Micha van Meeteren - Innovation Portfolio Management

Just a small thought during one of the famous Dutch traffic jams. Many companies are suffering (or just think they are suffering) from the current economic situation – just read the newspaper and you’ll find proof there. Something that does not appear in the paper is the changing focus of employees. Whereas they used to be too occupied externally, they now start to have some margin. By default, these people start working on topics they’ve been wanting to work on for some time, they get engaged in projects because they think it is worthwhile and have time anyway, or they start looking at internal situations. Some just look at their screen with glassy eyes – those will need some more guidance and motivation.

Why not make use of that situation and try to steer people in three ways; encourage them to work on those pet-projects and check those for quick wins, encourage them to review or look beyond their usual business for improvement opportunities or radical new potential sources of revenue (guess it will not be a surprise where the quick wins are) and finally use their time wisely to review your current portfolio of projects.

In sum: look for bottom-line improvements and tap into the unique experience and intelligence of your employees, add new potential sources of revenue to your portfolio of projects and finally review your current set of portfolio. Attention and resources may be scattered, you may have a lack of focus, your portfolio may be imbalanced and some projects may even be cannibalizing others!
If such an overview does not yet exist, make sure to bring in an external facilitator as comparing projects internally will result in a arm wrestling contest. Reviewing your current portfolio with a number of trends in mind will allow you to motivate and steer your employees to fill in the blanks.

Your future depends on it!

Innovation and many closely related topics like open innovation (Chesbrough, 2003, 2006; John Hagel III &  John Seely Brown, 2006)  and blue ocean strategies (Kim and Mauborgne, 2005) face the dubious honor of achieving a buzzword-status. Just about everyone seems to be ‘innovating’. Funny enough, it frequently sounds like people are doing exactly what they have been doing for ages and merely found a fancy term for it this time.

So, what exactly innovation is all about? How can we define innovation and how does that fit with what people relate to as innovation?

The answer to “what innovation is it all about” is fairly easy, even though many people fail to keep it in mind. For any ‘for-profit’ organization innovation is simply about making (more) money. Already a decade ago, Afuah (1998) wrote that “A firm makes profits from selling a product or service when the revenues it receives from the product are greater than the cost of offering it” On the question how to improve the profits, he states “This is where innovation comes in”. No matter how may additional reasons one comes up with, in the end it’s all about the Benjamins. Get the revenues up and/or the costs down. Nothing more, nothing less.

The question how to define innovation is more difficult. A quick internet search shows that there is no clear and agreed upon answer, which in itself somewhat confirms the fuzzy buzzword-statements above. Taking a look at Wikipedia’s innovation page and the related discussion page shows this confusion, even though it does put forward some interesting thoughts.

Mark Rogers from the University of Melbourne is quite sharp in his discussion on definitions and measurement of innovation. “Innovation can be defined as the application of new ideas to the products, processes or any other aspect of a firm’s activities. Innovation is concerned with the process of commercializing or extracting value from ideas; this in contrast with ‘invention’ which need not be directly associated with commercialization. While this definition of innovation may appear straightforward, a more precise definition involves consideration of a number of issues.” (Rogers, 1998)

These other issues relates to topics like ‘technical’ vs. ‘non-technical innovation’, ‘new and improved’ vs. ‘insignificant or minor’ and alike. So in a way, we can agree on a high-level definition of innovation, with the process of commercializing or extracting value from ideas as the main characteristic, but it is very difficult to develop a more specific definition (read the article for more information). The broadness of the term innovation explains why everyone claims to be innovating – even though the extent may vary considerably.

Innovation being a broad term and everyone tagging their activities as innovative makes it very hard for managers to understand what is going on in their companies. They will therefore need to develop a clear understanding of innovation and need sufficient tools to guide this process. Innovation portfolio management can provide the overview, and provide the insights needed to steer the company towards increased profitability.

Experiences, remarks and thoughts will be appreciated. You can leave a comment or contact me by e-mail.

Best regards,

Micha

Welcome dear visitor, welcome to this weblog!

This weblog will be dedicated to business innovation, with a specific interest in innovation portfolio management. The reason is the belief that innovation portfolio management is a process that lies at the very heart of any company. It has the ability to provide management with the insights and handles to deal with the complete set of innovation activities throughout their companies. It has the ability to, for example, uncover blind spots in a company’s innovation activities, to point out if management should start stimulating the creativity of their employees, if they face an overkill of projects, or if certain projects are actually contradictory in terms of their outcomes – even on beforehand.

In sum, innovation portfolio management is believed to be the backbone of all innovation activities throughout a company, and key for management to control and manage these activities. This weblog is meant to discuss and explore various aspects of this concept. By doing so, it will constantly take the corporate perspective towards innovation management. It is intended to have a logical sequence in posts – from the importance of innovation, to the meaning of ‘innovation portfolio management’ as a concept, from the way innovation portfolio management works to the ways management can use it to their companies advantage.

It should be noted that the content discussed throughout this weblog represents my individual opinion. This weblog is a voluntary effort, besides day-to-day activities and will therefore be unable provide a steady stream of posts.

Your input and initial thoughts will be highly appreciated. You can leave your comments and thoughts on this website, or send me an e-mail via micha.van.meeteren@capgemini.com

Best regards,

Micha van Meeteren