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Crowd-Sourcing

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Mind-Mapping

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Yes-And Method

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Innovation Audits

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TRIZ

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Analogy Thinking Canvas

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Step 1

Individually look for 2 inspiring examples (1 within your industry and 1 outside your industry) (15 min).

Present the examples to each other. Don't take more than 1 min per example (10 min).

Decide on the 3 most inspiring examples as a group and take 1 analogy thinking template per example (5 min).

Individually list what makes the example great and put it on post-its on the left side of the canvas (10 min).

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Individually look for 2 inspiring examples (1 within your industry and 1 outside your industry) (15 min). Present the examples to each other. Don't take more than 1 min per example (10 min). Decide on the 3 most inspiring examples as a group and take 1 analogy thinking template per example (5 min).

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Viima Board Canvas

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Cross-Team R&D

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Design-Competitions

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Brain-Writing

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Innovation Portfolio

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Management knows it and so does Wall Street: The year-to-year viability of a company depends on its ability to innovate. Given today's market expectations, global competitive pressures, and the extent and pace of structural change, this is truer than ever. But chief executives struggle to make the case to the Street that their managerial actions can be relied on to yield a stream of successful new offerings. Many admit to being unsure and frustrated. Typically they are aware of a tremendous amount of innovation going on inside their enterprises but don't feel they have a grasp on all the dispersed initiatives. The pursuit of the new feels haphazard and episodic, and they suspect that the returns on the company's total innovation investment are too low.

Making matters worse, executives tend to respond with dramatic interventions and vacillating strategies. Take the example of a consumer goods company we know. Attuned to the need to keep its brands fresh in retailers' and consumers' minds, it introduced frequent improvements and variations on its core offerings. Most of those earned their keep with respectable uptake by the market and decent margins. Over time, however, it became clear that all this product proliferation, while splitting the revenue pie into ever-smaller slices, wasn't actually growing the pie. Eager to achieve a much higher return, management lurched toward a new strategy aimed at breakthrough product development-at transformational rather than incremental innovations.

Unfortunately, this company's structure and processes were not set up to execute on that ambition; although it had the requisite capabilities for envisioning, developing, and market testing innovations close to its core, it neither recognized nor gained the very different capabilities needed to take a bolder path. Its most inventive ideas ended up being diluted beyond recognition, killed outright, or crushed under the weight of the enterprise. Before long the company retreated to what it knew best. Once again, little was ventured and little was gained-and the cycle repeated itself.

We tell this story because it is typical of companies that have not yet learned to manage innovation strategically. It demonstrates an all-too-common contrast to the steady, above-average returns that can be achieved only through a well-balanced portfolio. The companies we've found to have the strongest innovation track records can articulate a clear innovation ambition; have struck the right balance of core, adjacent, and transformational initiatives across the enterprise; and have put in place the tools and capabilities to manage those various initiatives as parts of an integrated whole. Rather than hoping that their future will emerge from a collection of ad hoc, stand-alone efforts that compete with one another for time, money, attention, and prestige, they manage for "total innovation."

Be Clear About Your Innovation Ambition

What does it mean to manage an innovation portfolio? First, let's consider how broad a term "innovation" is. Defined as a novel creation that produces value, an innovation can be as slight as a new nail polish color or as vast as the World Wide Web. Most companies invest in initiatives along a broad spectrum of risk and reward. As in financial investing, their goal should be to construct the portfolio that produces the highest overall return that's in keeping with their appetite for risk.

One tool we've developed is the Innovation Ambition Matrix (see the exhibit below). Students of management will recognize it as a refinement of a classic diagram devised by the mathematician H. Igor Ansoff to help companies allocate funds among growth initiatives. Ansoff's matrix clarified the notion that tactics should differ according to whether a firm was launching a new product, entering a new market, or both. Our version replaces Ansoff's binary choices of product and market (old versus new) with a range of values. This acknowledges that the novelty of a company's offerings (on the x axis) and the novelty of its customer markets (on the y axis) are a matter of degree. We have overlaid three levels of distance from the company's current, bottom-left reality.

Firms that excel at total innovation management simultaneously invest at three levels of ambition, carefully managing the balance among them.

In the band of activity at the lower left of the matrix are core innovation initiatives-efforts to make incremental changes to existing products and incremental inroads into new markets. Whether in the form of new packaging (such as Nabisco's 100-calorie packets of Oreos for on-the-go snackers), slight reformulations (as when Dow AgroSciences launched one of its herbicides as a liquid suspension rather than a dry powder), or added service convenience (for example, replacing pallets with shrink-wrapping to reduce shipping charges), such innovations draw on assets the company already has in place.

At the opposite corner of the matrix are transformational initiatives, designed to create new offers-if not whole new businesses-to serve new markets and customer needs. These are the innovations that, when successful, make headlines: Think of iTunes, the Tata Nano, and the Starbucks in-store experience. These sorts of innovations, also called breakthrough, disruptive, or game changing, generally require that the company call on unfamiliar assets-for example, building capabilities to gain a deeper understanding of customers, to communicate about products that have no direct antecedents, and to develop markets that aren't yet mature.

