From the course: Balancing Innovation and Risk
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Achieve a balanced innovation portfolio
From the course: Balancing Innovation and Risk
Achieve a balanced innovation portfolio
- A study from Harvard Business Review found that when companies allocate around 70% of their innovation activity to low-risk projects, 20% to moderately risky projects, and 10% to high-risk projects they significantly out perform the competition. The likely reason why is a perfectly balanced blend of innovation projects in their portfolio. Portfolio balancing is a technique used by the worlds best innovators to analyze the long and short risk of innovation projects in their pipeline. No innovation can afford to risk their business on one big idea. Likewise, developing a bunch of insignificant projects won't deliver a big win either. To help people at all kinds of companies evaluate the health of their innovation pipeline we use a tool called portfolio balancing. It involves the matrix method, and for illustration let's use the markets versus products matrix here. Now in the lower left quadrant we've got existing…
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