Innovation Portfolio Management, the ultimate explanation
As per the latest research by Nyenrode, businesses with strong innovation portfolio management have better customer satisfaction, more profitability and so, higher innovation success rate.
If I ask you what allows a company to position itself in the market? You would probably say profit margins, choice of products or service, etc. But, I would say, ‘PORTFOLIO’ as it creates value for the customer and stands apart from other big players in the market.
In today’s unpredictable times, companies are required to build innovation strategies and consistently adapt to ever-changing business conditions.
Projects are delayed and companies have a big number of projects to work on. Regaining control over such hazardous business circumstances is not a win-win battle. You need a killer approach to put together everything that aligns with your business objectives.
Here begins the answer…
What is Innovation Portfolio Management?
Innovation Portfolio Management is an amalgamation of activities that facilitate every company to select, build, and market a new flow of initiatives. The kind of flow that fuels business’s short term and long-term goals.
Now, there are some hidden aspects to its meaning…
IPM is a tool to transform strategic objectives into innovation activities that are project-based. On the basis of risk profile, an innovation portfolio gives a framework to convert roughly produced ideas into real investment opportunities.
Why is an innovation portfolio called a risk management tool? It is because when more innovations are brought into action, the number of investments and resources also increases which gives a rise to the risk. Thus, it becomes necessary to minimize the risk factor before supplementing the visibility of your innovation portfolio.
Moreover, the innovation portfolio is a time management tool too. It helps in assessing the time required to complete to start a new initiative. Also, it can be used to reflect on potential opportunities that can be judiciously used as leverage in technologies, markets, and products or services.
Portfolio management is also the perfect way to manage the success of innovation. The success of innovation is most of the time measured by dividing the total number of successfully implemented innovation projects BY the total amount of started projects. The main goal of portfolio management is to measure and optimize the performance of innovation projects.
All of it contributes to business profits for all the innovations while reducing the production cost and risks as well.
What is important to bear in mind is that reacting to the ever-changing market trend is a little risky and also it is essential to follow a particular course until the change takes place.
Portfolio Review – What is it?
It is a decision-making forum designed to comply with portfolio goals while adjusting to ever-changing market conditions and project variances.
Unfortunately, companies use their annual budgeting process as the primary way to fund development projects. Technologies, markets, competitors, customer buying behaviour change rapidly.
A quarterly review cycle is required to review investment priorities and redistribution of resources. Here are a few ways through which you can avoid falling into these pitfalls:
Separate evaluation from the decision making process
The portfolio analysis team’s responsibilities involve validation of projects, prioritising projects to the decision-making team, and communicating portfolio review decisions to the company.
When the data is evaluated, summarised in charts and recommendations are laid out in advance, the governance team can use the portfolio review to make effective decisions.
Strengthen review objectives
Prior to heading towards analysis, start a healthy discussion with project leaders. If they are not familiar with project particulars, remind them of other forums that are more suitable for keeping up with current status on projects, functional meetings, phase gate reviews, and project dashboards.
The gated development process was primarily used to manage important business projects. It allowed senior managers to eye into projects while supporting project teams to implement between the gates.
Integrating Strategy and Execution through portfolio management
Considering the increasing level of complexity in companies, it is not easy to determine the future. According to the research by HBR Press, it shows that the concept of sustainable competitive advantage is sooner or later to be deserted.
In today’s age, a business strategy needs to sync with a fluid approach to cater to the business environment. It should provide flexibility to adapt to external and internal influences though the motivation to serve shareholders will not fade away.
Some bottlenecks that almost every company faces in these interconnected marketplaces are as follows:
Integration of strategy development and improvement with implementation to provide real tangible results. Businesses with no suitable strategy in place fail to transform their ideas into productive initiatives and integrate them within the organization. Distribution of scarce resources across initiatives to increase the business value, at the same time, diminishing risk for the company.
The hallmark of a portfolio management approach is the readiness to evaluate and optimize the portfolio well. The process can be improved by effectively using IT platforms.
The project is constantly assessed according to its contribution to corporate strategy and associated risk levels.
Balancing short-term and long-term innovation
Using a portfolio in innovation management required a few balances to be managed adequately:
To cover both short and long-term initiatives
To feature a range of business initiatives in the portfolios without losing concentration
By optimizing the current products, services, or business models, innovation is of utmost importance to lead it to profitable returns. But, it also plays a dominant role to secure long-term survival by discovering new territories be it, geographic or new ventures.
Sustainable innovation management should be focused on identifying and building up businesses in tandem with optimizing the existing ones.
