Project Management in the Fuzzy Front End

In many organizations the pressure on the Product Development Process (PDP) has increased through the demand of greater product varieties and shorter lifecycles. Organizations aim for a structured way of speeding up the Product Development Process while not loosing effective scoping in the identification of market needs. Often they have succeeded using the Stage Gate Process - or a customized version of it. But even though the execution of an idea has increased in efficiency the search and selection of the ideas in the "Fuzzy Front End" of the Product Development Process resembles great complications to the project management. This comes with no surprise since the "Fuzzy Front End" is typically characterized through a high degree of uncertainty and equivocality. However transferring knowledge from the Risk Management tools for decision making under uncertainty or forecasting can be applied to ease the Project Management in the Fuzzy Front End.

Relevance of Project Management in the Fuzzy Front End

Project management is a management task divided into project definition, project implementation and project completion. The aim is that projects are properly planned and controlled so that the risks are limited, seized opportunities and project goals high, on time and be accomplished within budget. It is defined as a set of management tasks, organization, techniques and materials for the development of a project. In terms of product development the project management structure is strongly correlated with the success of the developed products. Contrary to the project management the purely functional structure has shown the lowest success rate. However managing a product development project needs to fulfill all the demands regarding quality, costs and time as any other project. Typical for product development projects is that in the very initial stages the resource commitment is still low, while there is a very high degree of uncertainties. Throughout the project the uncertaities decrease but the resource commitment increases strongly. In many cases high resource commitment can create a "lock-in" effect and leads organizations into pursuing projects which will fail in the end hoping, since they have invested heavily already, for a high return on invest. (technology, market, internal etc.). To avoid costly "lock-in" effects project management is highly relevant not only for the successful execution of the goal set within the quality, costs and time aimed for, but also regarding the correct setting of the goal. In terms of the project management in the field of product development this means to choose the "right" ideas to implement and launch as innovations on the market.

The "Fuzzy Front End"

Definition

Figure 1: Process Model of Innovation and the Fuzzry Front End

The Management of Innovation can be divided roughly into 4 stages:

1. Search - Finding opportunities for innovations
2. Select - Selecting the ideas to pursuit
3. Implement - Development of the product and launching it on the market
4. Capture - Capturing value from the innovation

On one hand most of the parameters for the later success or failure are set in the first two stages. On the other hand project managers are reluctant to make fast decisions because these stages are characterized with the highest risk and uncertainty levels of the whole process of innovation. The Search phase involves detecting signals in the environment like e.g. technological opportunities or changing requirements in the market. Here opportunities can be easily overseen. The Select phase the inputs from the Search phase are distilled and very few converted into an innovation concepts. Based on these concepts the whole organizational mechanism can now implement the innovation and capture value.

Hence in Innovation Management the Fuzzy Front End is considered the period between when an opportunity for a new product is first considered until the concept if the innovation enters the formal product development process. The Fuzzy Front End is an assortment of factors to control with difficulty, which create high uncertainty and risks for decision makers such as the project manager in charge: complex information processing, conflicting organizational pressures, market uncertainties, technology uncertainties, equivocality or reciprocal interdependencies to name a few. But it seems to get even more complicated: the Fuzzy Front End process seems not only to differ between firms but also between individual projects within the firms regarding e.g. individual activities, their sequencing, the overall duration and their degree of overlap.

Derived challenges of project management in the Fuzzy Front End

Based on the description of the Fuzzy Front End it is easy to comprehend the difficulties of organizational project management. Generally flexible project management skills are needed with a profound insight of the individual success factors of the firm and ability to adapt to changing conditions. For each project three types of constraints need to be discussed: should the idea screening be "gentle" or "harsh"? How formal should the Search and Select process be? How much uncertainty can be dealt with?

In the Searching phase the screening for opportunities in as many different ways as possible is key to success. However the organization should get rid of the bad ideas as quickly as possible in order to save costs of failed development. On the other hand a quick and "harsh" rejection can also sort out good ideas. Sometimes a "gentle" treatment of ideas is of advantage because they flourish through informal discussions in the company and then gain momentum. The next individual balance to be found regards freedom and formality. On one hand a high degree of formality can reduce risks create transparency and predictability. On the other hand a too high degree of formality can decrease innovation and flexibility. The project management needs to find an individual balance suitable for the project in all three constraints. Since the Fuzzy Front End differs to a very high degree between industries, companies and projects it is key success factor that the project manager is aware of the type of development project. The two types to be distinguished are incremental and radical innovations. Based on the type he can create the frame regarding the aforementioned constraints.

Project Management of incremental Innovations

Innovation Managers distinguish between radical and incremental innovations. In general incremental innovations are characterized by minor changes in existing products which cumulatively improve its performance. They often take place in the context of facelifts of products or the concept of continuous improvement. The scope is to improve quality and/or the productivity. However the underlying ideas in incremental innovations are not new but result often from the typical "learning curve" effect. Nevertheless most of the innovations take place in the incremental fashion and a successful project management can result in a stable ROI.

The Stage Gate Process

In development of incremental innovations organizations aim for a very structured way.

Project Management of radical Innovations

Radical Innovations, also breakthrough innovations or discontinuous innovation, completely change the nature of the product and bring hence a very high degree of novelty. These innovations often change the rules of their industry through opening up new opportunities but also challenging the existing players to reframe their operations.