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Building an Innovation Portfolio -- 10 Key Takeaways [Infographic]

I recently hosted a discussion with Forrester's, vice president, principal analyst serving CIOs, Chip Gliedman and Planview's NDP solution market manager Carrie Nauyalis about innovation and portfolio management, and how the two relate. I've included an image of the visual notes designed during the live event. They provide a visual reference for the topics and key takeaways.

Infographic: Building and Managing an Innovation Portfolio

We Had a Lively Discussion on Five Topics

  1. What an innovation really is and how it differs from change
  2. The capabilities needed to support sustained innovation across the enterprise
  3. Driving innovation forward and who typically takes the lead
  4. How to leverage an innovation network that culls ideas from inside and outside the organization; and last, but not least…
  5. How portfolio management can tie all this together

My 10 Key Takeaways

  1. Ideation is not innovation ‒‒ Innovation is a process that spans products/services, processes/operations, markets/business models, and organization/governance.
  2. Innovation differs from change; innovation:
    1. Is ongoing, not episodic
    2. Often has distinct governance and funding
    3. Implies a greater degree of creativity and risk
    4. Success metrics are different (often the driving principle is "fail fast, fail cheap")
  3. Balancing Risk vs. Reward is key; strive for innovations that drive value
  4. Exploit the entire ecosystem including employees, customers, suppliers, and more
  5. Innovation may be "everybody's job," but to thrive it is best driven, or at least supported, by a single area.
  6. Regardless of where innovation "sits" in an organization, the CIO role is going to need to shift to support the growing trend toward more innovation initiatives
  7. Product Portfolio Management (PPM) helps operationalize innovation throughout the Ideation, Product Planning, Development, and Launch processes. It also helps align projects and other investments with products, and aligns products with brand strategy.
  8. Be sure to make room in your project portfolios for innovation projects, even smaller efforts that may not have a major impact on current business operations, but help enable business change or growth.
  9. PMOs should not only help accommodate and support innovation projects (relaxing their methodology and metrics as appropriate), but should encourage and drive the trend. This can also serve to improve the image of the PMO as a bureaucratic bottleneck.
  10. To drive innovation, you need:
    • A strategy for driving and managing innovation
    • A culture that fosters innovation
    • Ideas! And lots of them!
    • Processes to filter and vet the ideas
    • A portfolio view of your innovation prototypes
    • Governance and control processes for innovation

For more information, listen to the full Webcast discussion Building and Managing an Innovation Portfolio. Meanwhile, I'd like to hear your thoughts. Who drives innovation in your organization? What processes do you have that ensure innovation is considered? What is the maturity level of your innovation program and what challenges are you facing? And lastly, what do you find stifles innovation in your organization?

Going Hybrid, and I’m Not Talking about Cars (it’s about the Cloud) - The Cloud: Not Just for Startups AnymoreThe word "hybrid" typically conjures images of the Toyota Prius (only for now if Ford has anything to say about it), but in the world of enterprise software it is about evolving business models. Actually, and more importantly, going hybrid is about bringing more value to customers by providing them with choice -- the choice of cloud-based or on-premise software deployment models. Over the past several years we at Planview have put this hybrid approach at the core of our business. We have embraced SaaS as a transformational business initiative, but at the same time continue to embrace the on-premise model as well. Providing choice is ultimately about being customer-driven versus fighting industry-centric religious wars about business models and technologies. Without question, going hybrid has brought more value to our customers, partners, and shareholders. For more on this transition and how a cloud-hosted approach made it happen, see my recent article on WIRED.

The Cloud: Not Just for Startups Anymore

"Clearly cloud-based software solutions are here to stay. Whether in consumer or enterprise markets, the cloud has transformed the way we deploy and consume software applications. For enterprise customers, cloud-based software radically…" Read the full article.

New PMO Directions Explored at Gartner 2012 PPM: Reasons Why You Should Rethink Your PMO

In my presentation at the Gartner 2012 PPM Summit, I discussed "Delivering What Matters: Focusing the PMO on the Big Picture." I presented a number of themes, all of which, to my delight, aligned quite nicely with the collective keynotes and presentations at the conference.

