Want to create successful innovation? Apply portfolio management to your ideation process.
I recently completed a research project in which I interviewed 100 corporate executives who run innovation groups in large organizations around the world. I asked them about what works and what doesn’t work, with regard to running a successful corporate innovation group.
One common theme I heard was that too many people approach innovation as if the goal is to come up with that one big transformative idea. Which, of course, is like trying to do wealth management by buying one asset.
A more successful approach, according to most of the execs I interviewed, is to apply basic portfolio management to innovation as a way of mitigating risk and improving outcomes.
“Success is dependent upon having a portfolio of ideas in development,” one exec at a F500 company told me, “since the odds of any one idea being transformative are pretty low.”
It also takes a while to fully vet and test each innovation concept, so having a bunch of them (“A big frothy pot of ideas”, is the way one exec described it to me) tends to have higher yield.
But perhaps the biggest danger in approaching innovation as if the goal is to come up with one big groundbreaking idea is that it frames the entire process incorrectly. “The goal isn’t to come up an idea”, one leading European exec told me, “The goal is to come up with the best idea”.
You can read a full copy of my research paper at the link below. I’d love to hear your thoughts.
Abstract: This paper explores global innovation trends for 2019. The author, who teaches at Stanford University, interviewed 100 corporate innovation executives at leading organizations including PepsiCo, Anheuser-Busch, the NBA, Volkswagen, Santander, Google, Barclays, Deutsche Bank, and Starbucks as well as a number of other companies representing a diverse set of sectors ranging from Financial Services to Consumer Packaged Goods, Oil and Gas, and Automotive, operating in 54 different countries around the globe. The paper explores some patterns uncovered as to how companies today are creating sustainable innovation within their organizations. Download PDF.
