As 2023 looms, business leaders reflect on the past year's highs and lows. For many, the lows tipped the scales as the world grappled with supply chain disruptions, energy insecurity, surging inflation, and shifting geopolitics. With these volatilities and uncertainties on the rise, what can organizations do to future-proof their innovation portfolios, adapt them according to a changing business environment, and pursue the opportunities that hold the greatest potential for sustainable growth?
This article will present key considerations for future-proofing your innovation portfolio to enhance your organization's resilience, agility, and speed.
5 considerations for future-proofing your innovation portfolio
Your innovation portfolio reveals a lot about your organization: where you are placing your bets for the future, how you translate strategic vision into execution, and what influences the prioritization of different initiatives.
It can also show how prepared you are to mitigate potential threats and capitalize on new growth opportunities. This is because, as much as your innovation portfolio is a reflection of internal goals and capabilities, it is also linked to your external business environment and the various trends and technologies that shape it.
Agile innovation portfolio management is built on a foundation of strategic foresight. It follows environmental scanning, the evaluation of external drivers of change, and an understanding of their impact in the short, medium, and long term. Equipped with this body of foresight intelligence, you can adapt your portfolio—and the initiatives, programs, and projects that comprise it—accordingly.
Within end-to-end innovation, portfolio management spans the ‘How to Win’ and ‘What to Execute’ stages. An innovation portfolio aligns the outcomes from ‘Where to Play’ with an organization's goals, innovation strategy, capabilities, and resources.
It is important to emphasize that the outcomes from ‘Where to Play’ are not fixed, and foresight activities like environmental scanning should be undertaken continuously. Therefore, it is likewise necessary for organizations to continuously assess whether their innovation portfolios align with evolving external drivers and signals of change making up their business environment.
Here are five questions to consider as you look to future-proof your innovation portfolio and embed learnings from your foresight activities:
1. How are your customer's needs evolving?
Whether you are a B2B company or cater to consumers, it is inevitable that customer needs change over time. Sometimes rapidly due to events like the COVID-19 global pandemic, major technological breakthroughs, or disruptive new business models. And sometimes gradually, as people's priorities and preferences shift alongside incremental developments.
So while your innovation portfolio is likely rooted in your customers' needs as you have assessed them today and even projected into the future, these needs continuously evolve, diverge, and manifest in new ways. In addition, what you view as the most effective way to address these needs could also change as a result of your organization acquiring new technologies, capabilities, partners, or talent.
To ensure that your innovation portfolio continues to align with your customers' needs, you need to understand the trends at play in your business environment. These trends, or demand drivers, represent your customers' attitudes, expectations, behaviors, or other market shifts. By continuously monitoring these trends, you can catch early signals of change that could impact how the initiatives, programs, and projects in your innovation portfolio translate to value in the eyes of your customers.
Using the Signals Feed in the ITONICS Innovation OS, you can easily monitor any trend—or technology, for that matter—that relates to your portfolio. Each demand driver has a machine-generated signals feed that pulls signals from ITONICS Insights, fed by top-trafficked news sites, curated RSS feeds, European and U.S. patent databases, and scientific publications. You can also refine the signals feed—e.g., for your industry, a niche topic, or other criteria—by viewing it in the Insights tool and adding additional keywords or filters.
2. Are there forthcoming regulatory and compliance requirements?
Much like your customers' needs, the regulatory landscape is in constant flux. One reason for the increasing activity around regulation is the pace of technology development. Regulators are often playing catch up, trying to strike a balance between protecting citizens, ensuring fair markets, and allowing innovation to flourish.
Examples of regulation lagging behind the edge of technological advancement include Responsible Telehealth, Digital Assets, Autonomous Driving Technologies, and Creative AI. Of course, all kinds of regulations—environmental, health, and financial—could impact the future resilience of your innovation portfolio and should be part of your foresight scope.
While there is often advanced knowledge of when different pieces of legislation and regulation will be rolled out, keeping track of the details, regional nuances, and revisions can be challenging. Consolidating all of this information into a central, digital location facilitates interpretation and compliance across all innovation activities in your organization.
In the ITONICS Innovation OS, you can create a regulatory radar populated with existing or anticipated regulations relevant to your business environment. You can include compliance information, the consequences of non-compliance, jurisdiction(s), and a timeline of deadlines you may need to know.
By connecting these regulations to the different initiatives in your innovation portfolio and plotting them together on a roadmap, you can more easily extrapolate the potential impact of each regulatory change and adapt your portfolio to meet or even go Beyond Compliance.
3. Are you investing in enabling knowledge assets?
Innovation portfolio management entails the assessment of internal knowledge assets and the allocation of resources to selected initiatives. Organizations must determine what is needed to execute each initiative: expertise, technologies, commitment, budget, etc.
Doing this exercise on an ongoing basis ensures that you can spot and preempt gaps in your ability to execute. Some organizations may decide to fill these gaps by investing in and building their capabilities in-house, while others will look to partnerships, mergers, and acquisitions.
For example, the automotive industry's race to develop electric vehicles has quickly become a race for dominance in Next-Gen Batteries. Plastics manufacturers, looking to shift from fossil fuels to recycled and bio-based feedstock, are seeking chemical recycling solutions and alternative production methods like fermentation. And leading tech firms like Meta and Microsoft are pouring investments into enabling technologies like extended reality, cloud computing, and artificial intelligence.
Use a roadmap to connect enabling knowledge assets to the initiatives in your innovation portfolio. Invite experts and leaders in your organization to weigh in and help prioritize initiatives and actions based on: (a) existing proprietary technologies and internal capabilities, (b) the level of investment to acquire enabling technologies and new capabilities, and (c) the potential return on investment.
4. How are other industries responding to drivers of change?
Many organizations monitor competitor activity to compare against their own innovation portfolios and identify areas where they may have an advantage or gaps they need to address. However, this alone can lead to convergent thinking and a lack of diverse ideas populating your portfolio.
Diversifying your innovation portfolio is a proven approach for balancing risk with potential reward. One way to do this is by looking at how organizations in different industries are innovating.
While their set of circumstances—in everything from target customers to business model to strategic outlook—could be different than yours, they may be influenced by some of the same demand drivers and solution drivers that exist within your own business environment. There are rich insights and inspirations to gain from observing how cross-industry organizations are responding to, leveraging, or preempting these drivers of change.
ITONICS' dynamic collection of inspirations available in our Innovation OS provides cross-industry, leading examples of innovation. These serve as evidence of how organizations are responding to trends and technologies in the real world. The aim is not to replicate exactly what other organizations are doing, but to nurture fresh and divergent thinking that can be applied to the initiatives, programs, and projects in your innovation portfolio.
5. Are you continuously monitoring your business environment?
Trends and technologies do not emerge overnight. However, today's rapidly changing market conditions and pace of technological advancement mean that weak signals on the periphery or horizon of your environment can quickly gain prominence and impact how your innovation portfolio performs in the future.
With ITONICS, you can easily monitor trends, technologies, regulations, and other drivers of change, gaining the foresight intelligence to future-proof your innovation portfolio. To help kickstart your continuous foresight activities, ITONICS provides nearly 170 trends and emerging technologies, a dynamic collection of inspirations, and various thematic filters, researched and packaged by our analysts and available in our Innovation OS.
Get started with your 30-day free trial and identify the trends and technologies relevant to your future innovation portfolio!