Counterfeit. That word always evokes a visceral reaction for most. It conjures up the thoughts of counterfeit $100 bills and nefarious behavior. So, it’s kind of painful to think of things within your innovation portfolio management processes as fraudulent. It’s not that there’s fraud there necessarily, it’s that the output of disparate data systems creates somewhat of an alternate reality in your overall portfolio. When fueling your organization up for growth innovation, you can’t be passing fake bills through the system and expect results.
An enterprise’s innovation portfolio encompasses the entire collection of processes and projects that lead to the commercialization of new products or services. And managing it should involve coordinating all of these disparate activities to serve specific business goals. Unfortunately, widespread misconceptions about innovation portfolio management prevent many enterprises from doing it effectively.
Most enterprises believe they’re doing innovation portfolio management, but the activities they associate with it tend to reflect outdated misunderstandings of what innovation portfolio management actually is. And these reductive practices fall far short of what true innovation portfolio management can do for their organization. They’re working from counterfeit concepts.
True innovation portfolio management empowers enterprises to confidently invest in initiatives that contribute to both short-term and long-term growth objectives. But these counterfeit ideas of innovation portfolio management have turned the process of innovation into a black box, where every stakeholder is siloed and no one has visibility into (or control over) the entire innovation pipeline. And this has created a slew of problems for today’s enterprises, including:
- Mismatches between a company’s strategy and its innovation investments
- Constant delays leading to meaningless launch dates
- Disconnects between innovation KPIs and business objectives
- Poor business cases for additional (and necessary) innovation resources
- “Zombie” projects that consume time and resources for years without making progress
All of these common problems stem from incorrect understandings of innovation portfolio management. They happen when an enterprise thinks they’re doing innovation portfolio management, but they’ve actually accepted a counterfeit form.
In this article, we’ll examine four counterfeit forms of innovation portfolio management, explaining how they hold back your innovation pipeline and highlighting what true innovation portfolio management looks like instead.
Which one of these sounds like your organization’s approach to your innovation portfolio?
- Counterfeit #1: Innovation portfolio monitoring
- Counterfeit #2: Innovation portfolio measurement
- Counterfeit #3: Innovation portfolio design
- Counterfeit #4: Innovation portfolio lip service
- True innovation portfolio management
4 types of counterfeit innovation portfolio management
Organizations that are still operating based on the first generation of innovation management tend to allow a wide range of activities to pass as innovation portfolio management. These activities may serve a purpose, but they can’t deliver the same kind of value that true innovation portfolio management does. And if an organization accepts any or all of these counterfeits as the genuine article, they’ll struggle to get the innovation outcomes they need to grow and stay competitive.
Counterfeit #1: Innovation portfolio management monitoring
An enterprise’s innovation portfolio is often a collection of thousands of projects. For many organizations, successfully managing that portfolio simply means completing projects. This reduces the entire process to monitoring project statuses, documenting which projects are on track, where work is falling behind, and which initiatives are over budget. This overemphasis on monitoring projects and aggregate project metrics fails to recognize the relationships between projects—the numerous interdependencies that cause progress (or lack of it) in one area to delay progress in another.
That’s like just viewing the flight information display system at the airport (the big boards with the ETDs and ETAs) and calling it air traffic control!
Every investment within your innovation portfolio comes with an opportunity cost—it’s taking up space on the runway or moving across flight paths. And while it takes up these resources (talent, time, equipment, and funds), other projects can’t use them. At an airport, every outgoing and incoming flight has a schedule, and air traffic controllers can’t simply set schedules and watch progress. They have to actively coordinate how these flights use the airport’s finite resources.
For innovation portfolio managers, orchestrating interconnected projects across the various stages of the innovation lifecycle is key to not just keeping the pipeline “on track,” but ensuring that your innovation portfolio is achieving the outcomes your organization needs. Monitoring alone isn’t enough to manage an innovation portfolio.
