6.1 Portfolio management

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来自 Erasmus University Rotterdam 的课程

Innovation Management

410 个评分

Erasmus University Rotterdam

Innovation Management

410 个评分

What is innovation management? How do firms bring in new business models and get new products and services to the market? Go on a nine-week journey through innovation management concepts, theories of idea generation, selection, strategy formulation and implementation in this MOOC in Innovation Management. In it, you will also learn the tools for implementing innovation projects yourself. Guided by world-class academics, you will develop an innovative mindset and expertise in how firms successfully create new ideas for marketing new products. The syllabus also includes sessions about innovation strategy, idea management and social networks. During this course, you will learn how to: • use the main innovation management terminology and concepts • explain the adoption life cycle and innovation adoption at the individual level • define creativity and explain how creativity can be stimulated • recognise and describe three types of idea management systems • explain what an innovation strategy is and why it is important • describe what a product portfolio is • explain how innovation projects should be selected and managed • explain the importance of teams, team structures and networks for innovation. Rotterdam School of Management, Erasmus University (RSM) is one of Europe’s leading business schools, and ranked among the top three for research. RSM’s primary focus is on developing business leaders with international careers who carry their innovative mindset into a sustainable future. Go to www.rsm.nl for more information. This nine-week MOOC in Innovation Management is taught in English. There is no fee to participate in the programme.

从本节课中

Strategy - Portfolio Management

This week’s module is about portfolio management, which covers how to implement your innovation strategy. We introduce the concept of the funnel. We show two alternative funnels, reactive and proactive, and we explain the differences. You will explore three practical examples of the proactive process: Ericsson, Lego and Philips. Next, we will elaborate on an important consideration in portfolio management, which is protecting intellectual property. Finally, you will learn two specific tools that you can use in portfolio management. The first is a financial tool, the real options method, and the second one is the planning tool called ‘roadmapping’.

6.1 Portfolio management9:45

Interview with Hans Boeve6:11

6.2 Protecting intellectual property9:12

6.3 Tools for portfolio management11:00

与讲师见面

Serge Rijsdijk
Assistant Professor
Rotterdam School of Management, Erasmus University
Jan van den Ende
Professor
Rotterdam School of Management, Erasmus University
Sandra Langeveld
Teaching and research coordinator
Rotterdam School of Management, Erasmus University
Murat Tarakci
Assistant Professor
Rotterdam School of Management, Erasmus University
Stefano Tasselli
Assistant Professor
Rotterdam School of Management, Erasmus University
Daan Stam
Associate Professor
Rotterdam School of Management, Erasmus University
Dirk Deichmann
Assistant Professor
Rotterdam School of Management, Erasmus University

[SOUND] Hello.

My name is Jan van den Ende.

I'm a Professor of Innovation Management at Rotterdam School of Management.

Which innovation projects do we undertake as a company?

How do we make choices?

This video is about portfolio management.

Portfolio management is about selecting the right projects for innovation.

It will be clear to you that selecting innovation projects is key for

the future of companies.

An example is Nokia.

The company was leading in the development of GSM mobile phones, but

it missed the transition to touch-screen smart phones.

The performance of the company dropped tremendously and

eventually the company was taken over by Microsoft.

This example shows that if you select the wrong innovation projects today,

this will strongly harm the future of your firm.

The selection of innovation projects today determines what products and

services you firm will offer to customers in the future.

This week I will first give you an overview of how to manage

an innovation portfolio.

After a short video on portfolio management at Philips Lighting I will

focus on the important consideration in portfolio management,

intellectual property protection, and I will introduce you to some tools.

To create an innovation portfolio firms usually have

used a decision process called the innovation funnel.

You first generate a large set of project ideas or concepts.

In the previous module on creativity, you have learned how to do so.

Then a review committee assesses these ideas or concepts and

selects the best ones.

For each selected idea or concept, you create a project.

After some time the committee reviews all projects and makes a further selection

based on the outcome of the projects and the market at that moment in time.

The review committee may meet several times per year.

It's of course best to try to reduce the number of

projects as early as possible in the funnel, and

to narrow down the funnel early since stopping projects late is costly.

We can distinguish between two ways to manage the final process.

I call the first one reactive.

Many firms apply this process.

Firms using reactive process collect ideas and concepts for innovation projects.

