Structuring and measuring innovation
As innovation projects grow in your company, tracking and managing the portfolio of innovation project into a innovation funnel is essential for:
Prioritisation and resource allocation: Evaluate and prioritise ideas based on impact, feasibility, and strategic alignment. Allocate resources effectively to focus on the most promising ideas.
Collaboration and engagement: Foster collaboration and engagement among teams and stakeholders. Utilise diverse perspectives and expertise for innovative solutions.
Measuring impact: Evaluate project impact to calculate the portfolio impact value and report on its evolution
Continuous improvement: Implement a structured framework for learning from successes and failures. Refine innovation strategies and continuously enhance outcomes.
Overall, tracking and managing an innovation funnel enables resource optimization, collaboration, impact measurement and continuous improvement of the innovation practice.
How:
The Innovation team has already most of the data at hand. A visualisation of the funnel is an essential innovation management tool for organisations that have advanced innovation capability.
The key elements to introduce are:
Funnel with all the project by stage / horizon / funding strategy / expected impact by area / resource allocation
This is an example of a funnel with different horizons
To improve the innovation process, you need to measure the funnel:
How long does each project spend in which phase?
What is the potential impact of each project?
Why are projects failing at which stage?
What is the cost of an exploration?
How many “winning” projects can you expect?
What is the drop-out rate?
Estimate the impact of the portfolio on a regular basis (3 to 6 months)
Define the impact area of the project
Assess for each project the potential impact (use external assessment benchmark)
Aggregate the total impact of the portfolio of projects
You can get support from a specialised innovation consultancy agency to structure your innovation portfolio and estimate the impact of the projects.
Here is an example of an Innovation Dashboard that measures and reports on the innovation activities of an organisation. This dashboard is essential to drive a proper innovation practice.
Measuring ROI
For the team to manage the innovation funnel and the various projects they need to be able to make trade-off decision costs vs potential benefits. The expected benefits from the project need to be clearly stated, tested and validated as early as possible in the project.
The possible benefits such as citizen happiness, social impact, green impact, influence impact and others need to be defined, and precisely evaluated as early as possible, then tested.
This common grid can then be used to effectively prioritise projects and make investment decisions.
This benefit analysis is a key element to communicate clearly the expected results to the innovation project and the benefits of the overall portfolio.