Cut the Duds: Prioritizing Projects for Growth in Your Innovation Portfolio

While project management is about doing stuff right, strategic portfolio management is about doing the right things. Most organizations are increasing their innovation spending, but we see them struggle to get the balance right and reap benefits from that investment.

Recent research by Accenture shows that the largest 10,000 corporations in the world saw a 27% decline in returns on innovation investments between 2017 and 2022. In our webinar on Intelligent Portfolio Management with ITONICS, our innovation experts examined the issues companies face in this area. This article looks at the common pain points and demonstrates the ways that ITONICS software helps ensure the right efforts are resourced and delivered.

Access the On-Demand Webinar → 

Why companies struggle with the project prioritization process

1,000bn $ per year is sunk into projects that lead nowhere by companies in the US. 15 years back, there was a different mindset and spirit in corporation innovation functions. Incubation and ideation campaigns were new and viewed with ripe optimism. But with experience has come the sobering realization that getting good results from these initiatives is difficult. When we speak to innovation professionals, they now emphasize the need for efficiency and productivity. They face frustrating blockers within their organization that make improving innovation performance feel like an uphill battle. The common challenges are:

• Risk aversion, lack of vision, and a desire for immediate results
• Lack of persistence, collaboration, and alignment
• Shortage of time and resources
• Insufficient system to manage ideas and track results

You'd expect that the top priority in a company's innovation portfolio would receive the most investment, but only 11% of executives report that priorities have the resources required to succeed. So, what is going wrong?

The organization's capabilities need to be aligned with its innovation strategy. Otherwise, it is visionary but incapable, or worse, boldly going nowhere. This is a common phenomenon in innovation management. Employees come up with ideas that sound great but are outside the company's capabilities. Top management is unwilling to resource the idea because they anticipate that the company does not have the right skills to commercialize it. Portfolio management is about aligning vision with capabilities and addressing the gaps to be able to execute innovation projects.

The purpose of strategic portfolio management is to prioritize the right things. There is often a mismatch in a company's innovation portfolio. Resources and attention go to things that aren't priorities due to factors like internal politics or depending too much on what has generated income in the past.

Also see: How to Quickly Identify Low-Performing Innovation Projects (Free Template)

Get the balance right with strategic portfolio management

The Matrix view in ITONICS software lets you visualize your innovation programs on a 2x2 grid. This interactive view is populated with all your organization's innovation projects, ideas, strategic focus fields, and more. You can filter the view to, for instance, only show programs owned by a particular person or tagged as part of a specific industry.

Strategic Portfolio Management involves taking a broad view of innovation programs across your organization rather than looking at individual projects within those programs. You want to be able to cluster projects into thematic buckets and ensure they align with your company's strategic goals. To compare the programs, we've set the Y axis to 'Economic Value' and the X axis to 'Strategic Alignment'. Economic value is a rating that considers market value, innovation potential, or competitive factors. Strategic alignment is an internal perspective: how possible it is for the company to capitalize on this program. Does it build on the company's strengths and align with its chosen focus fields for the future?

By clicking the Show/Hide Zones icon in the toolbar, the Matrix now displays the quadrant labels: kill, foster, build capabilities, and capitalize. This helps facilitate a discussion with your organization on which programs in the top right have the most value to invest in further and which in the bottom right are dud programs to stop.

For more details on a program and to review its ratings, simply click on its circle to open up the element card in the stack on the right. The stack provides a preview of a program element while remaining in the Matrix view. This allows you to see what other elements created by your colleagues such as trends, technologies, or smaller projects, are linked as relations to the program. The Recommended Relations widget also automatically shows content in the system that may be relevant to this program, such as an unexplored idea by a colleague in another department. This may inspire you to reach out to them and collaborate.

Compare to prioritize projects

While the Matrix is suited to comparing the relative value of programs in your innovation portfolio, the Kanban Board in ITONICS software presents an overview to see blindspots, projects at risk, and bottlenecks in the workflow.

What makes our Board more suited to portfolio management compared to a standard project management tool is the flexibility to change the columns and swimlanes. The cards rearrange as you, for instance, change the dimensions to Health Status, Project Manager, Capabilities & Assets, or Markets & Customers. You can customize the board to suit your project prioritization method and use case.

