How To F-Up Innovation #16: Poor Project Portfolio Management

Innovations have no value until they are launched. The most effective way to launch more, and better, innovations is to practice innovation portfolio optimization.

The issue isn’t ”if” your company is practicing innovation portfolio management, it’s “how”.

Every company that innovates practices some kind of project portfolio management – decisions are made to which projects are going to be funded, supported and launched.

Often the reason innovation teams underperform is they are overburdened with projects. I regularly see teams being asked to work at 140%+ of capacity – resulting in project delays, lack of focus and budget overruns.

The challenge is making objective decisions that align innovation investment with short term business needs, mid-term competitive advantages and long-term strategy – within resource and budget constraints.

An objective innovation portfolio optimization might use a Monte-Carlo simulation to analyze all potential project combinations and find the portfolio that best meets these goals.

The challenge with managed, as compared to optimized, innovation portfolios is in the ways non-business criteria influence go/no-go decisions and chosen portfolios inevitably exceed the capacity of available resources.

Optimizing innovation portfolios, can accelerate new product launches in the short term, while appropriately investing in the most valuable medium and strategic long-term projects at the same time.