Slay the Dragon of Risky Innovation

It is well accepted that companies who embrace innovation achieve competitive advantage and prevail in difficult times…

while companies that do not innovate become less competitive and can’t survive due to their lower performance.

Even though most companies write in their vision statement something like “leading by innovation” in most cases that declaration is not much more than beautiful words. Few of them have a strategy based on innovation. Several companies are not continuously innovating, rather innovating casually and haphazardly. When they implement innovation projects, usually they suffer high stress, because their mindset is the mindset of efficiency and optimization, while innovation deals a lot with experimentation and uncertainty.

Sponsors of innovation projects are intrapreneurs; therefore they are optimistic and perseverant by nature. As a project manager, your mission is not to be optimistic nor pessimistic, but realistic. You should have the ability to identify risks and to project scenarios, and to prepare risk responses and to have contingency plans to minimize economic and productive losses in case of failure.

The change of a piece of equipment in the production line by a prototype that can produce new products or achieve superior levels of quality and productivity correspond to a typical innovation project in production lines. The sponsors of the project usually have high expectations. Vendors and manufacturers of the equipment are very optimistic too (it cannot be another way because they must sell you the equipment). In general, manufacturers have tested the equipment in their factories, but factories conditions differ in much aspects to the environment in which the equipment should work.

Innovation, by nature, implies risk. You should realize that success is just a possibility, not a particular result. Other possibilities are a partial success (or partial failure) and total failure. Eventually, goals will be achieved, but rarely on the first try. Innovation implies iteration.
Some problems that can be present during commissioning of a prototype productive machine are:

1. Product specifications not achieved.
2. Specified productivity or quality rates not achieved.
3. Excessive time in the adjustment or calibration process.
4. Erratic or unstable performance.

The impossibility to achieve product specifications and productivity or quality rates could be related to poor product specification during the design phase (possibly the equipment was designed to process a limited number of products, not the entire set produced in plant), poor raw material specification, incorrect design or lack of quality in the components or in the construction of the equipment.

Excessive time in the adjustment process and unstable performance could be related to poor design, insufficient testing of the prototype in the factory and uncontrolled variables like work environmental factors, variability in raw materials, etc.

If the calibration of the equipment takes several times the scheduled time with no significant improvements, it is time to realize that the problem is not adjustment but the design and go back to the engineering office to improve the design. Ideally, define with anticipation how much time will be available for changes, avoiding unsuccessful work and time.

While various of these causes could be prevented during the design or engineering phase, as a project manager, you must be prepared to confront these issues during the commissioning phase.

Some important questions to consider during planning risk responses are:

• Is the modification reversible?
• Can we produce and stock a considerable amount of product before that the replacement of the existing equipment is done, to replace the lack of production during the commissioning phase of the new equipment?
• In this case, what volume or quantity of production is necessary?
• There are other equipment or lines in the plant that, working at high production rates or in additional shifts, can compensate the production of the replaced equipment during the commissioning process?
• If we are not able to achieve to produce an individual product, what percentage of the production volume it represents?

The answer to these questions involves the engagement of several areas, like production planning, operations management, logistics, sales, etc. In some cases, it could be convenient to communicate the project goals to the clients, and by that way, get some flexibility from them, in view that the project will result in a better quality of the product or in better order completion time.

Finally, during the commissioning process, you must manage stakeholder’s expectations and moods. When things do not work as expected, frustration, rage, and discouragement appear. If you have developed scenario analysis and alternative plans, and you have communicated risks before the execution phase, you are in good standing.