We’ve talked quite a bit lately about how InnovationOps—an approach that brings together an organization’s people, processes and the innovation jobs they do—helps to make innovation a predictable and repeatable exercise. It removes silos and encourages collaboration as everyone deprioritizes departmental and team goals for overarching organizational goals. But what factors maintain a practical InnovationOps approach? In my experience, it’s portfolio management and governance management.
Constructing innovation portfolios
Often, when talking about innovation strategy, portfolios represent projects. But that’s not a 360-view of what portfolios mean for our purposes. Portfolios can also include ideas and products. Another misconception is that portfolios are independent, but most of our customers have significant overlap on project, product and idea portfolios. And within that overlap, you’ll find new strategies.
Take the push for sustainability, for example, where companies have a mix of ideas (incremental to radical innovation), projects (how to build sustainably and source materials) and products (environmental compatibility). Within each of these three portfolio buckets are pieces of the puzzle—one specific to your company. In an InnovationOps approach, that information is recorded and accessible for those who need it.
Portfolio optimization and management to support an innovation strategy
To move forward a predefined innovation strategy, portfolio optimization is key. First, identify and define your key performance indicators (KPIs). To be clear, KPIs vary from portfolio to portfolio. They could be based on return, cost-reduction or numerous other factors. Here are some questions you should ask to help ensure portfolio optimization:
- What are the best bets for the portfolio?
- What investments best align with the strategy?
- How do we balance budget and resources across the portfolio?
- How can we make better decisions regarding budget and resource investment?
Once you’ve answered those questions, portfolio managers are in a position to do the job of actually managing the portfolios. There are innumerable considerations a portfolio manager may have, but when boiled down, they’re continuously evaluating:
- Strategy: Identify the corporate goal and vision and how to achieve it.
- Risk/return: Mitigate challenges and maximize
- Capabilities: Identify how the company—and competitors—meet market needs.
All three of these areas will help portfolio managers to support organizational goals, but that will require strategic governance.
Governance guides the innovation process
As mentioned, InnovationOps helps to make any innovation process predictable and repeatable —and that’s why governance is essential to this approach. Within a portfolio structure, governance creates guardrails that help portfolio managers to address strategy, risk/return and capabilities.
However, governance should be more than a set of rules that tell you what and what not to do. Within an InnovationOps approach, governance should be flexible enough to adjust guardrails when necessary. Also, governance should be constructed to allow for collaboration and cross-functional integration. InnovationOps should unite people, but traditional governance models haven’t always encouraged that mindset.
To achieve flexibility and collaboration, governance should include the following elements to enhance your innovation process:
- Structure: Determine who has decision rights to create a governance structure that supports InnovationOps.
- Policies and processes: Implement the policies that enable collaboration across people and processes.
- Metrics and monitoring: Identify the metrics that matter most within your portfolios and operationalize the tracking of those metrics.
- Culture of innovation: Create governance policies encouraging everyone to ‘fail forward fast’ and learn from missteps. Or, as my martial arts instructors have always said, “You either win or learn.”
Managing innovation governance
What exactly are we trying to manage as we drill into governance within an InnovationOps approach? There are three critical areas that every company is trying to grow and balance, irrespective of the industry:
- Time: This is pretty straightforward. Efficiency while maintaining quality is critical to driving innovation. Governance should allow an organization to innovate while drastically reducing wasted movement.
- Treasure: We’re talking about more than budget. Every company has critical resources like research facilities, patents, manufacturing capacity, etc. All of these must be balanced within your governance structure.
- Talent: It’s vital within an InnovationOps approach to ensure that people continuously learn and bring that knowledge to each initiative.
As organizations hone in on perfecting portfolio management and governance management techniques, InnovationOps becomes a much more straightforward approach to apply. Want to learn more? I recently conducted a webinar in Sopheon’s Mastering InnovationOps series that discusses this concept in depth.