Background

Process innovation that is mentioned in the above table refers to an improvement in a process within the project. When you look at the management of portfolios, this comes into play in that organizations have to address processes that are used across their business units.

Companies need to stay competitive with their portfolios to ensure they have a competitive advantage in their industry. To do this, innovations both in processes with techniques and technology becomes critical. Process Innovation is integral to the management of portfolios because it provides a way for companies to continually push for the best in their portfolios, without which companies could easily fall behind their competitors in the constant battle to take more of the industry share.

In SMEs, the use of innovation when conducting portfolio management is even more crucial due to how much SMEs rely on projects to stay competitive. Using these various forms of innovation to their advantage throughout their portfolio management would be a beneficial step. It would help towards fully integrating innovation into their processes and systematically throughout their organisations as well.

SMEs tend to be structured in a way that is not only more conducive to a project based set up, but also to innovative capabilities. Structuring this innovation through incorporation into their project portfolios will only help to strengthen the innovative capabilities that help them to stay competitive and counteract against any vulnerabilities that they have compared to their larger competitors (Raymond et al., 2013).

(Liebowitz & Megbolugbe, 2003). It is a particularly useful approach given that SMEs tend not to be good at keeping track of previous projects (Todorović, Petrović, Mihić, Obradović, & Bushuyev, 2015a).

One framework dedicated to this is called the knowledge management framework. It consists of a number of layered steps which will achieve an integrated knowledge management adoption system throughout an organisation (Liebowitz & Megbolugbe, 2003). Figure 1: Knowledge Management Pyramid, is a visual representation of this framework. Each level of the pyramid will be discussed further below.

(Liebowitz & Megbolugbe, 2003)

The bottom layer of the pyramid represents the first set of steps that should be taken to incorporate knowledge management into an organisation. These are knowledge management awareness, performing knowledge management external benchmarking to see what other companies are doing, developing a knowledge taxonomy which acts as a vocabulary and a structure on which to base the knowledge management system, developing a strategy for knowledge management, and identifying target areas for the best use of knowledge management activities (Liebowitz & Megbolugbe, 2003). The next level of steps in the knowledge management framework are selecting the appropriate knowledge management tools and techniques, developing an organisational infrastructure, and building and nurturing online Communities of Practice, or ‘CoP’ as it is referenced as in Figure 1 (Liebowitz &

Figure 1: Knowledge management pyramid

Megbolugbe, 2003). After these steps have been achieved, the next layer of actions entails running and measuring pilot knowledge management programs and instituting these change management practices throughout the organisation (Liebowitz & Megbolugbe, 2003). Finally, knowledge management can be fully implemented and then continuously sustained and extended throughout the business culture (Liebowitz & Megbolugbe, 2003).

While this framework is more specific to the knowledge management portion of project management, there are other frameworks that incorporate knowledge management without being the main focus. One such framework was discussed by (Todorović, Petrović, Mihić, Obradović, & Bushuyev, 2015) in their article. The framework they presented was a more integrated framework for project success, which incorporated elements of knowledge management with other associated factors of project management.

Their framework is called the Project Success Analysis Framework, and it works under the assumption that every project is dependent on the unique business environment, specific to the organisation in which it is implemented.

The aim of the framework is to outline steps that would allow for the efficient and consistent monitoring and evaluation of projects throughout the entirety of their lifecycles (Todorović et al., 2015a). It also aims to allow for systematic analysis of the entire project (Todorović et al., 2015a), bringing to mind similar goals outlined earlier with regards to project management. The framework is based on a number of models, concepts, and methods that have been developed previously and it brings them together into one cohesive and integrated concept.

Within this framework there are four independent steps, each of which builds off of the previous stage throughout the project management process. The four steps are as follows:

1) Definition of a Project’s CSF’s (Critical Success Factors);

2) Definition of a Project’s KPI’s (Key Performance Indicators);

3) Measuring Project success according to defined KPI’s and documenting results of success measurement;

4) Final evaluation of project success and creation of the final project report.

Each of the steps has a particular purpose towards integrating knowledge and proper management techniques throughout the project lifecycle. An in-depth description of each of these steps will further explain how project management can be achieved and improved.

The first step, entitled ‘Definition of a project’s CSF’s’, is where the wider project environment is assessed (Todorović et al., 2015a). ‘CSF’ stands for the Critical Success Factors of an organisation

(Spalek, 2005), and a scanning of the environment, including analysing the external environment to the organisation where the project is being implemented, as well as the environment internal of the organisation taking on the project (Todorović et al., 2015a). Events surrounding the project or relating to the documentation of the project within the organisation must also be analysed. This includes the project itself and any related projects, processes, procedures, company rules and specifications, the availability of resources, technology and any support systems (Todorović et al., 2015a).

