This section introduces portfolio management as a business task, with examples of process design and usage, typical roles and responsibilities for an innovation portfolio, how portfolio management differs from project management, and considerations in assigning value to a portfolio in which most projects won't complete the entire process.
If you have experience with a structured development process, this section will be familiar; if not, it will serve as a brief introduction to stage-gate business processes in which projects are routed and shepherded through sequential tasks to achieve a complex goal (Cooper 2001, von Stamm 2003). New pharmaceuticals, for example, follow a sequence of human clinical trials which are structured and enforced by regulatory authorities.
This generic new product process illustrates common elements:
First, note that this process consists of a number of stages through which new product ideas must pass before becoming actual products. The number and types of stages are set to achieve some general goals:
- Projects should be weeded-out as soon as possible if, for any number of reasons, they are not appropriate for funding and development to the end of the process. In most cases you will have more concepts than can ever be developed and launched, so your process must be selective. Clear-cut fatal flaws should be uncovered early: you don't want to discover a major patent infringement risk after development and market-testing are complete.
- The right skills (of employees, vendors, or partner) should be applied at the right time to avoid waste and repetition. For example, shipping and distribution questions do not need to be raised early-on and intellectual property lawyers usually do not need to be involved in market analysis.
- Consistent with weeding-out and overall cost control, inexpensive stages usually precede expensive stages. For example, for package design by a small team is far less expensive, and should precede, factory retooling for production.
With that background, we'll discuss four processes of increasing complexity.
An Innovation Team Handoff Process
In many cases, Results Engine will be used by a central innovation team in order to track ideas after Innovation Central events, as they progress into adoption elsewhere in the company. For this purpose a simple process like the one above may suffice. Its stages are:
Refinement
Ideas from prior Innovation Central events often need to be combined, edited, and put in a more specific context before their business value is obvious to others. Such a refinement task could be carried out either by a member of the innovation team, or by willing reviewers from the preceding Innovation Central event. With some experience the team should be able to come up with minimal standards to be met.
Business Case
Any project needs to justify the future resources needed to progress it, and this is often done by writing out a business case. Costs, risks, and value may be estimated or the first time. The list of possible serious sponsors is built and reduced to a manageable number. Anticipated pitfalls and success criteria may be summarised. The business case should be sufficient for a future sponsor to decide whether or not to take the project forward into their responsibility and funding.
No Action
As noted, the number of opportunities usually exceeds an organisation's capacity to develop them all, which implies that some must be left by the wayside. They are not "bad" projects, just not as good as others. It's a good practice to create a stage to note this decision not to take further action; far better than letting projects linger for months in uncertainty. Such a 'No Action' stage may include the task of informing original authors, and making the business case and value estimation available so that future proposals will be made with a clearer sense of what is sought and fundable.
Handoff
Handoff marks the transition from the innovation team's responsibility to another team or business unit which has agreed to take the project forward. At a minimum, the documentation for Handoff should include the name(s) and contact information about the project's new sponsor, so that original authors have some way to learn the fate of their contributions. Notifications can be configured to alert people automatically when projects enter certain stages. See the Designing & Building Workflows section below.
A Classic Stage-gate Process
The new-product design process shown above is a classic, linear stage gate process. It differs from the hand off process in that it tracks and coordinates activities to a much later stage, typically not a transition from one department to another (a handoff) but from inside the company to a new product or service out on the open market. The activities at each stage are evident from the stage names; more examples and detail can be found in Robert Cooper's books and writings.
Cyclic Processes
Linear stage-gate designs have been criticized as too rigid and especially inappropriate for innovative portfolios where uncertainty reigns. Planning may feel like "I don't know where I'm going, but I'll know when I get there." Rather than a linear process, it may make more sense for such work to proceed in incremental design-execute-evaluate cycles.
Such work patterns are common when cycles can be inexpensive and fast, for example in software development where there is nothing physical to create.
Complex Branched Processes
More complex multi-path processes may be appropriate in large organizations which have established departments for different tasks. Here, for example, one group may routinely carry out internal discovery (product brainstorming with employees), another may do customer interviews and surveys, and another may receive 'transoms', which are unsolicited ideas which come "over the transom" from outsiders in an unplanned way. Similarly, a licensing department may seek outside opportunities which can plug into the internal process (here, at Development). Projects which are valuable but simply outside the company's current scope may be given to an Outlicensing team, to shop for the best price without triggering direct competition. Results Engine is useful not for tracking internal details (each separate department has their own way of doing things), but for providing a consistent overview and managing the inter-team handoffs.
Conclusions
Results Engine lets you create any level of linear, branching, or cyclic process design, with any number of stages, forms to fill in, and reminders. Results Engine cannot do the work, but it will help you to keep on track, manage due-dates and reminders, and make an innovation follow-up process much more transparent. We suggest that you be thoughtful about your process design, adding just enough detail and no more. For a portfolio of innovation projects it is nearly always best to adopt or connect to a process already in use in your company, thus avoiding uncertainty about roles and tasks: process novelty and content novelty together may be too much change at one time.
Roles and Responsibilities
Many Imaginatik customers have a structure like that shown below: a small, centralized Innovation Team with a leader and a portfolio manager. The leader's role is to communicate the company's major needs and goals, make general decisions about project portfolio health and status, and communicate with upper management. The portfolio manager is involved in the day-to-day tracking and follow-up of all innovation projects. While not necessarily a full-time task, the portfolio manager typically spends considerable time prodding and reminding colleagues in the various business units. It is principally for such innovation teams that we created Results Engine.
The work of the company is done in various business units or divisions, divided along functional (Sales, Marketing, R&D) and/or geographical lines. While the business units need to innovate, they may not have a dedicated team for the purpose. Rather, they will have well-established processes to carry out every aspect of business-as-usual, and they may call on the innovation team for advice and support, for example by crafting and running Innovation Central events to support their own goals. Usually a business unit will have process managers who oversee projects and products. Compared to the innovation team, these process managers deal with fewer projects but in more detail and with more responsibility for cost, time, and success or failure.
A business unit may also have individuals with responsibility for specific projects or products. At this level, details are everything and failure is usually not an expected outcome.