Managing Your Innovation Portfolio

If your business could have one super power, what would it be?

What if your business could see into the future? Surely, in today’s VUCA (volatile, uncertain, complex and ambiguous) world, that would be highly desired? The impact of the dreaded organisational Kryptonite, disruption, would be rendered ineffective with enough forewarning, enabling the organisation to prepare and make the necessary ‘shielding’ and ‘blocking’ changes.

Unfortunately, this article is not about how you can see into the future. We sell professional services at Deloitte, not genie lamps or four leaf clovers. But what we will cover is how your organisation can harness another superpower, innovation, which you can use to fight the disruption villain if managed and used wisely.

Harnessing and using your power

While most organisations are able to generate a number of individual innovation initiatives, these initiatives are often energetic but uncoordinated. Organisations that excel at innovation strike the right balance across their initiatives and apply the appropriate tools and skills to rigorously manage them as part of a carefully integrated portfolio – from idea capture, through to scale and execution.

But just like Batman, a ‘super hero’ approach to innovation is not born but must be built. This requires a disciplined approach to innovation and consideration of the following:

1. Understand the power: Defining ‘innovation’

An organisation-wide understanding of ‘innovation’ is essential to ensuring the innovation portfolio is in fact an innovation portfolio. However, through overuse, misuse, hype and enthusiasm, the word ‘innovation’ has essentially lost its meaning. This is particularly the case when it comes to continuous improvement initiatives. To delineate between the two, a more nuanced understanding of ‘innovation’ compared to ‘improvement’ is required:

  • Innovation is the creation of new, viable business offerings that provide value to end users (human-centred) and the business by solving the right problem.
  • Improvements are ‘incremental upgrades’ to either solve a problem, increase effectiveness / productivity, and / or respond to market movements.
2. Know the limits of the power: Declare the innovation ambition

Successful innovators manage a portfolio of initiatives across three different ambition levels: (core, adjacent and transformational), and the Innovation Ambition Matrix is what brings these three ambition levels to life (Figure 1).

Figure 1. Innovation Ambition Matrix

Critically, striking the right balance across the three ambition levels also requires the organisation to consider the risk and reward appetite with their innovation activities (Figure 2).

This balance is not a ‘one-size-fits-all’ approach and is influenced by a range of factors including industry, competitive position and stage of development.

3. Learning to wield the power: balancing the portfolio

Innovative organisations should aim to create and maintain a well balanced portfolio of innovation ideas to avoid an unnecessary drain on employee time, company resources and ultimately funding. There are a number of elements to consider when identifying an appropriate balance, including:

  1. Alignment to the organisation’s strategic goals / focus
  2. Availability of capital and resources
  3. Contribution across the organisation’s 3 ambition levels
  4. Application of Doblin’s 10 Types of Innovation
  5. Impact on the current Innovation pipeline (awaiting approval and in execution)
  6. Short term and long term benefit realisations
4. Employ a sidekick: Implement the right Innovation Portfolio Management Toolkit

Once the appropriate balance has been identified, the right toolkit is required to capture, track and report on your innovation pipeline. Effectiveness is dependent on an ability to better enable innovation through the support and enhancement of your organisation’s innovation capability,[1] and at a minimum this will include the management of your ideas, portfolio and pipeline. Using these capabilities as a guide, your organisation can consider a range of options when making a decision on the suite of tools to use:

  • Configure existing tools: configure established and / or free collaboration tools
  • Best-in-breed: procure best in breed technologies to support each innovation capability (ideation, portfolio and pipeline)
  • Single platform: a single innovation management platform that manages the entire ideation portfolio and pipeline process.
5. Learning to use your power wisely: moving from ideas to execution

Learning to harness your power is but only the first step. As said by Deloitte Australia’s CFO Andrew Griffiths, “it is not just about coming up with ideas; but delivering on the ideas and having tangible, measurable outcomes.” In other words, innovation can only truly be a superpower if your efforts embody an ‘R&Do’ approach.

To get your innovation portfolio moving and to begin delivery on your ideas through the execution funnel, your organisation needs a resounding ‘yes’ in response to each of the following:

  1. Craft skills and capabilities: does your organisation have the right blend of craft skills and capability (across strategy, design, the social sciences, technology, finance and delivery)?
  2. Innovation ambition: does your innovation ambition articulate a set of meaningful challenges (striking a balance between intention and constraint)?
  3. Tools and processes: are your tools and processes repeatable, scalable and simple?
  4. Sensing and scanning capabilities: does your organisation have the right sensing and scanning capabilities to enable teams to be self-sufficient into the future?
  5. Governance structures: are the right governance and control structures in place to ensure proper portfolio balance, and full delivery on the organisation’s innovation ambition?
  6. Incentives and support: are the right incentives and rewards in place, and does the team have enough executive support to help stay the course when delivery gets challenging?

Conclusion

While disruption may be organisational Kryptonite, it need not be yours. Learning to first harness (manage) and then use (execution) your superpower (innovation) may require a significant shift in mindset, but it will also give your organisation the superman strength it requires to combat and defeat the villainous disruption if (and when) it appears.

Supporting footnotes

[1] Deloitte Doblin 12 Levers of Innovation Explained.


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