By Scott Mathews, Technical Fellow in the Chief Engineer’s office at Boeing Research and Technology and co–guest editor of this special issue of RTM.
It is difficult to understand why doing portfolio management well is so challenging. Shouldn’t it be as simple as deciding on a few attributes, like net present value and time to market, lining up all the opportunities and ranking them on those attributes, then funding the best of the bunch until you run out of money? If life were so simple, we would all have 2.5 children and live happily ever after. Clearly, it’s not. Year after year, IRI members rank portfolio management as a compelling topic and ask that IRI offer more resources on it. I am sure many of us aspire to accomplish great things with a portfolio of projects while being tantalized by the complexities of the process.
Innovation portfolio management, the subject of this special issue of RTM, adds another layer of complexity. Here, the challenge is not only to create and manage an effective portfolio, but to do so in new spaces with new activities where the right attributes and metrics are still emergent and the odds of success are slim at best but the payoffs are substantial. Portfolio management is not project management. The defined valuation methods and staged, gated processes of project management can’t always accommodate the chaos of early-stage innovation. Instead, portfolio management relies on its own set of metrics, relying on a layered analytical technique that reveals unique insights, giving meaning and value to the management process itself. Read full article.