Prioritizing innovation projects that support strategic objectives

How can organizations prioritize innovation initiatives that align with the company’s overall strategic goals and objectives? In this article, we address just that. The following sections will examine why this alignment is essential to ensure a higher rate of success for businesses. Moreover, we present different ways to prioritize innovation projects based on the Gartner® 6 Practices for Effective Portfolio Management.

Why prioritization and investment decisions have to align with business objectives

Innovation projects are not free from the risk of failure. Oftentimes, innovation managers fail to control, select and allocate resources within their innovation portfolio to meet strategic goals and objectives. Gartner indicates that “gaps in your organization’s portfolio management practices may be the cause.”

The success of any business depends on setting project priorities that are consistent with the organization's overall goals and objectives. Strategic portfolio management ensures that your prioritization and investment decisions are in alignment with your business objectives. Among the many reasons why this alignment is essential for your business, here are a few that we see at the top of the list:

• Projects are more likely to contribute to the overall development and success of the business when they align with the organization's objectives.
• Resources are allocated more efficiently and effectively toward attaining the firm's strategic objectives by concentrating on projects that align with organizational goals.
• Stakeholders are more likely to grasp the rationale behind project prioritization if they know the organization's goals and objectives, which can improve buy-in and support for the initiatives. 

5 ways to prioritize innovation projects

1. Assess strategic alignment

Review your organization’s overall strategic goals and objectives to see how well-aligned your innovation projects are with them. Your innovation projects must cater to and support the organization’s vision and future growth strategies. Prioritizing projects that fit well with the company’s strategies, capabilities, and competencies will ensure a higher chance of success.

2. Customer-driven prioritization

To match the ever-changing customer expectations, you must prioritize your organization’s innovation initiatives to match their demands. Gartner states, “To satisfy customers and deliver business objectives, focus on the initiatives that matter most to customers — prioritizing initiatives with the highest chance of meeting customers’ biggest needs.” Also, keep in mind that these expectations are also aligned with your strategic vision and objectives.

3. Analyze, monitor, and re-evaluate innovation portfolios

Use a portfolio matrix to analyze, track, monitor, and re-evaluate your innovation portfolios to find out which projects have the most significant impact on your organization. A portfolio matrix will bring your innovation portfolios on an X and Y axis for an easy evaluation concerning their risk and potential. You can thus prioritize project(s) that fall within the most optimal spot in the matrix.

4. Tracking the execution of value

Continuously tracking KPIs and innovation performance through dashboards is an excellent way to adjust your prioritization and maintain a healthy portfolio. Moreover, you can use tools like Kanban boards to identify bottlenecks and improvement areas and to ultimately understand how different projects are impacting the overall capacity or innovation portfolio goals.

5) Continuous value realization

Value metrics like customer impact, financial, outcome, and cost must be tracked periodically to make changes to your innovation initiatives with little or no disruption. Gartner suggests, “If your organization doesn’t realize the expected benefits, revisit the initial business assumptions to understand why.” This revisiting, or assessment of your portfolio, will enable effective decision-making as you can determine the changes or additional resources required to realize success and decide if you need to move funding into another project.

Manage your innovation portfolio with ITONICS

The ITONICS Innovation OS provides multiple features that support your organization’s strategic portfolio management. Gain perspective on your innovation portfolio, manage and prioritize projects accordingly, and identify bottlenecks and gaps where action is needed with our Kanban Boards.

To continuously track project KPIs, you can build custom dashboards with our wide range of charts, data groups, and filters in the ITONICS Innovation OS. Our newsletter function incorporates Dashboard views into regular updates so that you can easily engage teams and stakeholders and keep them updated with innovation portfolio developments and results for transparent and streamlined strategic decision-making.

Leverage the portfolio management capabilities of our software to prioritize innovation projects that support your strategic objectives. Explore the tools and features available in the ITONICS Innovation OS in a free demo.

Disclaimers

Gartner, 6 Practices for Effective Portfolio Management, Anthony Henderson, 26 April 2022

GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.