Key definitions

• Innovation portfolio - This is a thoughtfully curated bundle of potentially innovative initiatives, with clear aspirations and required resources defined for each. It includes a mix of short-term, incremental innovations and long-term, transformative projects. Managing the portfolio this way helps find new opportunities and determine the appropriate number and mix of initiatives.
• Incremental innovation - Refers to small, continuous improvements made to existing products, services, or processes. These innovations help maintain competitiveness and improve efficiency.
• Transformative innovation - Involves significant, groundbreaking changes that can create entirely new markets or disrupt existing ones. These innovations often require substantial investment and carry higher risks but offer potentially high rewards.

Importance of an innovation portfolio

Strategic alignment

An innovation portfolio ensures that all innovation efforts align with the organisation's strategic objectives. By carefully selecting and managing projects, organisations can focus their resources on initiatives that drive the most value.

Risk management

Diversifying innovation efforts across various projects and time horizons helps manage risks. If one project fails, others in the portfolio can still succeed, ensuring overall stability and progress.

Resource allocation

An innovation portfolio allows for more effective resource allocation. Organisations can allocate their budgets, time, and talent to projects that promise the highest returns, ensuring optimal resource use.

Performance measurement

An innovation portfolio provides a framework for measuring the performance of innovation efforts. Organisations can track progress, evaluate outcomes, and make data-driven decisions to enhance their innovation strategies.

Best practices for managing an innovation portfolio

Understanding legislation and regulations

Compliance with relevant legislation and regulations is crucial when managing an innovation portfolio, especially in regulated sectors like health and social care. Key regulatory bodies include:

• Health and Safety Executive (HSE) - Ensures workplace practices do not compromise employee safety.
• Care Quality Commission (CQC) - Monitors health and social care services to maintain high standards.

Strategic portfolio management

Confirming the total value of the portfolio needed

Start by determining the total value that the innovation portfolio needs to deliver. This involves setting clear financial and strategic goals that align with the organisation’s long-term vision.

Evaluating existing innovation projects

Evaluate existing innovation projects based on incremental value delivered, risk, and alignment with strategic priorities. This assessment helps identify which projects to continue, scale up, or terminate.

Getting comfortable saying “No”

One of the toughest parts of managing an innovation portfolio is knowing when to say “no.” It's crucial to stop projects that are dilutive or unlikely to pay for themselves and resist the temptation to pursue incremental initiatives that don't align with strategic goals.

Reallocating resources

Regularly reallocate resources—including competencies and skills—to new initiatives or to current ones that additional support can accelerate or amplify. This ensures that resources are used where they can have the greatest impact.

Identifying portfolio gaps

Identify gaps in the portfolio and define new initiatives to close them. This proactive approach helps maintain a balanced and comprehensive innovation strategy.

Foster a culture of innovation

Encourage cross-functional collaboration

Innovation thrives in environments where cross-functional teams work together. Encourage collaboration between different departments to leverage diverse perspectives and skills.

Promote a learning culture

Promote a culture of continuous learning and experimentation. Encourage employees to test new ideas, learn from failures, and iterate on their innovations.

Implement structured processes

Regular portfolio reviews

Conduct regular reviews of the innovation portfolio to assess progress, reallocate resources, and make necessary adjustments. These reviews ensure that the portfolio remains aligned with strategic goals and market dynamics.

Clear governance framework

Establish a clear governance framework to manage the innovation portfolio. Define roles, responsibilities, and decision-making processes to ensure efficient management and accountability.

Leverage technology and tools

Use innovation management software

Implement innovation management software to streamline the management of the innovation portfolio. These tools can help track progress, facilitate collaboration, and provide valuable insights for decision-making.

Data-driven decision making

Use data analytics to inform portfolio management decisions. Analyse performance metrics, market trends, and customer feedback to guide innovation strategies.

Steps to improve idea generation

Hold collision sessions

Collision sessions involve cross-functional groups gathering in a structured process to think through the intersection of unmet customer needs, technology trends, and business models. This process brings creativity and specificity to idea generation. A venture panel then considers these ideas, iterates on them, and prioritises which ones to pursue.

Challenge orthodoxies

Participants gather and describe common beliefs that prevent the organisation from innovating. Examples of these orthodoxies include statements like "budgets are limited" or "we don't have the digital capabilities to pull it off." Teams brainstorm alternatives by considering if the opposite of these statements were true, opening up new avenues for innovation.

Make analogies to other industries

Creating analogies involves listing companies with unique value propositions and systematically applying these propositions to generate new ideas. This cross-industry perspective can reveal fresh opportunities and new sources of value.

Apply constraints

Rather than searching for blue-sky ideas, tightening constraints on an idea's business or operating model can stimulate creative solutions. For instance, consider scenarios such as serving only one type of customer or relying solely on online channels. These constraints can drive innovative thinking within specific parameters.

Linus Pauling's approach

In the words of chemist Linus Pauling, "The way to get to good ideas is to get lots of ideas and throw the bad ones away." Encouraging a high volume of ideas increases the likelihood of discovering high-quality solutions. Regularly evaluating and filtering these ideas ensures that only the most promising ones move forward.

Recommendations

• Align with strategic goals - Ensure that all innovation projects align with the organisation's strategic objectives to drive the most value.
• Diversify projects - Maintain a balanced mix of incremental and transformative projects to manage risks and ensure steady progress.
• Foster collaboration - Encourage cross-functional teams to collaborate and leverage diverse perspectives for better innovation outcomes.
• Promote learning - Create a culture that encourages continuous learning and experimentation.
• Use technology - Leverage innovation management software and data analytics to enhance portfolio management and decision-making.
• Regular reviews - Conduct regular portfolio reviews to assess progress and make necessary adjustments.
• Utilise collision sessions - Implement collision sessions to explore the intersection of customer needs, technology trends, and business models.
• Challenge orthodoxies - Encourage teams to question and reverse common beliefs to uncover new possibilities.
• Make analogies - Apply successful strategies from other industries to generate innovative ideas.
• Apply constraints - Use constraints to drive creative thinking within defined parameters.

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