Counterfeit #2: Innovation portfolio management measurement
The first generation of enterprise innovation management marked the transition from R&D-led innovation to finance-led innovation. Enterprises became more risk-averse, which meant every innovation project had to be tied to a financial metric. To gauge the value and effectiveness of an enterprise’s investments in innovation, organizations often rely on two metrics: net present value (NPV) and product vitality index (PVI). NPV attempts to estimate the future performance of a particular project or investment, but in areas with a lot of uncertainty (like innovation) it’s a shaky predictor at best.
PVI shows the percentage of revenue new products have contributed in the past over a specific period. It’s a useful metric, but it doesn’t offer meaningful summations of your innovation portfolio’s effectiveness, and it doesn’t tell you anything about the portfolio’s role in your organization’s long-term survival. It tells you where you are and where you’ve been, but it doesn’t tell you where you’re going.
Enterprises consistently tell us that their innovation KPIs simply aren’t driving the results they need. This older model of innovation management places too much focus on trying to measure each project’s individual financial impact, forcing innovation stakeholders to choose the safe short-term bets every time and making it difficult to invest in the big swings necessary for an organization to grow. Innovation workers optimize their efforts around inadequate metrics, and the organization fails to recognize non-financial impacts of a project, such as the way some innovation “dead ends” lay the foundation for new products down the road.
Counterfeit #3: Innovation portfolio management design
Enterprises often think of innovation portfolio management as prioritizing the categories of investments in their portfolio, such as determining the mix of investments in AI, blockchain, CRISPR, or sustainability. Choosing the right technological areas to invest in is important, but that’s just designing your innovation portfolio, not managing it. It makes for a pretty slide deck, but it doesn’t paint a picture for the future.
This high-level labeling may look great to shareholders and the board at first, but making a pie chart isn’t management. It doesn’t provide insight into the actual innovation activities you’re investing in or how you’re deciding where to focus your efforts. This portfolio view can be helpful, but it’s not connected to the real operational “guts” of innovation: front end innovation (FEI), new product development (NPD), and go-to market (GTM) activities.
Stakeholders can’t look at a chart and make material connections to what’s happening in the innovation pipeline and the distribution of work across your portfolio. Nor does labeling your portfolio communicate the business results of innovation. How does “investing in AI” connect to innovation outcomes, or to the company objectives that those outcomes should be supporting?
True portfolio management should give you the answer. Portfolio design only prompts the question.
Counterfeit #4: Innovation portfolio management lip service
Just as “innovation theater” creates the appearance of innovation without doing anything of value, innovation portfolio lip service creates the illusion that your portfolio is being managed, despite no one actively managing it. Everyone says things can be done, but the lack of follow-through becomes so pervasive that commitments are meaningless, and the innovation portfolio gets bloated with projects that never end.
When an enterprise accepts lip service as innovation portfolio management, leaders continually over commit, and innovation teams continually under deliver. Executives and directors may give each other quick, optimistic yesses without doing their due diligence to evaluate what’s possible, leaving teams scrambling to meet unrealistic deadlines and produce unachievable outcomes. Innovation groups may agree to projects without taking ownership or concerning themselves with deadlines. As target dates and launch plans come and go, innovation workers and leaders alike shrug it off to the inherent unpredictability of innovation activities, rather than a systemic (and solvable) management issue.
Over time, this lip service to innovation portfolio management produces a legion of “zombie projects” with perpetually shifting goal posts—never complete, but never technically overdue.
This counterfeit innovation portfolio management is obviously unsustainable in the long term, but once it becomes normative in an organization, it can be difficult to root out.
Leaders need to assess how each “yes” impacts other work and vet the viability of initiatives before they make their way into the portfolio. Teams need the ability to set realistic targets to avoid costly delays. And stakeholders need better visibility into the innovation pipeline, so they can decide when it’s time for zombie projects to finally be put to rest.