There's no doubt that the role of the PMO is changing, and it was nice to see this issue play such a prominent role at the summit.

Seven common themes that emerged include:

  1. Gartner PPM SummitEmbrace Multiple Approaches -- Project management is no longer about a one-size-fits-all methodology. There's a right time for an agile approach and a right time for a more directive waterfall approach. Even large programs can take the directive path or be more adaptive. An enlightened PMO will have guidelines for when to use which.

  2. Agile is Here to Stay -- Especially for efforts with high uncertainty, or where exact requirements are not clearly definable, more and more organizations are moving to adaptive and iterative development methods. It's reached a critical mass, and the PMO can no longer afford to stick its head in the sand concerning Agile. Equally, the PMO must be aware of the culture shift it requires and manage change accordingly.

  3. The PMO is a Vital Component of Managing Change -- Constant change is the new normal. But when an organization has their vital information segregated across multiple spreadsheets and systems, it becomes nearly impossible to adjust the sails when the wind changes. The PMO is in a unique position to provide the knowledge, processes, and tools that support alignment and integration across strategy, operations, and finance. As such, it can no longer afford to keep a narrow focus on project execution methodology.

  4. The PMO Can Foster Innovation -- To thrive in today's dynamic environment, an organization needs to allow room for a number of higher risk innovation projects, within reason. The PMO can help create effective portfolio management and governance methods to aid the organization in achieving a balanced strategic portfolio of projects, products, and services.

  5. It's Not Just About Projects Anymore -- The handwriting is on the wall. Gartner's saying it. Other industry analysts are saying it. And I've been saying it for a few years now. An organization is an ecosystem, and the best way to organize work and resources is byproduct, not project. That's not to say you shouldn't manage projects, but those projects must tie to products (internal and external). In other words, value definition lies with products. But don't think of products as "hard goods and soft goods" as much as a certain set of functions, features, and capabilities that allows the end user or customer to function effectively, which takes us to our next item…

  6. Think in Terms of Capabilities -- In the olden days (i.e. the last few decades), IT and other service delivery functions were focused on solutions. In the extreme, solutions were conceived with a misguided view of what the providers "thought" people wanted or needed. Now trends are showing a shift toward speaking to business and functional capabilities. You're no longer implementing a software product; you're implementing the ability to xyz (pick the function of your choice).

    In the context of portfolio management, you may be implementing the ability to capture ideas, filter demand, govern intake, prioritize investments, assess resource capacity, and so on. And in the context of software projects, you might be implementing the ability for the business or the end users to achieve some measurable benefit. The key is that projects (aligned with products) must deliver certain capabilities, which are tied to measurable outcomes, which takes us to…

  7. It's the Outcomes, Stupid -- At the PMO Symposium in Orlando late last year, and at the recent Gartner PPM Summit outcomes and benefits realization were prevalent themes. Outcomes, both at the business/functional level and at the enterprise/strategy level are how we measure the value delivered through optimal use of constrained resources and funding.

    Indeed, there were a number of sessions at the Summit that talked about value mapping, and Mark Langley, President and CEO of PMI, spoke of the importance of benefits realization. Astute PMO leaders are quickly recognizing the need to bridge organizational gaps, and promote outcomes-based and capabilities-based thinking across all sectors. This is where the PMO can earn their proverbial seat at the table.

Speaking of seats at the table, in my white paper, A Seat at the Table: Making your PMO More Relevant in Times of Change, I discuss many of the above themes including the PMO as a change agent and integrator; the shift to capability and outcome-based thinking; and the importance of thinking of the organization as an ecosystem (bridging projects, products, services, and more).

It's refreshing to see the industry converge on these themes, as was definitely visible at Gartner PPM Summit. I'd love to hear your thoughts. Is your organization recognizing any of these shifts, and if so, what steps are being taken to get ready?

