Five keys to adopting a portfolio approach to innovation

26 February 2021 Consultancy.uk 4 min. read
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Every company wants to be more innovative, but only a few have realised the risk of putting all their eggs in the same basket. No organisation has a single route to success, so adapting to a portfolio method of innovating a company is key to their future successes.

As businesses across the industrial spectrum look to get a leg up on competitors in the coming months, the firm has applied its insight in helping customer-facing firms to launch a paper exploring an alternative approach to making such an organisation more innovative.

The white paper ‘A Strategy for Innovation: How to make change work for your organisation” addresses a number of ways in which companies can increase their chances of success through switching to a portfolio approach of innovation, and evolving their structures and processes to allow innovation to bloom. As part of this, according to Hannah Tharp, Head of Consulting at BJSS, there are five important factors to take care of on the way to portfolio success.

Five keys to adopting a portfolio approach to innovation

Know your customers

With many markets oversaturated with choice, and industry incumbents coming under pressure from new digitally savvy competitors, the way firms support and engage their customers is increasingly seen as a key differentiator. According to Tharp, the most important prerequisite for shifting to a portfolio approach is to ensure you have a thorough and continuously updated picture of customers, their needs, their desires and their behaviours.

She explained, “It’s not enough just to surface and meet their expectations because customers tend to base their views of the future on what they already know. They need companies to provide vision and leadership, reaching out to co-create the future with them ahead but cement a strong collaborative bond from the start of the journey.”

Anticipate major threats

“In every company, people are aware of the major threats to achieving change in their organisations,” Tharp went on. “But they may not volunteer their insights for fear of seeming negative. Asking colleagues what they think is the biggest problem ahead can make an enormous difference to your success.”

If companies can forecast the problems they may face down the line, they can make plans to try and offset negative factors. By collaborating honestly and openly with colleagues, organisations can remove obstacles before they become a major issue – and not only clear the path ahead, but cement a strong collaborative bond between staff as a result.

Maintain absolute alignment

As with any process of change, if a company is innovating its portfolio, it requires executive and managemental alignment to succeed – including agreement about strategic direction and success metrics. However, according to Tharp it is also vital that companies don’t become too introspective. They need to survey their markets and the wider environment, keeping on top of new developments and potential competitors.

“Disruptors can come from any direction,” she noted. “Many of them move with breath-taking speed: witness the recent growth of innovators in media streaming or electric vehicles, and the scramble of incumbent businesses to respond. The organisation that doesn’t keep a 360-degree lookout lays itself open to sideswipe.”

Upskill

It is widely accepted that change projects require a diverse and flexible skill set to be able to cope with future challenges. Business leaders said that skills of particular importance are leadership and management skills, budgeting and financial management, planning and monitoring, along with strategic management, digital skills and risk/opportunity management. However, skills and capability shortages are a potential barrier to which many organisations still face.

Tharp noted, “Your organisation will undoubtedly have skill gaps. Identify these gaps and create plans to remedy them. Find the support you need and work out how you can join up your client and internal teams. Bear in mind that the mechanisms and relationships you are building are for the long term. Moving away from the monolithic, waterfall approach means creating, embedding, and domesticating a new reality.”

Rewards

Adopting a portfolio approach to innovation is a strategy that combines institutionalised, evidenced-based decision-making with an objective view of risk and an agile attitude to change. It may prove to be a difficult cultural change at first, so setting clear goals and rewards can help incentivise behavioural shifts.

Tharp concluded, “Begin with senior sponsorship and buy-in as a foundation for creating a KPI set. Then propagate the vision and metrics throughout the organisation. Ensure that everyone sees innovation as part of their role and reward innovative behaviour. We have seen impressive results from in-house innovation competitions that generate lasting enthusiasm and concrete, actionable ideas.”

BJSS was founded in 1993 and has an annual turnover of more than £70 million. The company delivers business and technology consultancy services to a wide range of industries, including financial services.