They define criteria for the selection between the projects.

Subsequently, they score the projects on those criteria.

They give weights to the different criteria, and

they finally select the projects with the highest scores.

This process is simple and logical, but it has an important disadvantage.

The firm may end up with an unbalanced set of projects.

Research has shown that selection of portfolios at this rate leads to

over representation of incremental projects.

The reason is that, as you will explain later, these projects have a relatively

low risk and therefore, score high on financial criteria.

You may remember from earlier in this book that firms should also be engaged in

radical innovation.

The second approach, which I label proactive, solves this problem.

In this approach the firm defines a number of so called buckets.

We already mentioned this concept previously.

You can do so by following a four step process as shown on the slide.

Define the budget, define buckets for opportunity areas,

define criteria, and classify, and choose projects.

First, the company has to define the total budget for innovation.

How much do we want to spend?

We usually measure it by the so called R and

D intensity which is the innovation budget as a percentage of revenues.

The R and D intensity depends on the industry,

as you can see here at the bottom of the slide.

Pharmaceuticals, traditionally, have high levels of R and

D intensity, as does the software sector.

In the software sector the high levels are mainly due to low costs of operations,

which increases the weight of R and D costs in total costs, and

consequently, also in total revenues.

In services, R and D intensity is usually very low, partly due to

the dispersed nature of innovation activities in service companies.

Opportunities for innovation is a second factor.

If new technologies, markets, or channels create high opportunities for

innovation firms will increase their budget.

The strategy of the company is a third factor.

A highly innovative firm will spend more than a more conservative company.

And finally, if firms have high growth targets,

they will also spend more on innovation.

The second step is to define a number of buckets.

Buckets are opportunity areas and time horizons for

which you develop innovations.

You can see in the following video how the CEO Hans Vestberg of

the Swedish telecommunications and IT company,

Erickson, defines innovation buckets for his company.

As you saw, Vestberg defines three time horizons in which in each of these,

a number of programs.

We call these programs buckets.

In each problem, we will have different projects.

Let's have a look at another example, the toy manufacturer, Lego.

LEGO defines four different opportunity areas, business, product,

communication, and process.

Within each area, LEGO defines two sub-areas,

business refers to sales channels and business models.

The product area is split up into products and

the combination of different of products.

The consumers, the children get used together.

The picture shows that Lego also innovates in customer interaction and

production processes.

The company has to determine different types of projects in terms of novelty,

and to split up each area accordingly.

LEGO defines incremental improvement as small changes to existing offerings or

processes, new offering as a complete redesign of products or processes, and

redefine category as radical new offerings or processes related to a category.

After combining this classification with the opportunity areas,

LEGO ends up with a set of 24 buckets.

This is quite high, usually firms have fewer buckets.

The firm allocates a budget to each bucket.

The budget of course mainly depend on the importance of the alternative buckets,

but also on how expensive innovation projects within the alternative

buckets will generally be.

The last step is to position the different project ideas or

proposals in the right bucket, and to make a selection within each bucket.

On the slide, you see how LEGO has done so.

When positioning ideas in buckets it may appear that some buckets remain empty,

like the top right in this example.

This shows the advantage of the bucket approach.

You become aware that some areas of opportunity are not covered.

The approach challenges you to define projects for those buckets or

to invite colleagues to do so.

Step three is to craft different selection criteria for each bucket.

Possible selection criteria are technical feasibility,

market attractiveness, expected commercial value, strategic importance, etc.

Also, the possibility to protect intellectual property of innovation, for

instance by means of patenting, is often an important consideration.

For instance, you may decide not to develop a potential new

service if you know it can easily be copied by a competitor, or

even less so if the competitor will be able to provide it at a lower cost.

For incremental projects the expected commercial value will be very important,

where as, for radical innovations, strategical conservations will be key.

The expected commercial value are the total revenues

minus the cost over a number of years.

As I will explain later in buckets for radical projects you may calculate

the expected commercial value according to the real options approach while for

incremental projects you will apply net present value calculations.

All in all this proactive approach may be harder to execute then the reactive

process, but it helps you to manage your portfolio in a more balanced way

according to your strategic priorities.

Let's see how Phillips Lighting manages it's portfolio in the next video.

Pay attention to how Philips defines its buckets.

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