The Missing Portfolio

Over the past few months, I have written several posts regarding the changing landscape of portfolio management and Gartner's recent PPM Market Universe. As you may recall, part of this research includes a new Magic Quadrant for Integrated IT Portfolio Management Applications. This Magic Quadrant expands the IT portfolio and formally includes projects, applications, services, and enterprise architecture -- I contend there is one missing portfolio not listed -- the product portfolio.

Over the past few years product portfolio management has matured as a discipline. This maturation has predominantly happened within the context of classic product companies -- companies that design and build "real" products like discrete manufacturers consumer packaged goods (CPG), medical equipment, and many others. Because of this discipline, product portfolio management has been tied to the product lifecycle management (PLM) world as a software category. This has brought great value to these product companies, and more are adopting portfolio management every day. My point is to the IT community -- an opportunity is being missed.

Practitioners of IT portfolio management have aspired for years to achieve ideal "alignment with the business" as an output of the portfolio management process. Projects, applications, and services can be aligned to the strategic objectives of the enterprise as a way to ensure IT spending is best used. This is fine, but people who know me know that "alignment" is not one of my favorite words. Being aligned is an inherently reactive, passive state -- reactivity and passivity are classic traits business people use to complain about IT organizations. Alignment has value for sure, but how can IT organizations get to the next level with their portfolios?

I contend the product portfolio may be part of the answer. The largest IT organizations typically exist in industries such as financial services, health care, and insurance. Aren't these "services" companies? They don't design products, so how could the product portfolio be applicable? Hold on one minute. Talk with the businesspeople in these industries, and they will quickly tell you about the plethora of loan products, credit card products, fixed income products, and more that they market and sell. Sounds like a hidden product portfolio.

What if IT organizations understood how every aspect of their investments connected directly to the products that drove the revenue of the firm? That would go beyond passive alignment and put IT spend right in the business. We have seen leading IT organizations think this way, but they are still the minority.

Consider product portfolio management as a tool in your IT portfolio management approach. It has the potential to bring an important new dimension to understanding your IT spend. Let us know your thoughts about this subject. Is product portfolio is the missing portfolio?

What's (Still) on Your List?

One part of my job that I like best is working with prospective customers to help them understand the potential ROI of a PPM solution. It's an interactive process that takes many factors into consideration. Time and time again, what surprises me is the extent to which IT resources are over-committed, often to what turn out to be duplicated efforts, mis-aligned projects, and more. And yet IT is expected to lead the charge with innovation while keeping the lights on and taking a seat at the CxO table. It's a lot to ask, isn't it?

Top 10 CIO Priorities for 2012I think of this after reading Rob Preston's "Top 10 CIO Priorities" in a recent issue of InformationWeek. I'm sure you'll recognize some of these priorities from previous years' lists -- just as I'm sure some of these have made your own lists in the past. The number three priority to "Break Out of the 80/20 Spending Trap" and the number two priority to "Make IT One with the Business" have been there for years. Why haven't we been able to cross these off our lists?

Let's take the 80/20 phenomenon. It states that many companies are still spending up to 80% of their budget on operating costs and only 20% on innovation that can actually grow their company. Most of these CIOs want to see that ratio shift. So why is it still on the list? Preston suggests that in order to bring that 80% down, companies would have to consolidate data centers, applications and data marts, and modernize their infrastructures. Some companies have already accomplished this to great success, but why not more? Why not invest the time to evaluate current applications, services, and processes to see which could be consolidated or retired, thus reducing maintenance and support costs and the drain on resources? Portfolio management is a great solution to do just that.

Secondly, the repetitive requests of some CIOs to "make IT part of the business" is losing its effect. Successful technology leaders think of IT as an integral part of the business, not a separate function. No other executive in an organization spends time trying so hard to "align with the business." Instead, they think and act like part of the business by finding ways to improve the business. According to an InformationWeek 500 survey, almost half of the CIOs surveyed are taking on more responsibilities outside of IT, including process management, product development, supply chain management, and innovation. IT is the business. It's time to cross this one off the list.

The New Year is the perfect opportunity to put the plans in action to accomplish what's on our priority list. What we need is incentive: incentive to find efficiencies within our organizations' operations that can fund the initiatives that will differentiate the business.

