3 Primary Criteria to Assess Your Innovation
Besides assessing each initiative
individually for risk, investment, return, and timing, assess your
total portfolio to ensure that you have the right initiatives in it:
and strategic fit.
How much does your portfolio push the industry frontiers, and
how well does it fit with your business goals and
Capabilities and capacity.
Do you have the required
executive the portfolio and do you have enough of them? No
innovation strategy or portfolio is meaningful if don’t possess
the capabilities and capacity to execute it. When the demand for
resources exceeds their supply, a bottleneck forms and work
grinds to a halt. To address this problem,
Silicon Valley firms use two basic approaches: (1) they load
their innovation system to no more than 85% of the actual
capacity, and (2) classify innovation initiatives into broad
categories, determined by size and skill requirement, and then
create templates that summarize the resource and capability
requirements for completing each type.
Leverage and risk. Have you
leveraged your investments so that you have a productivity
advantage, while keeping risk within acceptable bounds? Leverage
is what separates winners and losers. You can get leverage, for
instance, from a
platform product, a core product design that
can be tailored with small changes to meet many different
customer applications. Internally, by migrating to a common
platform, you will be able to concentrate employees’ learning on
a single product architecture. The platform approach also
reduces the number of suppliers that you rely upon, increasing
your cost leverage: the same parts can be used repeatedly. The
platform strategy also means that when you undertake a new
derivative, the degree of change is sufficiently small that is
also confines risk and increases reliability.
are successful to the extent to which they define risks and confine
Relentless Growth, Christopher Meyer
"Modern Management", Ninth Edition, Samuel C. Certo
There are four reasons why you should use the
portfolio approach to
The portfolio is a risk
management tool. If you have more innovation initiatives under way than
traditional firms, and you are prone to stretch farther within each
initiative, without an overall view of your innovation efforts, you
could easily wind up taking too much or too little risk.
Visibility. The portfolio provides visibility that allows your
firm pace the introduction of new products and services. You should
balance the introduction of
revolutionary products with incremental improvements in others so as
to maintain a steady flow. By having a comprehensive view of your
initiatives over time, you can avoid either overwhelming or
underwhelming the marketplace.
Timing of New Initiatives. The innovation portfolio will help you
time when you start a new initiative or transfer a completed one into
manufacturing or the marketplace.
Synergies. The portfolio
illuminates potential leverage opportunities among technologies,
processes, products, and markets. This capability will enable your firm
to get more for each innovation dollar while reducing development cost
and risk, reduce complexity and free up people to work on tasks that
greater customer value.
Portfolio is much more than just a list of
initiatives. You should also create charts that compare these initiatives
across dimensions such as stretch, strategic fit, risk, potential return and
resource requirements. By using different charts as lenses to compare
initiatives, you can mix and match alternatives until you come up with the
that's right for you.
Achieving the Right Balance
Between Stretch and Strategic Fit
The first test for any innovation portfolio is
the right balance between stretch and strategic fit. If you engage in
hyperreactiveness thinking and continually react to the latest market or
trend, rather than following a course until there is a
significant reason to change, you’ll fail. The key to avoiding such
short-term thinking is to maintain
strategic alignment and test the assumptions that drive new products and
service decisions as you make these choices.
Synergize Incremental and Radical Innovations
innovation portfolio between the immediate and the future to achieve
bottom-line results and top-line growth...
Innovation Football (Innoball)
is a breakthrough simulation game that helps innovators achieve great
success in the real world.
Innoball helps you:
KoRe 10 Innovative
Kore 10 Metaphoric Tools
invent new things,
anticipate market shifts and your opponents' moves, find creative
to a complex problem design
How to decide If your innovation portfolio has
enough stretch? Silicon Valley firms use the following methods...
Steve Jobs returned to Apple in 1997, he
looked at the number of proposed research and development projects. Then he
stopped most of them. Today, the Apple
brand is known for
venture strategies, small but value-added product range and
great launch program...
12 Rules of Success
Project selection is a highly
competitive and tightly managed process – not all projects get funded.
For new high-risk and high-potential-return projects, project teams work
hard to find opportunities for lowering costs and reducing risks.
and the corporate
team formally review individual projects three times a year,
making decisions about the portfolio...