Let's say you're interested in seeing projects within your organization that involve Applied Artificial Intelligence. Click More Filters and then choose to only see cards related to the defined strategic focus field Applied Artificial intelligence. We can see that there's one such innovation project in the concept & business case phase, one in planning, and one in development.

A major benefit of having a unified system like the ITONICS Innovation OS is that the information fields in the elements are standardized, making it easy to compare apples with apples. This guides teams working on different projects to speak in a unified way since they are required to provide the same info to describe what they are doing. It benefits the project prioritization process. You can open a view on the Matrix, Kanban Board, or Radar and immediately make comparisons because the elements contain all the valuable information added to them already. Using the ITONICS Innovation OS maintains an effective single source of truth and establishes up-to-date transparency.

It's likely you don't just want to know what's happening internally but also need to be informed of external developments that may benefit or impact your projects. You can, for example, open up the project element 'Augmented Reality for Machine Maintenance and Repair', click on the Signals Feed and see recent news and patents related to it.

Another useful portfolio management tool in the software is the new Lists view. It allows you to manage your portfolio by viewing projects in a table view and easily perform multiple actions without having to click through separate elements. Seeing all your organization's projects together in rows allows for a side-by-side comparison of the Cost Performance Index or Budget Consumed, for instance.

Here, you can see the color-coded phase of each project as well as the profile picture of the project leaders. The battery chart in the bottom row provides an aggregated indication of the distribution of elements in the table. Suppose one of your portfolio goals is to follow the 70-20-10 rule and have 10% of your initiatives feed into a 'Transformational' strategic ambition; you can easily see if you've met that target in the battery aggregation.

Using figures input by project managers and the tool's aggregations, you can set up widgets on the right side as a dashboard to provide an overview of the total project portfolio’s health.

If you want to zoom in on a category of projects to see an aggregate for that selection, apply a filter to only show those projects. If you, for example, filter for projects tagged 'manufacturing',  we see the worrying indication on the health status pie chart that none of them are on track. This helps you identify if particular departments are struggling to make progress.

Get strategic alignment on future projects

Innovation projects don’t come from nowhere; they’re likely inspired by trends and technologies identified through environmental scanning. So, let's take a look at the front end of innovation, Foresight. One of the projects we saw in the Lists tool, '3D Printable Thermal Insulation' had a relation to the technology element 'Aerogels'. Open the Technology Radar to see what level it is in terms of technology readiness.

We see its readiness level is 5 and we can also review how people in the organization have rated it in terms of complexity and internal know-how. This information is relevant in terms of gauging if the company will be able to successfully incorporate the technology in the connected innovation project. Technology elements are typically the building blocks of projects in your portfolio so it's useful to see how it’s all interlinked. If we click on the 'Organic Electronics’ element on the Radar, we can, for example, see that it is connected to the strategic focus field 'Predictive Healthcare' as well as the technology application 'Organic Semiconducting Polymer'.

What will be the knock-on effect on related projects in your portfolio if that technology does not proceed? The ITONICS Roadmap is a project management tool that lets you visualize your projects in terms of time. Here we can see what projects are linked to three strategic focus fields in the top layer and visualize the start and end dates to spot potential hold-ups for future projects. For example, the project 'Intelligent 4D Moulds' is dependent on the technology 'Nanomanufacturing' as well as 'Self Healing Materials'. If there's a delay in the company's adoption of these technologies, the project will not be able to start and ultimately not launch to market.

The ITONICS Roadmap makes it easier to align innovation activities and turn strategy into action. It enables you and the executive team to do critical path analysis and prioritize projects. You can even place individual Roadmaps managed by different departments on a single overview Roadmap to provide key stakeholders with strategic oversight and demonstrate that all the projects align in terms of delivery dates and organizational goals.

If these features look like they will address your common challenges, it’s time to make innovation portfolio management at your company more efficient with ITONICS. Our solution seamlessly connects foresight, ideation, and portfolio activities with your strategic goals in one collaborative system. With an accurate overview of all the initiatives in your company, you can reallocate resources and prioritize effectively. To see how the software can be tailored to your use cases, book a demo today.