Innovation management is a part of strategy management and business transformation.
Innovation is not serendipity, but a process that makes the artistic work functioning. Innovation portfolio management plays a significant role in portfolio strategization, clarification, agility, integration, and rationalization, to provide visibility of the overall innovation portfolio that is exploring a new path to the business growth, support the company's strategic objectives, and assess opportunities to realign resources and investments as appropriate for unlocking business performance and building long term competency.
Strategization: Innovation portfolio management plays a significant role in strategic planning of the potential portfolio, pondering "what if" situations, showing potential scale of business benefit to be driven from the portfolio based on different mixes of innovation programs. The potential innovation portfolio investment needs to streamline the strategic objective alignment and accelerate future growth of the business. Make sure the investment of the business innovation initiatives is aligned with at least one strategic objective over the total portfolio. All of the above should be supported by a robust, flexible and comprehensive set of tools to report and provide potentiality/performance metrics, which allow the portfolio to be fine-tuned over time so that it delivers maximum strategic advantage to the organization.
If the innovation management focuses on short term value too much, their portfolio might not support long term strategy and vision in the end. If the innovation management puts too much focus on long-term value, there may be a loss of momentum and engagement. Innovation portfolio management provides an “executive” view, including impact analysis, reporting and alignment to strategy, leverages robust, flexible and comprehensive set of tools to report and provide performance metrics, allows the innovation portfolio to be fine-tuned over time so that it delivers maximum strategic advantage to the organization.
Alignment: It’s important to define innovation portfolio strategies to make a smart investment. Business capabilities underpin strategy management. The goal of innovation portfolio management is to make strategic alignment and value leverage; develop a mix of short, mid, and long-term business innovation initiatives that need to make up an innovation pipeline, accelerate idea generation and implementation..
Organizational development is limited by its resource, capital, capacity, or talent pool. For the “transforming the business” category of innovation breakthrough portfolio, it’s important to make wise investment and use of new technology, craft business processes, cultivate innovative business partners, reinvent business models, harness joint product development, supplier integration, and use real-time, accurate, predictive information.
Agility: Innovation agility is a critical business capability to manage innovation life cycle with speed. Idea validation is a crucial step in managing innovation with effectiveness and agility. It’s crucial to move ideas through their life cycle to achieve first to market. The goal is to improve innovation portfolio agility by anticipating and responding to changing market conditions. The original germ of a creative idea is often, if not always arrived through the interaction of ideas from different domains of thought and experience, or information without boundary. In order to enhance a business growth cycle, it is important to build scalable idea management which means for sharing and managing ideas throughout the enterprise across silos and geographies. Idea flow can be streamlined via fostering cross-functional communication, using common business language for harnessing understanding, taking incentives to encourage sharing and setting prioritization.
Agility is related to many things such as flexibility, changeability, robustness, sensitivity, comprehensiveness, speed, responsiveness, etc. Being agile is a mindset of improvement. In business reality, the main barriers to innovation are silos, rigidity, inflexibility, static mindset, or bureaucracy, etc. The stewards of idea management are corporate intrapreneurs who can recognize innovative ideas, fight for resources and political cover, connect ideas and teams together, transform problems and opportunities into value-creating ideas to build solid business values. The implementation of the idea has to follow a logical path to the solution of most types of problems since contemporary society tends to follow logically rather than lateral kinds of structures. Companies should improve idea management and orchestrate a balanced innovation portfolio with the right mix of incremental innovation and breakthrough innovation.
Integration: Dependency, interdependency is the natural relationship between applications, capabilities, people, etc, in the hyper-connected business world. From an innovation portfolio management perspective, the more complex the application is, perhaps there are more interdependent pieces that need to be integrated with for building differentiated competencies. It’s important to do mapping between innovation strategy and a set of cohesive business capabilities which are developed by an integral application program portfolio. A better approach to tackling the innovation application portfolio complexity is to integrate the multitude of business management (framework, application, performance management, etc.) and improve the overall innovation portfolio effectiveness.
In order to make the innovation portfolio executable, an organization needs to make sure that enough resources are available to deliver the programs, and manage interdependencies smoothly. The effective innovation program management focuses on the delivery of business benefits through the identifying interdependence of a series of interrelated business initiatives. Then, innovation portfolio management is doing the right things, focusing on the decision-making process around which innovation programs and projects are executed based on their alignment with the goals and objectives of the organization, as well as preventing value leakage, improving the overall portfolio health and maturity.
Rationalization: The innovation portfolio rationalization is an activity more critical than ever, to consolidate, modernize, and optimize by pondering what can be condensed, consolidated, and thrown away. It’s important to show the clear business goals of the innovation investment with critical elements such as financial returns, return timeline, and risk assessment. Innovation portfolio rationalization is an activity more critical than ever because the pace of change is increasing and decision-making cycles are getting shorter significantly. It’s also important to enhance the overall economic value of the innovation portfolio in order to get the optimal return on investment. The business value can be realized and measured by setting “S.M.A.R.T” goals and measuring things in the right way.
The business applications blended with current digital technology trends can deliver significant benefits to business growth, such as real-time business insight, continuously innovative products/services deliveries. The periodic overview of the innovation program portfolio would typically contain information about performance to budget, resource requirements, risk management, business value proposition, links to strategic objectives and interdependencies. Nobody can guarantee the achievement of the expected goals of an innovation portfolio, but their achievement's probability can be increased if the strategic management system is built and used according to the correct and complete framework.
Running a business is an iterative problem-solving continuum by building a balanced portfolio with the right mix of “running, growing, transforming” innovation initiatives, depending on the organizational situations, strategic objectives and severity of external challenges or changes. Innovation portfolio management is a part of strategy management and business transformation. The portfolio management process itself is a governance process which is usually tailored to match the organization’s type and size of business, culture, and overall organizational maturity. Organizational management needs to gain contextualized understanding of corporate strength and weakness, optimize processes, and improve the overall corporate innovation portfolio management effectiveness, agility, and maturity.
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