How to Manage Your Current Innovation Portfolio

In many organizations, the biggest challenge is not defining new projects. The real challenge is setting clear priorities, choosing the right projects, and executing them successfully. Successful innovators master the art of Innovation Portfolio Management.

The most frustrating part of innovating is this: you know that it is very expensive, but the outcome is uncertain. Consultants James P. Andrew and Harold L. Sirkin wrote the insightful book Payback: Reaping the Rewards of Innovation on this subject. The authors subdivide the typical innovation project portfolio into 3 groups, each approximately a third of the sum of initiatives:

• the proven winners;
• the projects at the beginning phase—it is too early to predict success or failure;
• projects that have not been successful, but they are still executed.

So, the chances are that two-thirds of your innovation pipeline is not viable at the moment (and the future is uncertain) which is a heavy burden on your organization.

In other words, the biggest challenge is not defining new projects. The real challenge is setting clear priorities, choosing the right projects, and executing them successfully. This is why successful innovators master the art of innovation portfolio management.

I define Innovation Portfolio Management as “the process of constructing and administering a series of innovation initiatives with the aim of producing the highest overall return that’s in keeping with the accepted risk.”

More practically speaking, Innovation Portfolio Management means monitoring projects on well-defined metrics. So, only projects with a positive business case will be continued. The projects that do not show economic viability and/or product/market-fit will be canceled. In a rapid process, the viable projects are scaled up with the resources that are freed up.

How are you coping yourself? To test the health of your innovation portfolio, I invite you to ask yourself the following questions:

• Is the responsibility for innovation well embedded in my organization?
• Are people in our organization given explicit and sufficient time to brainstorm on new innovations?
• Do our communication platforms enable and stimulate innovation?
• Do we regularly organize innovation events (g., innovation days, hackathons)?
• Do we actively tap into the startup scene to fuel our innovation pipeline?

It can be illuminating to see how you compare to the competition, both regarding innovation portfolio management and other innovation topics. Our Innovation Readiness Benchmark is designed to identify the key improvement areas for your organization to help you become a best-in-class innovator. Click here to test the innovation power of your organization!

At RevelX, we design winning growth strategies, new business models, and (digital) innovation roadmaps to help you realize sustainable, double-digit growth. Could you use a hand innovating your business model and improving your innovation processes? Let us help you map your current innovation initiatives and define your future innovation portfolio.