What bets should be taken in your innovation journey?

That's what this all boils down to. Your senior management and strategic decision makers need to make a few decisions on investments. Should they make investments in highly uncertain projects that might have a big payoff, or stick to projects with a more likely rate of success but are less likely to be major hits? For you as an innovative service creator, you need to know if your focus is on emphasising the core business or directing your attention further afield into unchartered waters.

Does your senior management have a clear picture of where its spending resources? 

Before you can innovate or create any new SaaS or digital services, it is very useful if you can see a complete picture of what your company is spending its resources on. A visual map of the major initiatives going on at your company. There is a slim chance that this will be at hand, but perhaps you can help map it out using the Opportunity Map Canvas you can download here.

Note: I am only interested in digital (software) services, so this Opportunity Map is tweaked with them in focus. However the fundamentals of the canvas can reach beyond digital initiatives.

‍

The Opportunity Portfolio Map

OK, let's start mapping out the initiatives currently in place at your company. First download the canvas. By the way, you'll see 2 versions of the canvas when you download - one that sorts clusters slightly differently (a little more advanced) should you need it. This mapping is from the discovery driven growth work by the amazing Rita McGrath.

Horizontal Axis: 

• This axis represents market and organisational uncertainty level.
• Where such uncertainty is HIGH, you may not know who the customers are; what price they are prepared to pay; how to go to market; how to distribute; the key USP's.
• Where this uncertainty is LOW you have a good idea of all the above variables.

Vertical Axis: 

• This axis represents technical, or capability, uncertainty.
• Where this is HIGH you may not know what technical / data standards are; whether the challenges can be met at the right cost; what skills are going to be important; whether you have all those skills etc.

So to summarise, the projects or initiatives clustered in the top right, the greater their level of uncertainty, and the more unpredictable the initiative is likely to be. These initiatives need new ways of working to address, but the initiatives in the bottom left of the canvas you can take on with conventional tools and planning.

‍

Breaking down the Portfolio Map further

A good idea when you map YOUR initiatives here is to use bubbles per initiative. The SIZE of each bubble representing the upside potential; and a NUMBER inside each bubble representing person/months to completion. Boom!  It's quick and effective, and just enough to see a holistic overview. Be consistent in your judgements of "upside" though.

Ok, let's look closer at the portfolio matrix parameters for clustering:

Core-enhancement Launches

• These are projects that improve the profit streams and growth of the core business.
• Although these initiatives MAY be highly innovative, they are building upon or enhancing a business with which your firm is already successful.
• These include investments in improvements with operational effectiveness; upgrades to IT, HR or supply chain systems.
• These initiatives are vital to improve current revenues - indeed without them it's hard to sustain a lead against motivated competitors.
• Other core-enhancement projects could be growing into new markets; penetrating existing customers' wallets more deeply, or extending existing brands into adjacent areas.

Platform Launches

• These are major initiatives requiring substantial investment, to establish your firm in a new growth area at scale.
• The goal of a platform project is to establish a platform for future significant revenue growth.
• These projects are more risky than core-enhancements.
• Platforms require that a firm explore new capabilities and new market areas.
• Platforms are highly vulnerable. They often struggle because of internal power-plays with core business projects that nibble (or gobble up!) all resources that are supposed to be driving the new platform projects.
• Platforms can often suffer from premature launch. Tech-first platform launches often result in a state where no one has actually created a business model(s) for them.

Both Core-enhancement and Platform Launches represent the here-and-now of investments in growth. Traditional concepts of management, ways of working and planning are still worthwhile here.

‍

Positioning Options

• These are initiatives in areas which your company is fairly confident that a long-term customer demand exists.
• Think of positioning options as bets to hedge. They provide alternatives in the event other bets go wrong.
• Positioning options are investments that your company makes to learn enough to effectively TARGET emerging demand.
• Unknowns might be how to deal with any eventual demand.
• Positioning options serve 2 strategic purposes: 1. To create a hedge in the event the unexpected happens. 2. To provide a safe place in which people in your firm can learn about new capabilities or technologies without immediate pressures like business performance hanging over them.

Scouting Options

• Scouting options are useful when you have a capability or technology (or data) that you think might be of value to a set of customers.
• These options are then used to experiment with different approaches to the business, to find out what might work.
• Ideally scouting options are low-cost, but can get expensive...
• These are the only way to get information about your customers' responses to your offers.

Stepping Stone Options

• These options are the highest uncertainty category, because the capabilities, technology, market demand, the form the initiative might take etc are all unknown.
• Invest in these when you think that the technologies or markets will be important in the future and you do not want to get left behind.
• These options are called "stepping stones" so your company should not be intimidated or scared of attempting them. Don't leap too boldly from a concept to premature market introduction.
• Rather, just take incremental steps from discovery to discovery, with the goal of reducing uncertainty.

‍

So you've done your portfolio positioning. Now what?

Your senior team should be able to use this portfolio now to gain insight into :

1. What's actually going on in our company in terms of strategic initiatives? 
2. Will the initiatives as currently funded address the growth challenge we have?

Expect responses like "I had no idea!" when you carry out this mapping.

‍