Innovation portfolio management is the process of prioritizing resources spent on innovation projects. The most widely used methods are quantitative scoring (e.g., ROI, market share, or risk) and portfolio balance diagrams (e.g., technical versus market novelty). Evidence from practice suggests that organizations struggle with innovation portfolio management, which may be partially caused by the criteria used being standardized rather than driven by the specific strategy of the organization.
This study proposes that a strategy-specific portfolio – the innovation goals of which are derived directly from the change needs in the strategy of the focal organization – can more effectively support the organization’s strategy. We conducted a field intervention, where 10 business unit (BU) management teams participated in a 6-hour workshop to review their innovation portfolios. Five Bus used a standardized portfolio tool (a balance diagram), while five matched BUs used strategy-specific portfolio diagrams. The BUs with the strategy-specific portfolio diagrams took significantly stronger actions (in every case). Interestingly, we found that the reason for this outcome stems less from the teams’ capability to perform better analysis but from the additional clarity and relevance of the strategy-specific tool emotionally alerting the teams to the urgency of action.
The study bridges the literature on innovation portfolio management in operations strategy and on emotional motivation in behavioral operations. The results suggest that emotions play an important role in motivating and energizing action; analysis can help to channel the motivational energy, but it is not sufficient to create action readiness in the first place.
