Amazing tools to manage innovation portfolio
Part 2 of 2
In the 1st part of this article, I discussed the ‘Innovation portfolio dimensions’ tool. In this 2nd part of the article, I’ll explain another tool called IFA (Innovation Factors Assessment).
IFA process consists of two main steps, providing visual results that will allow you to get quick and precise decisions.
As I kept saying in the first part of this post, it is highly recommended that you would do this process along with your team or as part of a workshop.
Step 1 – list the main strategic factors to analyze your ideas and score each factor.
Step 2 – list top ideas into Ambition table.
Before we dive into details, don’t worry if things sound a bit confusing, I’ll provide samples and templates you can use.
Step 1 - Strategic Factors
Here you, as an innovation leader, need to prepare a list of all the factors that affect each idea or project you encounter. As you know, ideas can come from many different places such as open innovation, contests, ideation, startups scouting and other sources. Think carefully what factors can affect your decision on which ideas are the best for you and your company. Now filter your list and choose a set of 5 – 10 that you feel are most important.
The next step is to score each of these factors a weight between 1 (less important) to 5 (most important). You should receive a table similar to these:
Once your factors list is ready, move to the next step and fill in the portfolio table, grading each idea, based on the factors you’ve listed. Now you should have a table looking like these:
Using our template, you’ll receive a Total Score for each idea listed in the table. Now move on to step 2.
Step 2 - Ambition Analysis
In this step, you will take the ideas with the highest score from step 1 and list them in the 3rd table, the ‘Ambition’ table.
This table includes two columns, and for each column, you have to choose one of three options.
After filling in the information for each idea, you will receive your Ambition map, presenting where your ideas stand in term of Core, Adjacent and Transformational. This will help you take better decisions and adjust your portfolio as I’ll explain in a moment.
The Innovation Ambition Matrix
In general, you should manage and invest in 3 levels of innovation, carefully controlling the balance among them. The industry average numbers show that your projects should be 70% Core, 20% Adjacent and 10% Transformational. Remember that these are average numbers and you should make the adjustment to match your industry and company resources and vision.
The horizontal (X) axis refers to How to win, placing projects between the following options:
- – Use existing products and assets
- – Add incremental products and assets
- – Develop new products and assets
The vertical (Y) axis refers to Where to play, placing the ideas between the following options:
- – Serve existing markets and customers
- – Enter adjacent markets, serve adjacent customers
- – Create new markets, target new customers needs
After filling in the table, your ideas will be placed on one of the 3 areas of the matrix:
Core innovation initiatives – efforts to make incremental changes to existing products and incremental inroads into new markets.
Adjacent innovations – these innovations usually takes something the company already does well and leverage it to a new market or add incremental change to existing service or product. Adjacent innovation can share characteristics with core and transformational innovations.
Transformational innovation initiatives – these are the high risk-high value initiatives. These are the ideas designed to create new offers, new businesses or at list serve new markets and customer needs.
To make things a bit easier, you’re welcome to use our template for this process.
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