OUR APPROACH

• How do we sift through a portfolio of ideas and focus on the right ones?
• How do we best balance our growth portfolio?

How we respond

Most investors know the value of balancing their portfolios across different classes of assets, like stocks and bonds. Yet it is amazing how many companies forget this principle when building their innovation portfolios. Organizations that scrutinize their innovation portfolio often find that their investment allocation has a low chance of delivering the growth they need. Oftentimes, the great majority of their investment lands in close-to-the core, incremental improvements with a single, highly risky new growth initiative that has a large chance of failure.

To quickly develop a winning portfolio, we typically approach the project in two phases:

Phase 1: Lightning Round

During this phase, we use the Innosight principles to rapidly develop strategic options for new growth businesses. Specific activities may include:

• Review existing market research and utilize internal knowledge to develop a preliminary list of potential unmet jobs-to-be-done that could point to designated growth opportunities.
• Review and extract lessons from other successful and struggling approaches in the white space.
• Work with the client to develop a long list of growth opportunities. Our experience suggests that we can generate a list of 20+ ideas.
• Use a customized "gut checklist" to winnow the list down to 3 to 5 of focus opportunities for further evaluation.

At the end of this phase, we convene with a meeting of the project's stakeholders to decide next steps for the portfolio of opportunities. We will push the group to make the following decision for each opportunity:

• Just Do It: An obvious winning idea that should be implemented immediately.
• Investigate Further: An idea that has potential but requires more investigation.
• Shelve: An idea that is not worth investigating further at this time.

The specific deliverable for this phase is an agreed-upon list of high-potential new growth strategies.

Phase II: Evaluation Round

In this phase, we explore and build out selected opportunities in more depth. Specific activities in this phase may include:

• Use Innosight's proprietary opportunity evaluation tools to provide a more detailed assessment of the disruptive potential and killer issues for each "Investigate Further" opportunity.
• Further flesh out each opportunity, providing preliminary thoughts about items such as the target consumer, the technological solution, the business model, the channel to market, sources of competitive advantage, and the rough-cut financial upside.
• Begin to gather data and design experiments to gain certainty about critical assumptions and risks behind each opportunity.
• Perform a more comprehensive analysis of potential jobs-to-be-done in the space by conducting internal brainstorming sessions, interacting with a handful of consumers, and potentially conducting additional primary market research.
• Create recommendations for next steps for each opportunity and for the portfolio as a whole.
• Continually monitor the Just Do It ideas to ensure progress against stated objectives.

At the end of this phase, we will convene another stakeholder meeting where we direct the group to review the list of opportunities and decide whether the client should:

• Double down and step up investment to commercialize the strategy.
• Continue exploring to assess critical unknowns.
• Re-vector and explore a different path.
• Fold and focus on other opportunities.

The goal is to get each opportunity as close to market readiness as is possible during the project's duration. It is conceivable that there would be tangible deliverables, such as rough prototypes or working partnerships for some opportunities. At the very least, there will be a detailed assessment of each opportunity's disruptive potential and the key actions required to evolve each initiative to the next stage of confidence and investment.