As scanning is occurring, the focus of the project has to remain on the main goal of the project, and incorporate effective project management to establish project plans, organise teams and ensure proper leadership, implementation of plans as well as monitoring and recording of the implementation process in order to achieve successful results (Todorović et al., 2015a). Conflict management, decision making, and managing risk must also be employed by project managers throughout this process (Todorović et al., 2015a).

An overview and an analysis of all of these elements allows for the generation of a comprehensive list of CSFs for a project (Todorović et al., 2015a). As not all of the CSFs will be necessary at every step of the project lifecycle, this step in the framework can be adopted visually through a lifecycle stage diagram where the previously identified CSFs can then be linked to each stage. It will also be important for project managers to describe the needed knowledge and task definitions to team members who are performing related activities (Todorović et al., 2015a). In this way, project team members can acquire the necessary skills and knowledge for particular tasks in order to execute them properly.

The second step, entitled ‘Definition of a project’s KPI’s’, is about looking towards the future and enhancing the decision-making process (Todorović et al., 2015a). KPI stands for ‘Key Performance Indicator(s)’ which are measurable values that demonstrate the effectiveness of a company at achieving their key business objectives and goals (Neely, Richards, Mills, Platts, & Bourne). In this stage, the importance of CSFs becomes clear as relying only on the success criteria of the Iron Triangle (Cost, Time, Quality) can lead to very narrow key performance indicators and success factors (Todorović et al., 2015a). To avoid this obstacle and instead achieve enhanced project performance, KPIs must take into account the project team, the organisation, and the environment the project will generate (Todorović et al., 2015a). After defining the CSFs specific to each lifecycle phase, measures must be defined for each CSF as the parameters for evaluating project success and then target levels must be established for each measure for project activities to reach (Todorović et al., 2015a).

The vast number of measurements used both for project management and for the reflection on project success are important to keep track of (Todorović et al., 2015a). KPIs and project performance measures allow for a detailed analysis of the elements in a project, the management projects, and what knowledge is necessary where within a project, in order to raise the chances of a successful conclusion (Todorović et al., 2015a). In addition, this collection of information, knowledge and measures can benefit future projects and future project management endeavours.

In the third step, entitled ‘Measuring project success according to defined KPI’s and documenting results of success measurement’, documentation is the main goal (Todorović et al., 2015a).

Documentation is important for two core reasons: for project and organisational sustainability, and for the decision-making processes that will take place in future projects (Todorović et al., 2015a). Some activities and results will be incredibly difficult to measure accurately throughout the project lifecycle, but these should still be measured, just to a lower level of accuracy (Todorović et al., 2015a). Defining methods for gathering, analysing and distributing data should be done in the planning phase of project management so that measuring and evaluation can be done to the fullest and most accurate degree possible throughout the rest of the project lifecycle (Todorović et al., 2015a).

This evaluation phase also has to weight various KPIs against each other in terms of priority, as well as the negative impact they will have on projects if they are not reached or if they are overshot (Todorović et al., 2015a). Turning this into a standardised system aids in the project process and in future project implementation and in successful conclusions.

The fourth and final step, entitled ‘Final evaluation of project success and creation of the final project report’, is the step where a final comprehensive evaluation of the project takes place (Todorović et al., 2015a). Documentation of every step of the project as outlined in the previous step becomes of clear importance when writing up the report to analyse the project once it is finished (Todorović et al., 2015a). Completed projects are a rarity in many companies, especially when the method of post-project audits is included as a step in the project lifecycle (Todorović et al., 2015a). This is an unfortunate fact, since post-project evaluations can identify any deviations in the process, data, or results, and the big-picture view it creates can help project managers and teams to see where they went wrong or what could have been done better to improve the process (Todorović et al., 2015a). The information gained from these audits can therefore progress implementation of processes in future projects undertaken by the organisation.

While the two frameworks described above relate specifically to project management, there also exist useful frameworks for the other types of management that have been discussed. With regards to portfolio management, it is important to understand that it is in fact a framework in and of itself. As a more recent subset of the research performed on project management, portfolio management has become a framework used to organise the various projects that organisations undertake at the same time.

