Here’s how to manage a portfolio of innovation projects, and to pivot with agility to maximize outcomes.
“Genius is one percent inspiration and ninety-nine percent perspiration.” Thomas Edison gave voice to this sentiment back in 1902, and the concept still holds true today.
Insight into the “next big thing” takes you only so far. The trick is turning the best ideas into reality.
Today’s unicorns and more established forward-thinking enterprises have several characteristics in common: They continuously disrupt their legacy or adjacent industries. They have rapid-response strategies to disruptive threats and opportunities. They discern the subtle changes in the market that can herald the next disruption down the road. And they strive to use what they learn to refine their innovation approaches—whether their ventures succeed or fail.
At KPMG, we work to bring our best ideas to life by regularly refining our efforts and rebalancing our portfolio of innovative projects with a focus on three critical areas: how to invest, how to launch and how to learn.
Successful companies take a strategic view to determine how much investment is necessary to achieve innovation-fueled growth. Business leaders should ask: Should we seize an opportunity that may not pay off quickly? Or should we focus on improvements that can raise margins immediately?
It’s critical to understand how wide and deep innovation efforts should be. Too much innovation can starve a company’s core strategy, while too little can erode competitive advantage.
What’s more, not all innovation projects are equal in value. Some are defensive, designed to maintain competitiveness. Others are adjacent, created to engage new customers or expand market share. Still others are “new horizons,” targeting untapped channels or transformed business models for long-term growth.
A diverse governance team from across the organization can review these options and consider the enterprise’s risk appetite in making portfolio investment decisions.
KPMG’s leadership evaluates these three options each time we consider an innovation investment. When pursuing organic builds, we deploy a rigorous end-to-end process, with formal stage gates at key junctures.
Creativity and ideation are the wellsprings of innovation. But companies must perform the hard work that will allow inspiration to grow into successful new products, services, and businesses. In this way, they can provide real solutions to customers’ needs while successfully leveraging innovation to accelerate their financial growth.