Planview just published its 2nd Annual Benchmark Study for Product Portfolio Management (PPM). It’s a public document. For students of innovation, darn fascinating reading, rich with data about innovation. Now, Planview’s “lens” on the data is around the need for PPM, but looking beyond that, the study reveals these tidbits about innovation process in big companies:
- 61% indicated that their organization are “risk averse or highly risk averse on new product innovation”
- Nearly 60% report that product innovation prioritization is done based on personality and relationships, and not on data-driven decisions
- 57% said that managing changing priorities as business conditions change was their greatest risk
We agree with the study’s conclusions and admire the rigor with which it was conducted. We’d like to add some additional perspective here on what the study data indicates.
First, it’s all about the “cycle” of innovation. Management teams that wish to have improved innovation efforts, while balancing resources, should focus efforts on the front end of innovation and develop a rapid cycle for exploration, ideation, and evaluation of new product concepts. In a way, it’s about getting to “No” faster. Of course there will be the occasional “Yes,” but what really eats up resources is energy spent on product ideas that ultimately don’t make sense.
KILN’s innovation system is about a rapid, formal, flexible cycle. As conceived, a cycle kicks off every six weeks, for 8 cycles a year. Because it starts with cultural trends or big picture themes, ideas tend to be more original. More original ideas mean a more efficient ideation engine, leading to more “Yes” projects, faster.
Second, we believe that the concern for lack of resources can be partially addressed with an “always dripping faucet” of innovation. The need for this is why KILN has created FuseTrail: a self-guided conversation system to help innovation teams work face-to-face and remotely more effectively. One other way of tackling the resource problem is to spread the work out across a larger group of people, both internally and externally. Again, KILN’s FuseTrail provides a DIY structure to facilitate this.
Building the nerve
Third: risk aversion, one of the real jaw droppers in the study, is partly due to a lack of consistent visioning. If you don’t imagine/vision frequently, you are not so good at it, and you don’t see or feel which products are likely to be big winners. A more frequent cycle of imagination, where executive decision makers get drawn into thinking about future success stories new product ideas could/would generate, is part of building up the nerve to pull the trigger on new projects. KILN makes “future tense stories” part of its rapid cycle process.
Fourth: the study points to the widespread use of very simple IT tools for management of pipelines, projects, etc. — i.e. Word, Excel and PowerPoint! It really points up the need for not only a PPM* system, but an integrated Idea Management System with a Project Management component or link. It’s kind of amazing that even though innovation managers are often MBAs there is resistance to automating this essential function. If an organization wishes to measure its innovation process, they really need to have both PPM and Idea Management tools in place.
Overall, the recent study tells us that focus needs to stay on an “innovation cycle” – a more narrow focus will leave an organization without the full capability and the receptive culture to drive innovation into action on an ongoing basis.
* Planview is a software firm that serves over 550 companies worldwide. They offer a “Product Portfolio Management” solution. A PPM is something a bigger company in particular needs as it seeks to balance resources and manage new product introductions and old product discontinuance. The larger your portfolio of products are the more complex it its to manage them, and Planview’s solution really make sense, it provides the data necessary to make decisions. A PPM is somewhat analogous to an MRP or DRP system in that it helps management plan how to allocate resources.