2 Basic Business Growth Strategies

Surprise To Win: 3 Strategies

Value Innovation: Yin-Yang Strategies 

 

Innovation Portfolio Silicon Valley (case study) Synergy

3 Primary Criteria to Assess Your Innovation Portfolio1

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:

  1. Stretch and strategic fit. How much does your portfolio push the industry frontiers, and how well does it fit with your business goals and strategy >>>

  2. Capabilities and capacity. Do you have the required capabilities to 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.

  3. 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.

 "Most innovators are successful to the extent to which they define risks and confine them." ~ Peter Drucker

 

Innovation Management and 80/20 Principle

 

 

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References:

1. Relentless Growth, Christopher Meyer

2. "Modern Management", Ninth Edition, Samuel C. Certo

The Four Reasons

There are four reasons why you should use the portfolio approach to manage innovation.1

  1. Risk Management. 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.

  2. 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.

  3. 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.

  4. Discovering 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 generate 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 portfolio that's right for you.

 

 

Achieving the Right Balance Between Stretch and Strategic Fit

The first test for any innovation portfolio is achieving the right balance between stretch and strategic fit. If you engage in hyperreactiveness thinking and continually react to the latest market or technological 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

Strike a synergistic balance in your innovation portfolio between the immediate and the future to achieve bottom-line results and top-line growth... More

Business e-Coach Simulation Game "Innovation Football"

Innovation Football (Innoball) is a breakthrough simulation game that helps innovators achieve great success in the real world.

Innoball helps you:

Business e-Coach Kore 10 Innovative Thinking Tools

The Kore 10 Metaphoric Tools help you invent new things, anticipate market shifts and your opponents' moves, find creative solutions to a complex problem design a synergistic innovation strategy... More

Case Studies Silicon Valley Companies

How to decide If your innovation portfolio has enough stretch? Silicon Valley firms use the following methods... More

Case Studies Apple

When 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 its lean venture strategies, small but value-added product range and great launch program... More

Steve Jobs' 12 Rules of Success

Case Studies Corning

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.  >>>

CEO and the corporate executive team formally review individual projects three times a year, making decisions about the portfolio... More