Challenges and Execution of Innovation Portfolio Management

Abstract

Due to the globalization of markets, high-tech companies are nowadays faced with an environment which is characterized by an increasing dynamism, unpredictability as well as complexity of technologies. In order to stay competitive companies need to develop a suitable and flexible innovation strategy by means of possessing a broad setup of innovation-projects (innovation portfolio) and permanently adjusting this portfolio to the changing environment. Hereby Innovation Portfolio Management (IPM) can support as an appropriate tool to implement strategy shifts into all innovation-project activities throughout the organization in a coordinated manner. Main difficulties arising in the portfolio management process are related to the risk profile of basic innovation ideas, the continued innovation portfolio prioritization as well as to the dynamic resource allocation.

This article focuses on describing an innovation portfolio management system located as a connecting element between qualitative strategy definition and the project-based implementation (Strategic and Operational Portfolio Management). Hereby also a macro view on how to tackle the mentioned main challenges of investment risk, portfolio prioritization and resource allocation will be given along with a proposal and description of suitable tools. The article is concluded with a short future outlook and future research possibilities.