen!
Anticipate the Unanticipated
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Sh#t 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
Don’t use this as an excuse, after all, you committed to
managing the risk!
Don’t ever be afraid to ask for help….
Search for the Guilty
Evaluation – “Search for the Guilty”
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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
Correction – “Punish the Innocent”
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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
Closure – “Rewarding the Uninvolved”
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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
Final Thoughts
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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…..
My List
The UGLY
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The “Big Dig” (Boston)
Denver Int’l Airport
Windows OS
(all versions)
The Elegant
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The Chunnel
Boeing 777
The Macintosh and Mac
OS
The iPod (all versions)
Thank you…..
Questions?