In SMEs, having a framework of portfolio management in place is incredibly important because not only does the organisation have multiple projects occurring at once, but project managers and employees are more likely to be involved with numerous projects at once as well, all of which are using the same pool of resources. Often these multiple projects will have conflicting goals, or certain aspects of the projects that conflict with one another. In these cases, portfolio management allows for the allocation and organisation of resources. Management decisions on which projects should be prioritised, as well as how employees and project managers can organise their time and efforts to ensure that projects interfere with each other as little as possible, are also benefits of portfolio management to SMEs.

Instead, it ensures that the parallels of projects are utilised to the advantage of the firm and project teams.

Ensuring that the techniques employed in portfolio management lead to a portfolio that is best suited to achieving company strategies requires some strategic building criteria (Miguel, 2008). Incorporating strategy-based criteria into the decisions of which items stay and which go, as well as using prioritisation and top-down strategy models are a few examples of what techniques and processes can be used to maintain strategic alignment in portfolios (Miguel, 2008; Oliveira & Rozenfeld, 2010).

Another key strategy that can be used is to categorise each project in terms of the amount of change it will have towards furthering the strategic goals of the organisation (Miguel, 2008). Charts, diagrams, and other visual aids may also be useful to map out strategic objectives and where portfolio items fit within the larger picture (Miguel, 2008).

With regards to innovation management, a framework specific for SMEs was developed after an intensive literature review by Saunila in 2016. While the author of the study did not give a specific name to the framework, here it can be referred to as the Innovative Capabilities Improvement Framework.

This framework has four key propositions which are as follows:

1) ‘A firm’s innovation capability is determined by firm-specific contextual factors and enablers;

2) A firm’s innovation capability consists of seven determinants that overlap and influence each other;

3) Innovation capability can be developed through a proper use of performance measurements;

4) Facilitating innovation capability through performance measurements enhances a firm’s performance’ (Saunila, 2016).

These four propositions have been visually represented in Figure 2: Innovation Management Capability Framework. The purpose of the framework is to give a structured approach for SMEs to improve their innovation capabilities through the use of performance measurements. As is apparent in reviewing the frameworks for all three types of management, there are some key features such as measurement and analysis, as well as the interconnected nature of elements, which are crucial to the frameworks regardless of the type of management being addressed.

The first proposition outlined by this framework has to do with the firm-specific factors and enablers that help to determine an organisation’s innovative capability. With this proposition, it is important for management to keep in mind that there are factors about organisations that will help or hinder their innovation (Saunila, 2016). For example, certain industries are innately more innovative than others, and restrictions on financial resources will limit the types of innovative solutions that can be achieved.

The vision and strategy of a company will also impact the innovative capability, either enabling a more innovative culture, or acting as obstacles (Saunila, 2016).

The second proposition describes the interconnected nature of determinants. These are the seven factors located in the larger box labelled ‘Determinants of Innovation Capability’ in Figure 2. While it is sometimes viewed that factors influencing innovation are a homogenous group, this framework argues that these determinants are actually dynamic (Saunila, 2016). While the framework views them as interconnected factors, the use and applicability of each factor may differ depending on the type of firm and the type of innovation being employed within that firm (Saunila, 2016).

The third proposition is that innovation can be achieved through proper implementation of performance measures. This is a theme that was seen in Todorović et al. (2015b) framework for project management as well. Measurements, if conducted properly, can be incredibly beneficial tools for forwarding innovation initiatives in organisations (Saunila, 2016). Measures should be dynamic and continually under review to ensure that necessary changes are made to keep the measures relevant (Saunila, 2016). A variety of measures are adopted by an organisation as this can help to foster diversity in thinking and knowledge application which in turn helps to foster innovation (Saunila, 2016).

Finally, the fourth proposition is about measuring innovation itself, and how this can be beneficial to facilitate the innovative capability of a firm. Measuring innovation can and should be a strategically implemented management tool, so that proper decisions can be made based off of the measurement information (Saunila, 2016). As well, firms should start to focus their attention not only to just the measurement of performance, but further to the management of that performance (Saunila, 2016).

With regards to innovation capability measurements, the focus should be on evaluation and reacting to changes so that performance improvement is possible (Saunila, 2016). Finally, innovation measures should be aligned with the organisational strategy and with each other, and measures should be implemented at a number of levels and throughout the project lifecycle (Saunila, 2016). In doing so, measurement can be realised throughout the project process, turning capabilities into assets of the SME (Saunila, 2016).

(Saunila, 2016)