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Innovation Strategy | Portfolio Management | Innovation OS

Stop Using Excel Files for Innovation Portfolio Management

What is the right software for balancing your company's innovation portfolio? Microsoft Excel has been a go-to tool due to its common availability and general-purpose utility. However, using Excel spreadsheets for strategic portfolio management is not the most effective approach. Let's examine the reasons why Microsoft Excel falls short in managing an innovation portfolio and explore a better solution.

Why spreadsheet software is not suitable for strategic portfolio management

For leaders who want to maximize their company's return on innovation, strategic portfolio management has become crucial. It involves determining how to allocate the organization's finite resources across a portfolio of initiatives to achieve its strategic goals. Strategic portfolio management takes a holistic view in order to select, prioritize, and manage a range of innovation initiatives so that they align with the agreed strategic direction. It is essentially about making sure the right things are treated as business priorities. What this means practically is aggregating portfolio data in software, getting an overview to make comparisons, identify gaps, and see how projects are in which stage of progress. It's a collaborative process that benefits immensely from having KPI charts on a shared user-friendly platform.

A pyramid hierarchy of Strategic Portfolio Management, compared to Program Management and Project Management

Many innovators doing strategic portfolio management are looking for the best Excel alternative because of the limitations and risks of the spreadsheet application:

1) Spreadsheets were not designed to be collaborative

Microsoft Excel was originally designed so that a single user could calculate numbers with formulas and functions. While real-time collaboration was added as a feature in 2016, the format was not conceived to facilitate the collaborative process that's become the norm for today's innovation teams. Just because most managers have access to spreadsheets does not mean that spreadsheets must be the format to work together on innovation projects.

When multiple users work simultaneously on a spreadsheet, there is the potential that one user's actions can unintentionally affect another's formula. Alterations made by multiple users simultaneously may result in unnoticed erroneous information.

2) Complex calculations become unreliable

In 2012, an employee at America’s largest bank JP Morgan Chase, made a formula mistake in Excel that divided the sum of hazard rates instead of their average. This resulted in a trading loss of $6.5 billion due to a gross miscalculation of the firm’s synthetic credit portfolio.

Research shows that 88% of spreadsheets contain errors. As a spreadsheet becomes more complex, the impact of these errors grows, significantly undermining its reliability. It is difficult to interrogate the makeup of a number by following the formulas that produced it, especially across multiple tabs. These Excel files become the care of one person who understands the interconnected formulas, while others fear they might break it with modifications. Complex spreadsheets are, therefore, difficult to disentangle and interrogate.

3) Painful to manage scattered sources

If you're an innovation manager, you want an overview of your portfolio with the most up-to-date information on your organization's running projects. You don't want to have to search various spreadsheets to determine what to include or email different departments to ask for updated information on their innovation projects.

Large enterprise companies face a common challenge when they want to get an overview of their innovation investments: the relevant sources are scattered. What if you're dealing with a series of spreadsheets managed by different departments? That's when portfolio managers see the appeal of Excel alternatives that keep all your company's innovation efforts in a standardized format on one platform that serves as a single source of truth. A software solution for innovation portfolio management must deliver quick transparency.

 4) Spreadsheets lack security

The collaborative nature of innovation projects requires ensuring the right people have authorization to view and edit data. While Microsoft Office does have Information Rights Management, what often happens in practice is that files are shared through email, putting potentially sensitive innovation data at risk of uncontrolled dissemination or alteration. Microsoft Excel does not have easy-to-use role-based permission governance for users. When spreadsheets are shared, anybody with access to the sheet can alter it.  Organizations need to move beyond spreadsheets and into bespoke software intended for innovation portfolio management that allows them to modify role permissions to reflect the company's established structure.

Upgrade your strategic portfolio management approach with ITONICS

The ITONICS Innovation OS enables companies to get an overview of their innovation pipeline and prioritize the right balance of initiatives. Our solution is an Excel alternative better suited to strategic portfolio management, helping teams unlock potential and drive growth.

While Microsoft Office has a range of graph options, most are ungainly, and tricky to customize the view on the fly. In contrast, visualizations on the ITONICS platform are intended specifically for innovation management. It allows you to analyze your data in interactive graphics to uncover opportunities, optimize your innovation portfolio, and drive progress.

We've introduced ITONICS Lists, a centralized portfolio view that eliminates the need to tediously switch between spreadsheets and various documents. Lists offer real-time monitoring of the vital performance, budget, and planning KPIs of your innovation portfolio, equipping you to make swift decisions.

Project portfolio view in the ITONICS Lists tool

For instance, if you want 20% of your initiatives to work toward a specified market goal, such as attracting adjacent customers, you can easily see if you've met that benchmark in the battery aggregation chart. You don't need to add projects to the List manually. It can immediately display all elements that your team has enriched in other parts of the software, including technologies, ideas, strategic focus fields, and start-ups.

ITONICS List with a battery chart highlighting adjacent marketsOpen the KPI widgets stack on the right to see donut charts and financial calculations indicating your innovation portfolio's overall health. Configure thresholds on the List to color code projects that have, for instance, exceeded their budget and require attention.

ITONICS software showing the widget feature in Lists

Another advantage of centralizing your innovation portfolio management in ITONICS is that you can click a project row on the List to open a preview of its full details in a stack on the right. No need to switch to separate project management software to assess the project's purpose and progress.

The List also provides a convenient view for an expert to rate multiple elements, such as innovation projects, with just a few clicks. Make changes easily and see the updated information reflected in the KPI visualizations.

ITONICS software showing a Matrix view of innovation ideas

In addition to Lists, the ITONICS Matrix is a bubble chart with a two-axis-layout that lets you easily evaluate your innovation portfolio of opportunities, technologies, ideas, or projects. Apply this view for innovation portfolio management, balancing quick wins and moonshots, then move forward with those growth initiatives that align with your strategic goals and business capabilities.

Balance your portfolio to meet strategic objectives

Many CEOs want a better grasp of the innovation pipeline in their organization. There may be a range of ongoing innovation initiatives, but rebalancing is typically required to align with the company's strategic objectives.

Research by the Harvard Business Review found that companies with a successful innovation portfolio can articulate a clear innovation ambition and get the right balance of core, adjacent, and transformational initiatives across the enterprise. Those companies have also put in place the tools and capabilities for innovation portfolio management.

At ITONICS, we recommend the 70:20:10 rule as a guideline to strike the right balance between resourcing short-term stability while investing in long-term growth initiatives. Combine this guideline with the Three Horizons framework to the innovation ambition matrix. This distribution of investment is intended to curb the common pitfall of allowing low-hanging fruits to cannibalize your ambition. The idea is to invest 10% in new products in transformational markets, even if this carries greater risk and uncertainty.

Combine the 70:20:10 rule with the Three Horizons framework to create an innovation ambition matrix

The ITONICS Innovation OS is particularly suited to strategic portfolio management. Our purpose-built tools let you visualize data to optimize your strategic initiatives and invest effectively. Experience a straightforward, centralized view of your company's integrated portfolio, enabling informed decision-making to achieve strategic goals. Move beyond ill-suited Excel files. Upgrade your team's ability to do strategic portfolio management by adopting the ITONICS Innovation OS.