Let’s get our definitions straight

Innovation portfolio management (which, for the sake of the readers, we’ll be calling IPM) is often confused with a general portfolio management concept. The first step to managing your innovation portfolio is to understand what it means. General portfolio management refers to all things strategic within a department – plans and investments based on company goals- including a range of activities such as daily projects, marketing campaigns, or business expansion plans.  While conceptually the same, innovation portfolio management is a method to help you oversee innovation projects specifically, and independently of a company’s or department’s daily business activities. Unlike those, projects that belong in your innovation portfolio will have a clear start and end.

Why do i need innovation portfolio management?

Regardless of the size of project pipelines, any organization can be paralyzed because of the number of projects or areas that could be driving innovation, and that, for some reason, are not. 

The role of IPM is to bring clarity to existing innovation projects, their outcomes, and if they are aligned with your company goals. More specifically, innovation portfolio management takes care of:

  • Managing innovation risk by reviewing a project’s ambition, strategic alignment and pipeline.
  • Identifying where in your innovation process projects get stuck, to define mitigating strategies.
  • Highlighting negative spaces on strategic topics innovation teams could be working on.
  • Deprioritizing non essential/strategic projects.
  • Understanding revenue potential of ongoing projects. 

Steps towards innovation portfolio management

Connecting the dots between innovation projects and your company’s strategic objectives, IPM shines a light on projects, objectives, and innovation horizons that need specific attention. Here are three steps to implement IPM.

1. Outline your strategic mapping framework

Any organization’s innovation projects can be split into two categories to help differentiate an innovation project’s nature, improving the overview of the entire portfolio in the end. 

Improve & Optimize: all activities related to efficiency, new systems, processes, etc. Projects under this category aim to make things better and faster while spending fewer resources. 

Explore & Create: this scope stands as the traditional understanding of innovation – inventing something new. This is what most people refer to when they talk about innovation. Because of this, it’s important to bear in mind that exploring or creating innovation initiatives goes beyond implementing radical innovation. 

The Explore & Create category involves doing something new, or changing the way something is done, like coming up with new value propositions, or exploring new markets.

Because there is no one size fits all, these macro categories are broken down in subcategories depending on your organization’s specific activities, leading to deeper, more specific insights.

2.Map strategic priorities

Most businesses have a clearly defined set of overarching strategic goals that respond to the company vision. These are the ones translated into operational innovation objectives, which you should map according to the subcategories you defined in the previous step. The result of this stage of the IPM process is initial insights on where your organization’s focus lies in reality, based on what your projects represent. For many of our partners, this is when they experience their first AHA! moment.

3. Map innovation projects

You’ve mapped your priorities, so now it’s time to begin charting ongoing and pipeline projects according to each subcategory. Once all innovation projects are under the right one, color coding comes into play.

Color coding helps map the relationship between projects and strategic objectives, showing if they contribute to the company’s goals. This is an eyeopener phase, where our partners are driven to question why projects are there in the first place, reevaluate investments, and set new grounds for informed decision making.

When mapping your projects, strategic objectives and subcategories won’t be the only filtering elements in place. Other tags and details that drive different views of each project should cover:

  • High-level resource intensity (Low – Medium – High)
  • Started Project vs. Pipeline Project
  • Potentially problematic projects (eg. shared ownership, involves high number of stakeholders, dependencies to other departments/projects)

Results and learnings

One of the most significant outcomes of implementing innovation portfolio management is having a clear road towards strategic resource (re)allocation.

Knowing where your resources are going, and why, will help you determine if your innovation investments are being put to good use.

Beyond resource management, IPM offers visibility on the negative space in your innovation portfolio. It shows which strategic objectives don’t have enough projects in the pipeline to drive them; the balance (or lack of) between subcategory projects; and overall excluded strategic objectives that need to be re-introduced through new projects in your pipeline.

Another outcome is having an overview of how ambitious projects are. This helps businesses determine whether their expenses and focus answer to their hopes for change or stability, in the long run. How important your innovation ambitions are will be only determined by your own innovation strategy.

Letting you know if all your eggs are in one basket and understanding all that comes from managing your innovation portfolio will help you, in the end, manage your risks.

Although scarce resources in a specific department, negative spaces, or ambition gaps may, at first, come across as disadvantages, they reveal more about your organization’s true strategic objectives than your current activities.

Going deeper

We help our partners craft their own framework to implement a customized innovation portfolio management, bringing clarity to make fully informed decisions regarding their innovation pipeline, and to benefit from more than a single positive result. 

Check out our other two blog posts on Innovation Portfolio Management to dig a little deeper.

IPM mockup 1 copy

Innovation Portfolio Management guide

Do you manage innovation at your organization? Is your innovation pipeline blocked? We have the guide for you.

Make bigger moves

Align your current and future products with your growth ambitions. Structure your portfolio to win by making actionable choices with the right product mix. Set up an agile portfolio management system with simple and effective governance.