True innovation portfolio management
The problem with each of these counterfeits is that what passes for “innovation portfolio management” is too reductive. Monitoring a portfolio isn’t managing it. Neither is measuring its value. Or designing its topical focus. Or making commitments without follow-through.
To leave these counterfeit ideas behind, enterprises don’t simply need better tools and practices, they need a complete shift in philosophy about innovation. They need to embrace a deeper, more holistic understanding of innovation portfolio management—one that directly connects innovation activity to the enterprise’s growth and orchestrates the portfolio accordingly.
To help enterprises discern true innovation portfolio management from these counterfeit concepts, we propose using the 4As model: articulate, allocate, align, and analyze. Here’s how enterprises do true innovation portfolio management.
Articulate an innovation strategy that leads to growth
True innovation portfolio management requires a shared understanding of how innovation will contribute to company objectives. Translating your short-term, mid-term, and long-term business goals into an innovation strategy establishes a clear framework for actively managing your finite innovation resources. As new opportunities and requests for innovation arise, you can evaluate how they fit with the strategy and the work in progress.
Using growth as a common denominator between innovation initiatives enables you to compare and prioritize them based on how they’ll contribute to business objectives. And while part of an innovation strategy may involve identifying categories of innovation activities you’ll pursue, the most important thing to communicate is how your innovation initiatives relate to the strategy, and by extension, organizational goals. Then, by associating each project with a specific initiative, you can empower decision makers and innovation workers to understand the strategic value their individual projects provide and the larger purpose they serve for the organization.
To truly manage an innovation portfolio well, every innovation project needs specific, measurable, growth-related targets. The success or failure of an innovation project needs to be rooted in its contribution to growth, so everyone can recognize what work represents the best use of resources at a given time.
Allocate resources in keeping with a growth-oriented strategy
When growth is at the heart of your innovation strategy, and everyone is on the same page about the fundamental purpose of your innovation activities, growth becomes the determining factor in resource allocation. Initiatives and projects don’t simply cut in line based on who requested them or what a competitor is doing—priorities are rooted in the enterprise’s long-term growth strategy, and resources are distributed accordingly.
Short-term, incremental growth (the quick, easy wins) still have a place in the strategy, but they don’t constantly consume your innovation resources and prevent workers from making progress on the mid-term and long-term initiatives that will lead to greater growth down the road.
Part of allocating resources for innovation initiatives involves following through to ensure that the resources for each project are available when they’re needed. You have to coordinate the use of resources and recognize how your commitments now will impact other priorities in the future—when that top priority project reaches the next stage, will the personnel, equipment, and budget be ready to shift to it, or are their current projects lagging behind? Can they pivot when the time comes?
Counterfeit concepts of innovation portfolio management essentially allow priorities (and therefore, the portfolio’s relevance to the organization) to shift by not making resources available when they’re needed. Returning to the air traffic control metaphor, these enterprises allow low-priority planes to remain parked at the gates when high-priority flights need to load or unload there to stay on schedule—because they’re not managing air traffic, they’re simply monitoring, measuring, and/or categorizing it. Or, if innovation portfolio lip service has taken hold, they’re continually saying every flight is good to go, without actually doing the work necessary to coordinate, prioritize, and schedule them appropriately.
At times, circumstances will require adjustments. Your innovation priorities are based on the growth opportunities you’ve assessed and projected at a specific point in time. But with thousands of projects being carried out simultaneously, setbacks are inevitable. And new opportunities will always arise. As this occurs, it may be necessary to adjust your resource allocation and set new targets to reflect these new projections for likely growth outcomes.
True innovation portfolio management will involve continually refining your resource allocation to ensure that the entire collection of initiatives and projects is best aligned with your business objectives and the innovation strategy that stems from them.
Align innovation activities around growth objectives
One of the key differentiators between true innovation portfolio management and counterfeit models is the process of orchestrating an enterprise’s portfolio to maximize growth. Within a single innovation initiative, there are numerous interdependencies, not just due to the allocation of resources, but due to the inherent relationships between projects. One project may depend on completed research or successful commercialization of another.
