Innovation and more of it has become the mantra of top management. The ability to innovate and thereby sustainably create value for the business is becoming the defining competitive advantage for companies which want to thrive in a globalized economy. So obviously, driving innovation is a key job for top management, the CEO and the C-Suite. But what about the Board? What role should it play in the innovation game – if any?
This is the second of two articles, co-written by Ralph-Christian Ohr and Kevin McFarthing. In our previous post, we discussed how Strategic Portfolio Management (SPM) ensures that the content of the portfolio is driven by innovation strategy and associated targets. We would now like to move on to Operational Portfolio Management (OPM), where the portfolio directs resource allocation, metrics and reporting on an operational and tactical level. The link between the two is shown in Figure 1 below.
Facing increasingly dynamic and unpredictable environments, firms are required to develop convenient innovation strategies, constantly adapt them to changing conditions and properly implement strategically aligned initiatives throughout their organizations. Innovation portfolio management (IPM) can act as the pivotal tool to translate strategic objectives and priorities into project-based innovation activities. Furthermore, it provides a framework to convert raw ideas into real investment opportunities, based on their risk profile.