December 5, 2013 Leave a comment
Five years before George Day’s article “Is It Real? Can We Win? Is It Worth Doing? Managing Risk and Reward in an Innovation Portfolio” appeared in the December 2007 edition of the Harvard Business Review, we were working with the a Fortune 100 Company to build a process to manage “ideas.” Imagine a traditional scorecard or project assessment portfolio, built much like our FAST approach to quantitative SWOT analysis, that could look something like the picture below.
While you would need to determine the weights and sensitivities of your own situation, the questions being asked (Criterion) are pertinent to all product development and portfolio balancing initiatives. Since most of our alumni struggle with methodology rather than facilitation, listed below are the primary categories (far left column of picture), the secondary categories (second column from the left), and the questions each contains, that you may choose to modify for your situation.
Note that the primary categories provide natural agenda steps for a workshop. The secondary categories open the door for activities to support each step. The questions themselves are the bottom of the FAST holarchy, as known by our alumni.
Methodologically, it is very important to follow the sequence as shown, as we discovered based on our own experience facilitating such workshops. If the product is not very real, stop. If the product is real but we cannot win, stop. If the product is real and we can win, what is it worth?
- Market Attractiveness: Is the market real?
1.1. What is the need, want, or problem to solve?
1.2. Who are the identifiable customer(s) willing to buy?
1.3. How attractive is the market potential?
2. Technical Feasibility: Is the product (or solution or service) real?
2.1. What is the idea, concept, or solution that addresses the identified need?
2.2. To what extent do we have the technology and expertise to make it? (technical risk)
2.3. To what extent do we have the manufacturing or delivery capacity to provide it? (manufacturing risk)
2.4. How likely can we make the product within the defined market window? (timing risk)
2.5. To what extent will the product fit the customer’s processes? (commercial risk)
3. Product Advantage: Is the product competitive?
3.1. To what extent can our product be competitive on design or performance features?
3.2. To what extent does the product compliment or enhance an existing product offering? (product cannibalization risk)
3.3. To what extent does our price meet customer expectations? (pricing risk)
4. Synergy with Core Competencies: Is the company competitive?
4.1. To what extent does it leverage our core technology or build on an existing platform? (investment risk)
4.2. To what extent do we have a path to market and business model to be successful? (market share risk)
4.3. To what extent do we have the experience, skills, and human resources to be successful? (project risk)
5. Strategic Fit: To what extent is the product strategic?
5.1. How well is this opportunity aligned with the strategic plan for our organization?
5.2. To what extent does this opportunity open the door to new business in the future? (strategic leverage)
5.3. To what extent are there overriding factors? (eg, affordability)
6. Risk/ Reward: To what extent is the product profitable?
6.1. What are the capital requirements? (financial risk)
6.2. What are the full-time equivalent requirements? (human capital risk)
6.3. What is the range for projected annual sales in year five?
6.4. What is the projected range for rate of return on capital invested?
6.5. What is the range for projected size of return in ten years? (net present value or NPV)
6.6. To what extent do we have confidence in the opportunity? (forecast risk)
With consensual answers to these questions and appropriate weights applied, you can now calculate and compare discrete values for real, win, and worth. The workshop discussions lend to the capture of top risks, critical information, key uncertainties, and major assumptions that need to be captured for setting up next steps including an action plan, key milestones, and critical dates. (See Roles and Responsibilities tool).
Become Part of the Solution, Improve Your Facilitation Skills
The FAST curriculum on Professional Facilitation Skills details the responsibilities and dynamics mentioned above. Remember, nobody is smarter than everybody, so consult your FAST Facilitator Reference Manual or attend a FAST professional facilitative leadership training workshop offered around the world (see MG Rush for a current schedule — an excellent way to earn 40 PDUs from PMI, CDUs from IIBA, or CEUs).
Do not forget to order Change or Die if you working on a business process improvement project. It provides detailed workshop agendas and detailed tools to make your role easier and your team’s performance a lot more effective—daring you to embrace the will, wisdom, and activities that amplify a facilitative leader.
- Managing Innovation Portfolios – Strategic Portfolio Management (innovationmanagement.se)
- Phase One Results from a Facilitated Business Process Improvement Project (facilitativeleadership.wordpress.com)