Every leaders understand innovation is the only way to ensure their organizations can stay relevant and keep growing in the future. But it's hard - because innovation is often seen as abstract, and when everyone is already fully occupied responding to daily urgencies, innovation review and planning can hardly take place.
But the world has changed. No organization has the luxury to keep on doing what they have been doing, and have the confidence that they will stay relevant in the future. At SprintImpact, we believe in leveraging technology and co-innovation to succeed in this new normal. One of the best ways to start, is to conduct a strategic review of your current products and services.
In this article, let’s look at how you can use Innovation Portfolio as a strategic planning tool. This tool was inspired by the teaching of Barry O'Reilly and Strategyzer, both are iconic innovators whom I have great respect for. I hope you and your team will find this tool useful in revealing new perspectives and creating alignment for making strategic growth-oriented decisions.
Invite your team to set aside a morning for a focused workshop. The goal is to help your key team members to visualize the current state of innovation allocation, so that together the team can design an intentional strategy for creating and sustaining future growth.
Step 1: Identify your growth assets
- Products and services that you're currently offering to your customers
- New projects (or idea) which have been started
- List out anything in between - e.g. pilot projects, beta products.
- Write them down on a Post-It note. The rule is have only one item on each post-it note.
- Initially, try limit or converge to the 10 most representative items as your growth assets.
Step 2: Perform Asset Mapping in an "Innovation maturity grid"
An Innovation Maturity Grid has 2 axes:
- X-axis: Degree of Growth Potential
- Y-axis: Degree of Uncertainty
For each asset (post-it), we do the following as a team:
- Discuss one asset at a time
As a team, decide where the post-it should be placed on the Growth Potential (i.e. horizontal) axis
- Put the post-it at the centre (0,0) of the Innovation Maturity Grid
- Ask the question — "Should we move it left or right?"
- Notice growth potential includes not just financial gain, it could also be its ability to achieve values and impacts of your organization's purpose.
Now, work on the Uncertainty (i.e. vertical) axis, which reflects how much uncertainty is linked to that asset:
- Starting from where the asset is, from the last step.
Ask the question — "Should we move it up or down?"
- Low uncertainty assets include products and services with repeatable business or operation processes.
High uncertainty assets may demonstrate various levels of uncertainty from:
- Evidence in understanding in customer needs and preference
- Evidence in technology or manufacturing mastery
- Predictability in market size and business model
Step 3: Reveal the Asset Domains
After the team has completed the mapping exercise - putting all the assets in their positions on the Innovation Grid, it's time to reveal the 4 domains associated with each quadrant. Tips: Best not to reveal these domains to the team before the mapping exercise.
There are the 4 domains associated with each quadrant:
- upper left: DROP
- lower left: RETIRE
- upper right: EXPLORE
- lower right: EXPLOIT
Let's dive into the EXPLOIT domain and further identify these 2 categories:
- EXPAND: For assets that achieved product-market fit validation, but still face uncertainty in becoming a repeatable and scalable offer.
- SUSTAIN: For assets that have a proven business model, with repeatable and scalable operation.
Step 4: Team review and discussion
Now we have mapped out our Innovation Portfolio - with 5 categories, namely - Explore, Expand, Sustain, Retire, Drop.
Before diving into discussion with your team, best to offer a short break (and perhaps get a fresh cup of coffee!), as there will be some in-depth discussions and decisions to be made after the workshop resumes.
Let's review our growth assets in each category. Let's start with Explore.
- Objective: Create new growth engines
- What is our ratio of Explore vs. Exploit? Is it a healthy ratio?
- How well are the current programs in the Explore category aligned with the organization's strategy in creating future growth engines? How effective are these initiatives?
- Does the organization recognize the huge difference in team culture and practice between Explore and Exploit teams? Is there a 'safe to fail' environment provided to the EXPLORE team members?
- Are we putting the right people on the EXPLORE team, best suited to the exploration culture of customer discovery, fast-paced learning, experimentation and cross-functional co-innovation?
Image credit - strategyzer.com
- Objective: Accelerate business growth for assets with Product-Market fit validation.
- What evidence do we have to prove that this asset has achieved Product-Market fit?
- Have we set clear milestones to achieve accelerated growth?
- Can the team distinguish which part of the venture would still require continuous discovery just like the EXPLORE stage?
- Objective: Renew product and service offers of the established business. Focus on systematic improvement and growth.
- How fast is the market shifting (e.g. impact from COVID) ? Did we detect any sign of disruption or future challenge to our business?
- How proactive are we in improving business and operation efficiency? What have we done?
- Have we examined our role in the value chain? How are we renewing our values to targeted customers, partners, our community or even our society?
- Objective: Reallocate resource from slow-growth area to high-growth area.
- How might we retire these assets swiftly and respectfully?
- What are some the learnings that could be shared among the organization?
- What's our process in talent allocation and re-skilling?
- Objective: Free up resource as soon as possible to minimize waste.
- How to end swiftly ?
- Why didn't we stop earlier? Is there a lesson which we can learn and share?
Together is better in Innovation
"Though there are many paths to follow into the unknown future, there is one way that dramatically increases the chances we will enjoy the journey. To travel with someone we trust." - Simon Sinek
If you make it to the part of the article, I want to say thank you! Innovation is hard, no one person could have all the answers and this is exactly why we need to do it together.
What's one thing you need to overcome to build a healthy innovation portfolio? Send me a message and let me know!
p.s. If you're interested in receiving a copy of the Innovation Portfolio template, contact me.