Monday, May 16, 2011

Summary: Portfolio Management Summit, Day One, FEI 2011 – already a lot of learning!


Luis Solis of Boston-based Imaginatik kicked off the Portfolio Management Summit (Track 2) at FEI 2011.

Daniel Zweidler then led the way with his presentation Innovation and the reality of meeting social and market expectations. He leveraged examples from the energy and pharmaceutical industries to compare the process of innovation within each. In pharma it’s innovate (create a drug) and differentiate (create a different drug), in oil & gas it’s innovate (find resources) and repeat (find more). He then shared a framework for creating an optimized portfolio of opportunities, counseling that you measure in regard to organizational priorities – balance risk/reward and trade-offs (reward/reward) – and ask: Does the opportunity contribute to the portfolio as a whole? Are the trade offs acceptable? Is the risk level tolerable?


David Matheson CEO of SmartOrg followed with his presentation Innovations in innovation management. Up front he said you should be asking three questions in pursuit of innovation: Does anybody care? (The market need) Should we do it? (Strategic and economic value) Can we do it? (Our competencies/processes). He told his story though the lens of HP’s four-phase model: ideate, formulate, incubate, accelerate. One of his major points was that ideas are good ones when they generate energy within the organization, meaning, at a high-level, the focus should be on people (so-called Idea Champions) not ideas. When turning an idea into an opportunity HP searches for proof points in asking what evidence would I need to deliver on this plan in order to know it is working? He counseled that you start with the concept with the lowest probability of success and also the lowest required investment, saying if it pays off you’re golden, if not you’ve failed fast and inexpensively.


Scott Mathews brought us out of the networking break. Scott, a Technical Fellow at Boeing, discussed Boeing’s evolving innovation portfolio framework. At a high level, strategic intent informs the idea generation process, which feeds the creation of an innovation portfolio (that is dynamic and recycles imperfect ideas back into the ideation process), and ends with opportunity transition for high-potential concepts. He compared and contrasted an innovation portfolio with a traditional project portfolio (Project portfolio: Deterministic, detail heavy, goal oriented. Innovation portfolio: Exploratory, adaptive, concept level). Leveraging a “Fast & frugal” decision tree, a portfolio is created with concepts that support a coherent strategy, and, capturing as much value as possible out of the ideation, idea “fragments” are not lost but combined into viable concepts. The process is managed by someone familiar with both technology and business areas, however senior mangers no longer make the go/no-go decisions themselves. Boeing’s Complex Adaptive System uses a simple set of rules to assess potential, following an emergent strategy it measures whether the concept value trajectories are non-linear and the concepts support a cohesive strategy. Ultimately the CAS helps to create the best set of ideas that support the strategy. Scott discussed the challenge of adding technologies to a portfolio of business or product opportunities, suggesting that utilizing derived operating earnings allows the incorporation of technology opportunities. Using a minimum set of independent and mutually exclusive quantitative criteria provides an equal base for comparison of a wide array of opportunities.


Lianne Simonse, Philip’s Senior Consultant on Innovation now at Delft University, discussed Innovation Roadmapping with our group. Lianne made it clear that Innovation Roadmapping is not technology forecasting, rather it is a combination of “market needs, market intelligence, consumer knowledge and technology knowledge into a portfolio of opportunities for business value creation.” She said companies do innovation roadmapping to guide investment decisions, align time-to-market expectations, open a (critical) strategic dialogue on technology push and market pull, and to plan feasible product/market/technology combinations. Roadmapping leverages critical trend information as well as key business drivers and business results, setting the stage for gaining deep insights into the needs and aspirations of end-users, in turn allowing the transformation of insights into meaningful innovations and facilitating the “learn fast, fail cheap” mantra.


Dr. Alastair MacGregor, CEO of Innovia Technology, had the unenviable task of presenting immediately before lunch. His presentation was nicely titled Great ideas: would you know one if you saw one? He promoted a holistic approach to innovation that combines the four key areas of design & manufacturing, business & strategy, consumer & brand, science & technology. The recurring theme “sum of many parts” nicely framed his points on getting to great ideas. He also asked the intriguing question, are you WEIRD? (Western, educated, industrialized, rich and democratic) If so, you’re one in 8, which reinforced his point that we tend to operate under a host of assumptions that can misdirect our efforts. Some of his headlines for getting to great ideas: “Great means different things to different people”; “Think of the big picture”; “Explore options early”; “Work with uncertainty, creating scenarios to play out possibilities”.


Tamara St. Claire of PARC got us going after lunch (and wrapped up the Portfolio Management Summit) talking about the challenge of achieving disruptive innovation, a very different challenge from pursuing incremental innovation. She walked us through a nice, straightforward risk/reward quadrant framework with new/existing technology by new/existing markets. Highlighting some of the challenges in the back end of innovation – e.g. lack of infrastructure, required commitment, critical mass, a portfolio, credibility/experience – led into a discussion around the how in pursuit of the disruptive. In order to, as she said, “find the wise answer,” she suggests you ask what the minimum viable product is, and where in value chain you will play. Pursuing a disruptive innovation means entering a niche (nascent or non-existent) market so you have to consider your feature set through that lens. St. Claire said, “Get below the fog and understand the players, dynamics and drivers of the market.” Flexibility is key to this. In developing the value chain she advises you be honest – realistically answer: What am I good at? What are my weaknesses? What am I willing to trade off? She fleshed out this fascinating talk with a handful of diverse cases. Wrapping up, she referred back to her quadrant framework, highlighting PARC’s strategy of leveraging the left side (existing markets) to mitigate the risk required in pursuing the right (new markets). Interesting lessons gleaned from experience.


More to come from the keynotes this evening!




- Clay Maxwell (@bizinovationist)


Clay is a Business Innovationist with Creative Realities, an innovation strategy consulting firm. He is a frequent contributor to their Innovationist Blog where all things innovation are discussed. You can find out more about Creative Realities at www.creativerealities.com

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