So as we bid 2011 farewell, what's my hope for 2012? That we make good on these priorities and cross them off the list to make room for new ones! So that the next time we see InformationWeek's "Top 10 CIO Priorities" list, it will feature some bold new challenges, new incentives, new ideas we make happen. Who's with me?

How Portfolio Management Can Maximize CIO Contribution to Shareholder Value

Written by Steven Cristol, Founder and Managing Partner of Strategic Harmony® Partners

Steven Cristol

ZDNet recently ran a piece entitled, "5 Reasons the CIO Can Be a Corporate Sustainability Hero." Interesting and true, but I felt like they buried the lead as journalists like to say. Sustainability is crucial to this story, but far more powerful when considered in conjunction with the CIO's impact on his or her company's brands. So in the dual contexts of brands and sustainability, let's consider one of the most important components of many CIOs' project portfolios: IT projects that enable product development and delivery.

Corporate Sustainability HeroA few months ago the CIO of a well-known consumer electronics company helped me document that nearly half of all his IT projects fell into that category. Prioritization of those projects is often sub-optimized in portfolio management since, as another CIO so aptly put it, "a big driver of IT priorities is which business unit's GM screams at IT the loudest." This obviously sub-optimizes the CIO's contribution to shareholder value creation.

Taking a page from the product portfolio management playbook can trump those politics. Consider that the most strategically sound approach to prioritizing new products/features is based on the combination of (1) alignment with drivers of brand choice (how customers decide between offerings -- i.e., attributes that define ideal customer experience) and (2) competitive impact. As it has become increasingly impossible to manage a brand without proactively managing sustainability, now a third element is required: how sustainably can those products or features be developed and delivered? These three considerations -- ideal customer experience alignment, competitive impact, and sustainability -- when evaluated along with resource requirements and risks, provide as useful a foundation for prioritizing product development-related IT projects as for actual product development projects.

The ZDNet piece had this right: IT touches every division, CIO's know how to work across silos, and they know how to think sustainably -- accustomed to projects with large capital requirements that can no longer be cost-justified without sustainability costs and benefits integrated into ROI analyses. Let's leverage that knowledge by combining it with what their internal clients know: what end customers want and what competitors fear. Tying that all together and then back to product-enabling IT projects is a powerful lens through which to manage CIO portfolio optimization for brand impact and value creation. All of which, when integrated with early evaluation of likely environmental impacts of IT projects, makes the CIO not only a sustainability hero as ZDNet suggested, but a total brand hero as well.

Customers, shareholders, and employees all share in the CIO's triumph when the voice of the companies' customers is injected into IT portfolio management in a more disciplined way. Your comments welcome on whether or not -- and why -- ideal customer experience, competitive imperatives, and sustainability are driving CIO portfolio priorities in your organization. Or how you're handling those screaming GM's.

Portfolio Perspectives: Getting the PPM Picture

Welcome to Portfolio Perspectives! I'm excited to present this new blog which will offer insights, thought leadership and points of view on portfolio management and its growing impact across the enterprise. In today's business climate of perpetual change, the discipline of portfolio management is more critical than ever to help you make timely, informed business decisions for your organization.

Innovation, Plan, Success, StrategySo, to start off, let's be clear about what we mean by portfolio management and PPM. Portfolio management is often referred to fondly as PPM, with that first P representing project or program or product. As we've seen portfolio management grow, it's being used for many initiatives that don't start with the letter P -- services, applications, strategies, and more. Since we all like to use three-letter acronyms, you'll see PPM and portfolio management used interchangeably throughout this blog.

Portfolio Perspectives will be the resource for you to stay on top of the latest trends in portfolio management. Portfolio management experts and executives will cover a variety of timely topics including:

  • The state of the PPM market
  • Resource management best practices
  • The transformation of annual planning
  • Analytics & reporting insights, sustainability and much more…

Everyone who shares a passion for the benefits of PPM across the enterprise has a point of view. This blog is a forum for your voice, so when a topic or opinion strikes a chord… share your perspective!