Power Up Your Innovation Portfolio for 2024
“While 89% of large companies globally have a digital and AI transformation underway, they have only captured 31% of the expected revenue lift and 25% of expected cost savings from the effort.”
“The Value of Digital Transformation” (Harvard Business Review) (2023)
Many large organizations are facing a crisis with the widespread adoption of artificial intelligence solutions. Leaders are wondering: how do we stay relevant? What new innovation and products and services can we bring to bear in this fast-moving market? We are truly in the Wild West stage of A.I., where hundreds of new solutions are emerging, with no clear standards of use for a given industry. Over the next 12-36 months, we will likely begin to see this change. We will see A.I. solutions segment into industry specific solutions such that the machine learning algorithms will achieve deeper and more relevant insights and automation. Generative A.I. may almost seem like a parlor trick a few years from now.
But what is a company to do about this? Particularly, the more traditional organizations that face deep competitive challenges and game-changing new technologies? While there are no panaceas, powerful tools exist that can help organizations more clearly understand the market and target their innovation investment for maximum effect.
Enter the Portfolio View
The portfolio view is a vital tool for understanding innovation in a marketplace. It shows where a company can build a repeatable process for interpreting competitor offerings, as well as its own solutions, in said marketplace. Here is how a portfolio view can help a team gain confidence and drive more effective innovation.
Many people are familiar with the product life cycle curve and its four phases: Introduction, Growth, Maturity, and Decline. Products and services enter the market as new-to-world in the Introduction stage. They grow and build large user bases in the Growth stage. Then they consolidate as growth slows in the Maturity stage. And then they either disappear or service small – and sometimes exclusive – user bases in the Decline stage.
If we take this simple, yet powerful life cycle view, we can transform it by adding new insights in order to get everyone on the same page around what innovation is needed. For example, we can plot products and services according to the level of innovation going on across the life cycle. Innovation is highest to the left (Introduction and Growth) and lowest to the right (Maturity and Decline). Start-ups are found in the Introduction stage. Here, we ask: Is anyone going to buy this? In Growth, we see early adopters and then the early majority grow the footprint. In Maturity, everyone who intends to buy the product/service will have done so. The product/service will experience low-to-flat growth. Eventually, it will enter Decline as demand falls and it will experience declining growth.
Furthermore, the positioning of a product or service is dependent on its maturation in its industry, NOT its company. For example, if Dell decided it wanted to start manufacturing and selling flip phones, its flip phone would enter the market in Decline, not in Introduction. This is because the market for flip phones is in Decline, not because it is new to Dell. The horizontal axis positioning on the life cycle curve is based only on the product/service’s market, not the company’s market.
In addition, companies whose product/service portfolios are strongest are companies that have a balance of products/services across all four of these stages. This allows strong companies to use Mature products to fund Introduction and Growth initiatives. On this chart, Products E, F, and G should provide the cash to fund Product A at initial investment levels and Products B through D at growth maintenance levels.
Traditional organizations typically struggle with lackluster growth. This is due to older products/services, ineffective competitive positioning, unclear pathways for launching new products, and market protection strategies (vs. growth strategies). These organizations typically need help determining how to maintain growth with an innovation strategy. The portfolio view serves as a great first filter to evaluate new product/service ideas and get clear on strategy. Benefits of using a portfolio view are that it:
Clarifies the company status as an industry player (industry leader, fast follower, niche leader, or me-too)
Distinguishes new product/service needs based on desired industry player status
Identifies gaps in the current product/service mix
Solidifies the role new products/services must play
Eliminates reactionary one-off innovations with limited growth outlook
Facilitates better, longer-lasting growth strategies
In conclusion, if A.I. or any new market dynamic has you wondering “how are we going to thrive in this new environment?,” remember the portfolio view. You’ll find a potent method to evaluate the outlook for short- and long-term growth, classify your status as an industry player, and identify critical life cycle entry points where new product/service development is most important with the portfolio view.
A Call To Action
Intentional Innovation® is a commercially-proven innovation operating system designed to simplify and implement higher-performing, longer-lasting solutions that drive market disruption, new revenue, and deeper customer engagement.
Ready to learn more about the portfolio view, Intentional Innovation®, and how Teaming Worldwide can help you solve your business’s most pressing innovation pain points? Let’s connect. Visit www.teamingworld.com/innovation to schedule a discovery call or email firstname.lastname@example.org.