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Recently, I came across a concept presented by U.S. businessman and author Tim Ogilvie centered on "design thinking" -- how to turn abstract ideas into practical applications to maximize business growth. Since the core of portfolio management centers on identifying the right opportunities through strategic alignment, innovation and transformation, this concept seems to apply to our job as portfolio managers.
Of course, this is easier said than done, and although innovation is typically defined as a "breakthrough," it is actually accomplished through trial-and-error experimentation and old-fashioned hard work and perseverance. I think of innovation as "fail fast, fail often," but more accurately as "recover even quicker."
Mr. Ogilvie asks some key questions, to which I've added my own thoughts on how they apply to portfolio management in identifying the right innovative projects or programs in a systematic way:
What IS? This covers more than the current state -- it assesses what's happening with competitors, the industry, adjacent industries and opportunities. What ideas exist? What new products or markets can be created?
What IF? What are key possibilities? If something could change, what would that be? Through deep consumer insight, voice of the customer and a systematic process, options can be identified, assessed and prioritized. Careful oversight is needed at this stage, since viable options don't happen by accident.
What WOWS? What is fundamentally different than what's been done before? How is it better? Sometimes, an innovation is not necessarily something new, but something that brings an idea together perfectly. For example, the iPhone was not the first smartphone, but many have adopted it as the best. Innovation can be combining or recombining capabilities at a different level than before, not necessarily introducing new capabilities.
What WORKS? Ideas may look good on paper or in a presentation but may work differently when translated into a market test or actual use. Through small experiments and investments, the "fail fast, fail often" mantra should prove what's viable. Failing doesn't mean the end. Experiments that fail are sometimes the precursors to a breakthrough, if learnings are applied.
Innovation Model Canvas
The Innovation Canvas and its eight key components is another way to find and sell innovation. You can easily put this on a one-page document or even the back of the napkin to concisely describe to executive sponsors why a project or program changes the way the organization does business. If you can only partially fill out the grid, then the project may require more development. You may even want to do two versions -- one for the current state and another for the future state:
What methods do you use to spot innovation in your projects and programs?