I. The value of managing and investing in an innovation portfolio
The ability to effectively manage and invest in an innovation portfolio is a critical success factor for many businesses. As the world changes fast, industries evolve and technologies advance, it is paramount for organizations to stay ahead of the curve, maintaining RELEVANCE and competitiveness.
A well-curated innovation portfolio signifies that a company is not only ADAPTING TO THE PRESENT but is also FORWARD-THINKING, ensuring long-term sustainability and growth. However, the challenge lies in deciding which innovative initiatives to invest in, how to allocate resources efficiently, and ensuring these initiatives align with the strategic goals of the organization.
II. What can you do to manage and invest in your innovation portfolio
Based on a comprehensive review of the literature, the following are the evidence-based options that can be implemented to manage and invest in your innovation portfolio:
- Time allocation for innovation
- Cross-functional innovation teams
- Continuous learning & training
- Resource reallocation strategy
- Stage-gate process
- Balanced portfolio approach
- Open innovation strategy
- Return on innovation (ROI) analysis
- Innovation lab / Incubator
- Idea crowdsourcing platform
1. Time allocation for innovation
- Description: Set aside dedicated time for employees to work on innovative projects outside of their regular duties.
- Implementation plan: Introduce policies like “20% Time” where employees spend a set portion of their time on innovation.
- Roles & responsibilities: Managers ensure policy adherence, employees manage their schedules.
- KPI's: Number of ideas generated, employee engagement levels, projects moved to implementation.
2. Cross-functional innovation teams
- Description: Teams composed of members from various departments to provide diverse perspectives on innovation.
- Implementation plan: Identify key stakeholders from different departments; form teams based on projects.
- Roles & responsibilities: A team leader coordinates efforts, members contribute based on expertise.
- KPI's: Number of projects completed, team member satisfaction, diversity of ideas generated.
3. Continuous learning & training
- Description: Equip teams with the latest tools, methodologies, and thinking in innovation.
- Implementation plan: Organize regular training sessions, workshops, or bring in external experts.
- Roles & responsibilities: HR/training department organizes sessions, employees attend and apply learning.
- KPI's: Number of training sessions held, employee feedback, application of new methods in projects.
4. Resource reallocation strategy
- Description: Systematically review and reallocate resources from less promising projects to more promising ones.
- Implementation plan: Regularly review project performance, shift resources as necessary.
- Roles & responsibilities: Portfolio managers conduct reviews, teams adjust based on resource availability.
- KPI's: Resource utilization rates, project success rates, agility in resource reallocation.
5. Stage-gate process
- Description: A structured process where new innovation projects are moved through sequential stages, with gates in between for evaluation.
- Implementation plan: Define clear stages and criteria for each gate. Review projects at each gate to decide whether to move forward, pivot, or halt.
- Roles & responsibilities: A cross-functional team evaluates projects at each gate. Management oversees the entire process.
- KPI's: Number of projects that progress to the next stage, time taken for each stage, percentage of successful projects that reach market readiness.
6. Balanced portfolio approach
- Description: Diversify the innovation portfolio across a mix of incremental, adjacent, and transformational projects.
- Implementation plan: Identify current project types and assess gaps. Allocate budget across different innovation types.
- Roles & responsibilities: Portfolio managers to balance projects. Teams specialize in different innovation types.
- KPI's: Percentage allocation to each innovation type, ROI from each category.
7. Open innovation strategy
- Description: Leverage external sources, such as startups, research institutions, or customers, for innovative ideas and projects.
- Implementation plan: Create platforms or partnerships to facilitate external collaborations. Run innovation contests or hackathons.
- Roles & responsibilities: Innovation managers to foster external relations, teams to integrate external ideas.
- KPI's: Number of external partnerships, percentage of successful external innovations.
8. Return on innovation (ROI) analysis
- Description: Use ROI to prioritize projects based on their potential returns relative to investment.
- Implementation plan: Establish criteria for ROI calculations. Evaluate all projects using this metric.
- Roles & responsibilities: Financial analysts calculate ROI. Management decides on project continuance based on ROI.
- KPI's: ROI of each project, comparison of expected vs. realized ROI.
9. Innovation lab / Incubator
- Description: Dedicated spaces or departments where new ideas can be experimented with without the pressures of business-as-usual operations.
- Implementation plan: Designate a physical space or virtual platform; allocate budget and resources for experiments.
- Roles & responsibilities: Lab managers oversee operations; interdisciplinary teams execute projects.
- KPI's: Number of prototypes developed, number of successful innovations moved to production.
10. Idea crowdsourcing platform
- Description: A digital platform to gather and evaluate innovative ideas from both internal and external stakeholders.
- Implementation plan: Develop or adopt a crowdsourcing platform, promote its use, evaluate submitted ideas.
- Roles & responsibilities: Platform administrators manage operations, cross-functional teams evaluate ideas.
- KPI's: Number of ideas submitted, stakeholder engagement, ideas moved to implementation.
Please note that the above options are crafted based on generalized situations, and the context and unique attributes of your organization should be considered for tailored solutions.
For more personalized and in depth solutions check out www.lowcostconsultancy.com
III. Critical assumption and test
Critical assumption: The selected innovation projects, when implemented effectively, will provide a competitive advantage and generate a positive ROI.
Test: Review past innovation projects to analyze the correlation between the success of the project and the growth or profitability of the company. Similarly, test the outcomes of a few selected projects based on the new criteria against expected results.
Implementation guide
How do you choose the right option and make it a reality?
Dive into our implementation guidelines. Crafted specifically for forward-thinking managers and entrepreneurs, it will help you evaluate and materialize the best solutions for your unique situation.
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VI. Sources
- Chesbrough, H. (2006). Open innovation: The new imperative for creating and profiting from technology. Harvard Business Press.
- Cooper, R.G. (2008). The Stage-Gate idea-to-launch process – Update, what’s new, and NexGen systems. Journal of Product Innovation Management, 25(3), 213-232.
- Day, G.S. (2007). Is it real? Can we win? Is it worth doing? Managing risk and reward in an innovation portfolio. Harvard Business Review, 85(12), 110.
- Hargadon, A. (2003). How breakthroughs happen: The surprising truth about how companies innovate. Harvard Business Press.
- Huckman, R.S., & Staats, B.R. (2011). Fluid tasks and fluid teams: The impact of diversity in experience and team familiarity on team performance. Manufacturing & Service Operations Management, 13(3), 310-328.
- McGrath, R.G., & Keil, T. (2007). The value captor’s process: Getting the most out of your new business ventures. Harvard Business Review, 85(5), 128-136.
- O’Reilly III, C.A., & Tushman, M.L. (2008). Ambidexterity as a dynamic capability: Resolving the innovator’s dilemma. Research in Organizational Behavior, 28, 185-206.
- Rigby, D.K., Zook, C., & Thomas, R. (2002). Innovation in Turbulent Times. Harvard Business Review, 80(6), 79-87.
- Souder, W.E., & Moenaert, R.K. (1992). Integrating marketing and R&D project personnel within innovation projects: An information uncertainty model. Journal of Management Studies, 29(4), 485-512.
- Thomke, S. (2003). Experimentation matters: Unlocking the potential of new technologies for innovation. Harvard Business Press.
Please note that while the sources listed provide substantial knowledge on the subjects, exact numbers, facts, or detailed insights should be extracted from the original publications for full context.