In this episode, we link up with Noel Sobelman, a corporate advisor, researcher, and writer on innovation effectiveness, to discuss portfolio management. Learn more about what you can do right now to improve product portfolios and create a balance of near-term and long-term investment in new sources of growth.
Please note: This post is an excerpt from the Shift Podcast which can be found here.
Aaron: “Awesome. Thank you for joining us. I’m excited to get a chance to dive into evidence-based portfolio management with you, interdependent systems, and all this innovation goodness. Why don’t we start by having you introduce yourself? Who are you? What do you do? All that good stuff.”
Noel: “I describe myself as an innovation and product development lifer who’s worked on product development teams through most of my early career, mostly in technology-driven companies. After business school, I went into consulting. Overall, I’ve spent about half my career advising other companies, helping them improve their innovation capabilities. I worked across industries.
I have continued to work in high tech, but also do a lot of work in life sciences and consumer packaged goods, industrial, chemical, and automotive industries. I enjoy the domain of innovation and product development and I think you can apply these practices across industries. In some highly regulated industries, you might need to make some considerations and change some of the things you’re doing to improve results, but I enjoy the diversity of working across industries. I love what I do and I don’t see myself slowing down anytime soon.”
Aaron: “That’s great. Let’s dive a little bit into interdependent systems. I’ve been reading some of your blog posts and other things that you’ve got out in the world. You talk a lot about innovation as an interdependent system. Maybe a little bit of definition to kick things off. What does that mean to you?”
Noel: “I’ve noticed in working with companies and working for companies—large companies mostly—that they’ll go after and try to improve their innovation effectiveness. They might take a design thinking initiative, or a lean innovation initiative with growth as the objective, or just improving their data development process. What I’ve noticed is that they often see some initial improvement. There’s a lot of excitement and after a lot of hard work they do see improvement, but it plateaus over time. In some cases, companies will often even backslide.
The promise of these initiatives don’t really live up to the expectations or the goals that are being set, so I try to think about why is that. What I’ve learned over the years is that you really need to do more than just take on one element of innovation. What I mean by that and what I’ve come up with is a framework for innovation as a system. There’s a lot of highly interdependent moving pieces in that engine, if you will. For example, there’s your core business, and there’s the processes, the people, the tools, the mechanisms to improve your ability to deliver new products over and over again, and then there’s innovation.
In recent years, a lot of companies are investing in improving their growth innovation or coming up with new sources of growth. That’s where design thinking and lead startup comes in. That’s the middle layer of this framework I’ve put together. But again, when companies are taking those on, they’re getting that improvement, but it only goes so far unless you think about some other elements of innovation like portfolio management.
How are we making sure that we have a balanced portfolio of both near-term and long-term improvements to our core product portfolios? At the same time, we’re also making decisions to invest in new sources of growth. Most companies don’t have unlimited resources, so that’s where portfolio management comes into play. How do we have a balanced portfolio, and make sure that we are not saying yes to too much, and our throughput doesn’t suffer because we’re loading up that pipeline with too many projects.
Portfolio management is a discipline. It sits in that layer between strategy and execution. Strategy is another important layer. Where are we going to play and how are we going to win with innovation? I’d be that portfolio management layer as the link between strategy and execution. Those three elements, innovation strategy, portfolio management, then innovation core and new growth innovation, are the center of the model.
In recent years, more and more companies are going outside of their four walls, and that’s where open innovation comes in and co-developing or co-creating with startups universities. That’s another key element. Finally, all of this is enabled by tools, a culture, and intensive systems that align with that. I came up with this framework and I call it an interdependent system because each element that I just named, you need those other elements to work together because they’re so reliant on one another. They’re very integrated.
These capabilities, the maximum benefit comes when all these pieces are working together. You can improve one of those six elements I just mentioned, but you don’t work on the other ones. There’s going to be a limit to how much benefit you’re going to get. You’re only going to get a fraction of the value. That’s what I mean about integration. It’s like one plus one equals more than two. You really need to look at all these different moving parts in order to get the results that you’re looking for. It’s hard to describe this in words.”
Interdependent Systems Diagram (from the Podcast):
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Noel is a corporate advisor, researcher, and writer on innovation effectiveness. His experience includes senior-level corporate roles, new venture creation, and consulting. He is widely recognized for bringing practical and applicable approaches to companies looking to accelerate growth from innovation. Noel has worked extensively in the areas of innovation strategy, business model design, lean innovation, and product development execution.