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The innovation portfolio puzzle

Which ideas – out of the many you collectively have in your company – should you pick to move them forward? Where should you bet your time and resources? Should you just go for your next big thing and discard all the rest?

When you consider the challenge of moving innovation from an art to a business discipline, you must consider how you manage your portfolio of innovation initiatives. That does not come without challenges and many managers often end up with deciding based on their “gut feeling”, though they do not always admit.


For normal business execution, you would “just” optimize expected value and minimize costs. However, what do you do in front of the inherent uncertainty of innovation? It makes sense to balance your portfolio. If that is the case, what are the trades-off of the innovation portfolio puzzle? What are the key dimensions to balance?

/wp-content/uploads/2015/02/multidimensional_649821.pngTime is of essence: you need both quick-wins to keep running your business, but also time to explore, invent and cultivate new markets. Risk is crucial: you need to balance the highly promising big bets with the safer incremental improvements. You also need to balance different types of innovation, ranging from product to services, from processes to business models, from branding to customer experience, etc.

submarine project photo.jpgI think that it is wise not to fill your portfolio completely, thus you have a “placeholder for the unknown. I am used to saying that the most important project is the one we do not have in our portfolio yet. Which means you will have to keep a space for your “X projects”, the free space your team needs to come out with the not yet identified next big thing. Sometimes these “X projects” are multiple initiatives running “under the radar”: the “submarine projects”. Moreover, if you want to expand in new territories, you should keep some space for initiatives that leverage new competencies. Another important point: Do not forget synergies among your projects, as no project is an island.

portfolio management.jpgInnovation portfolio management is central to allocate resources for innovation. It has many connections with other innovation management practices. For example, it is the foundation to build innovation roadmaps, it builds on risk management, and the idea management process feeds it. By the way I think the role of the innovation management architect is emerging to design how these and all the other different innovation management components fit together.

That’s it for today and it would be great if you would like to share the principles you use in your organization for innovation portfolio management. Stay tuned.

About the author:
Marco Cigaina is Program Manager in SAP Service Innovation. He focuses on service innovation research, innovation management, and integration of stakeholders in the innovation process. He is the author of the book “Innovation Management Framework: enabling and fostering innovation in your company“.

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