In order for any R&D department to be successful, it must have a coherent portfolio consisting of a manageable number of projects balanced over a range of time horizons, from pressing customer needs to emerging future opportunities. Too much of any one thing, near-in or far-out, can be problematic: a hopper full of customer fire-drills will keep you busy for the semester, but it won’t line your pockets five years from now; on the other hand, if executive leadership can’t foresee ROI because scientists are working on something years away from commercialization or far afield from current products, they may decide that their continued financial support is not justified.
Striking the right equilibrium requires looking both inside the organization at technical know-how and interests, and at the larger outside world to try and harmonize and predict what problems will be important in the future to solve. This balancing act is immensely challenging, especially when personalities and politics come into play: attachment to “pet projects” sometimes impedes construction of a realistic and coherent strategy, and fear of the future unknown often orients portfolios too narrowly toward today’s business-aligned problems. To make matters worse, portfolio selection usually happens only once a year or so, and the process doesn’t always allow for enough stakeholder engagement or external exploration to ensure comprehensiveness.
Too much of any one thing, near-in or far-out, can be problematic.
We’ve found that the best way to address this web of complex incentives and obstacles associated with risk, timing, and buy-in is to institute a collaborative visioning process that leverages external and objective insight, is inclusive of both technology and business leaders, and concludes with some forcing mechanism where everyone involved agrees on top priorities. Successful portfolio optimization efforts we’ve been engaged in recently have involved the following:
- Incorporating outside perspectives – R&D organizations can become enamored with their own projects or beholden to client demands and miss what is going on in the outside world. Benchmarking technical peers and competitors, interviewing customers in possible future markets, and using big data analytics to investigate “big problems” in technical literature are just a few ways to make your portfolio development and prioritization process more objective.
- Iterating over time – The process of integrating these outside perspectives with internal priorities is not a short or simple one when done well, and effective portfolio optimization efforts require a commitment of time, personnel, and other resources from the organization.
- Enforcing cross-functional collaboration – Providing multiple opportunities for internal experts and research leaders to help prune, augment, and down-select among research options is a critical aspect of the process. A series of small-group or one-on-one discussions leading up to one final facilitated session helps ensure comprehensiveness and buy-in while also building awareness of topics not selected in case something makes them more poignant or viable down the road.
In addition to planning for all time horizons, planning for an interactive and engaging process seems to get the most traction in the end. Leveraging a key few research leaders, but also offering points of inclusion for technology and business leaders across multiple levels, can help make the options selected as creative and robust as possible and set up the organization for long-term success.Email Ellen to learn more