Innovation leaders need to recognize the ripple effects that decisions about one project have on others. And as thousands of projects simultaneously progress through the pipeline, they need to anticipate and mitigate delays and setbacks to keep the system working smoothly.
Given the various disciplines within the innovation system (which we can generally group into the families of front end of innovation, new product development, and go to market), this continual alignment across the innovation lifecycle requires cross-functional calibration and recalibration. With each of these disciplines working from the same framework—the innovation strategy—stakeholders can make decisions that maximize the desired outcomes of the entire portfolio, not just the stages, initiatives, and projects they oversee.
However, to manage your portfolio well and ensure there’s a consistent process, innovation leaders can’t be left to interpret the strategy and debate the best path forward without clear guidance for navigating this process. Enterprises need to institute and socialize governance standards for their innovation portfolio, including procedures for recognizing when it’s time to realign work, as well as policies for implementing course-corrections.
Analyze innovation activity to find ways to optimize for growth
You can’t effectively manage an innovation portfolio without exploring ways to improve it. But at most organizations, stakeholders don’t have much visibility into innovation data, making it difficult or impossible to answer questions about what’s working (and why), where the pipeline needs improvement, and how new ideas and opportunities fit into the mix. This lack of visibility is the root of the black box problem, where nobody has a comprehensive understanding of the enterprise’s innovation activities.
While “innovation portfolio monitoring” and “innovation portfolio measuring” are counterfeits of innovation portfolio management, the problem is when organizations reduce innovation portfolio management to these data collection and progress tracking. In fact, true innovation portfolio management requires enterprises to capture and monitor more data—tracking metrics for every step of every function of the innovation process, including executive strategy, FEI, NPD, and GTM. Project managers need to conduct rigorous reviews and vigilantly document the lessons learned over the course of each project, laying a clear foundation for future work to build on.
This is where innovation management solutions like Accolade have given leading enterprises a major advantage. This software centralizes data from innovation ideas, timelines, budgets, approvals, strategic work, and other project documentation. Every stakeholder gets access to the data they need to see in custom dashboards, making it easy to evaluate and replicate successful projects, identify themes in projects that fail, assess performance trends, and find opportunities to optimize the portfolio for growth. As an enterprise’s historical database grows, stakeholders can reference past problems and solutions to improve assumptions about future endeavors, helping the organization to more reliably project outcomes, allocate resources, and align innovation activities for growth.
This visibility into innovation data has enabled enterprises to rapidly increase growth. In fact, according to a Total Economic Impact (TEI) study conducted by Forrester in 2024, enterprises that use Accolade to manage their innovation portfolios launch one additional new product within their first five years of adoption and decrease time to market by 15–30%.
These dramatic, lasting improvements happen because our customers are discarding these counterfeit concepts of innovation portfolio management, and instead, they’re embracing a philosophy that makes growth the focus of all their innovation efforts.
It’s time to rethink innovation portfolio management
True innovation portfolio management organizes all of an organization’s innovation activities around business objectives, then strategically and continuously aligns work and resources around the projects and initiatives that have the greatest impact. Unlike the reductive counterfeits that emerged in the first generation of innovation management, this second generation orchestrates the entire portfolio to work toward a singular goal: growth.
For many organizations, these counterfeit concepts of innovation portfolio management have taken hold over decades, wasting resources and preventing enterprises from evolving to their full competitive potential. But increasingly, industry leaders are transitioning to a growth-oriented approach, and they’re releasing more new products faster.
At Wellspring, we’ve distilled this approach into three main principles:
- Every single innovation activity is explicitly tied to growth objectives.
- Every single piece of data is logged in the system and visible to whomever needs it.
- Every single activity is orchestrated in alignment with growth objectives.
We call it the growth innovation trifecta. And if you’re ready to explore what it takes for your organization to make the shift, check out our free ebook, The Growth Innovation Trifecta: A New Philosophy of Innovation Management.