A sense of accomplishment that comes with integrating different time formats horizons effectively turns out to be a highlighting aspect of innovation management.
Tips to manage innovation portfolio for business
In portfolio management, some factors play a massive role in the company’s distinctive position:
Strategic Innovation Portfolio Management
Business transitions are fluid due to which strategy needs to be aligned in a fluid way. This means that strategies have to be flexible to adapt to ever-changing market conditions.
Companies face business issues when they are not able to transit and integrate the transits into the company. So, sustainable innovation portfolio management should focus on finding and growing businesses in correspondence to optimizing the current ones.
Enterprises should be open to experimenting with a new line of products, technologies, and business models.
The direction of future innovations
A powerful portfolio has a clear focus and balance with current products and services and facilitates the development of impactful innovations. Portfolio moves with the market fluctuations give directions to future innovations and create high value for customers.
Moreover, a portfolio with clarity fosters the company’s goals because the strategy is translated into product and innovation projects already so that everyone in the team works on shared goals.
Project Portfolio management is a business process
Not just a management tool, but portfolio management acts as an organization-wide process too. Businesses that make choices from a portfolio mindset understand the relationship between various products, current projects, market changes, and strategic course of the organization.
Moreover, the focus is necessary to define the company’s course of actions for using its resources and to achieve a clear positioning in the market in relation to business needs, skills, and competition in the market.
A portfolio aligned with focus allows companies to make effective decisions regarding shortlisting innovation ideas, what projects to continue, and what to end, diversifying existing products and removal of existing products.
Evidence-based portfolio management
Effective portfolio decisions are usually powered by evidence-driven processes that emphasize on market insights, critical thinking abilities, and multidisciplinary collaboration. In case, if processes are not developed, informal politically driven processes will come into existence in the decision-making process.
Taking decisions on the basis of intuitions can enhance the agility of the enterprise if it meets evidence-driven decision making. But, if opinions by individuals gain control, one automatically loses the overview while innovation projects lead its own lives in the company.
This gives an outcome of portfolio overload in which the business has plenty of projects in development for resources in-hand.
Operational Portfolio Management
It does the execution of the innovation. While, there are of course important elements in innovation management like; project management, governance, the operational portfolio management takes into consideration the strategic intent.
Like a dashboard, operational portfolio management facilitates integrated planning and allocation of resources through smart tactics. It is actually quite essential as it crosses across the complex arrangement of dynamic change integrating multiple interrelationships to use it efficiently.
Project management boards are utilized here if there are major project plan variances or strategic clashes.
How Accept Mission construct your Innovation Portfolio?
At Accept Mission, we help to organize and execute innovation portfolio management to maximize innovation success. Our software assists you with the categorization of the portfolio, balancing the innovation portfolio, organizing the innovative processes – gates and suitable metrics and design, and execution of persistent brainstorming and funnel management.
We have the perfect software solution to manage your innovation portfolio. The platform with multiple tools can help engage, collect and transform ideas into value innovation projects that scale the companies overall growth. We believe that innovation is a structured process to develop ideas into business value. Eventually creativity, better decision making and higher business value.
The tool helps for managing innovation projects
Projects time and money calculations
Smart Decision-making go/no go next stages.
Boost innovation success rate by implementing innovation projects step-by-step
Stage gate overview of innovation portfolio
Reporting on progress and success measurements
Selection tool for smart decision making
Decide what potential projects are becoming projects to be executed in the portfolio
Decide if the project can go to the next stage of the portfolio.
Decision making to help customers and partners help in making better decisions on the way.
For over many years, gated development processes have predominantly been great in managing new product development phases. Over a few years, design thinking and lean startup have turned out to be central approaches for future growth innovation.
Leading companies have now realized that integrating such useful approaches need integration within an enlarged innovation system that connects innovation strategy to funded projects and balances short term safe investment with longer-term investments
In order to keep your long-term business goals alive especially amid the Corona pandemic situation, Accept Mission has birthed such software that you need to stand out in the competitive business landscape.
Accept Mission platform with multiple tools gives you the best of the best start-up innovation management practices and processes, instantly out-of-the-box. We’ve integrated the best principles and practices from the latest innovation process trends, from managing product portfolios to creating a culture of innovation. Our tool allows you to manage started and successfully completed projects effortlessly. It assigns users to the project, manages the status and computes the success rate of projects. Overall, it keeps a smooth control over projects, sets strategic domains which give you a complete picture of your innovation success rate, so far.