In the middle are adjacent innovations, which can share characteristics with core and transformational innovations. An adjacent innovation involves leveraging something the company does well into a new space. Procter & Gamble's Swiffer is a case in point. It arose from a set of needs P&G knew well and built on customers' assumption that the proper tool for cleaning floors is a long-handled mop. But it used a novel technology to take the solution to a new customer set and generate new revenue streams. Adjacent innovations allow a company to draw on existing capabilities but necessitate putting those capabilities to new uses. They require fresh, proprietary insight into customer needs, demand trends, market structure, competitive dynamics, technology trends, and other market variables.

The Innovation Ambition Matrix offers no inherent prescription. Its power lies in the two exercises it facilitates. First, it gives managers a framework for surveying all the initiatives the business has under way: How many are being pursued in each realm, and how much investment is going to each type of innovation? Second, it gives managers a way to discuss the right overall ambition for the company's innovation portfolio. For one company-say, a consumer goods producer-succeeding as a great innovator might mean investing in initiatives that tend toward the lower left, such as small extensions to existing product lines. A high-tech company might move toward the upper right, taking bigger risks on more-audacious innovations for the chance of bigger payoffs. Although this may sound obvious, few organizations think about the best level of innovation to target, and fewer still manage to achieve it.

Strike and Maintain the Right Balance

In contemplating the balance for an innovation portfolio, managers should consider the findings of research we conducted recently. In a study of companies in the industrial, technology, and consumer goods sectors, we looked at whether any particular allocation of resources across core, adjacent, and transformational initiatives correlated with significantly better performance as reflected in share price. Indeed, the data revealed a pattern: Companies that allocated about 70% of their innovation activity to core initiatives, 20% to adjacent ones, and 10% to transformational ones outperformed their peers, typically realizing a P/E premium of 10% to 20% (see the exhibit "Is There a Golden Ratio?"). Google knows this well: Cofounder Larry Page told Fortune magazine that the company strives for a 70-20-10 balance, and he credited the 10% of resources that are dedicated to transformational efforts with all the company's truly new offerings. Our subsequent conversations with buy-side analysts revealed that this allocation is attractive to capital markets because of what it implies about the balance between short-term, predictable growth and longer-term bets.

Analysis reveals that the allocation of resources shown below correlates with meaningfully higher share price performance. For most companies, this breakdown is a good starting point for discussion.

A second research finding adds more food for thought. In an ongoing study, we're focusing on more-direct returns on innovation. Of the bottom-line gains companies enjoy as a result of their innovation efforts, what proportions are generated by core, adjacent, and transformational initiatives? We're finding consistently that the return ratio is roughly the inverse of that ideal allocation described above: Core innovation efforts typically contribute 10% of the long-term, cumulative return on innovation investment; adjacent initiatives contribute 20%; and transformational efforts contribute 70% (see the exhibit "How Innovation Pays the Bills").

Among high performers that invest in all three levels of innovation, we find the following distribution of total returns. As it happens, this ratio is the inverse of the resource allocation ratio we discovered in high-performing companies.

Together these findings underscore the importance of managing total innovation deliberately and closely. Most companies are heavily oriented toward core innovation-and must continue to be, given the risk involved in adjacent and transformational initiatives. But if that natural tendency leads to neglect of more-ambitious forms of innovation, the outcome will be a steady decline in business and relevance to customers. Transformational initiatives are the engines of blockbuster growth.

Let us be clear: We're not suggesting that a 70-20-10 breakdown of innovation investment is a magic formula for all companies; it's simply an average allocation based on a cross-industry and crossgeography analysis. The right balance will vary from company to company according to a number of factors (see the exhibit "Different Ambitions, Different Allocations").

On average, high-performing firms direct 70% of their innovation resources to enhancements of core offerings, 20% to adjacent opportunities, and 10% to transformational initiatives. But individual firms may deviate from that ratio for sound strategic reasons. Here are three allocations we have seen that made sense for firms in various circumstances.

One important factor is industry. The industrial manufacturers we studied have a strong portfolio of core innovations complemented by a few breakouts, and they come closest to the 70-20-10 breakdown. Technology companies spend less time and money on improving core products, because their market is eager for the next hot release. Consumer packaged goods manufacturers have little activity at the transformational level, because their main focus is incremental innovation. Of these three sorts of businesses, industrial manufacturers collectively have the highest P/E ratio relative to their peers, perhaps suggesting that they are closest to getting the balance right-for them.

A company's competitive position within its industry also influences the balance. For example, a lagging company might want to pursue more high-risk transformational innovation in the hope of creating a truly disruptive product or service that would dramatically alter its growth curve. A struggling Apple made this decision in the late 1990s, effectively betting its business on several bold initiatives, including the iTunes platform. A company that wants to retain its leadership position or believes the market for its more ambitious innovations has cooled may decide to do the reverse, removing some risk from its portfolio by shifting its emphasis from transformational to core initiatives.

A third factor is a company's stage of development. Early-stage enterprises, especially those funded by venture capital, must make a big splash. They may feel that a disproportionate investment in transformational innovation is warranted, both to attract media attention, investors, and customers, and because they don't yet have much of a core business to build on. As they mature and develop a stable customer base, and as protecting and growing the core becomes more important, they may shift their emphasis toward that of a more established company.

The point is that a management team should arrive at a ratio that it believes will deliver better ROI in the form of revenue growth and market capitalization, should discover how far its current allocation is from that ideal, and should come up with a plan to close the gap.

Organize and Manage the Total Innovation System

Targeting a healthy balance of core, adjacent, and transformational innovation is a vital step toward managing a total innovation portfolio, but it immediately raises an issue: To realize the promise of that balance, a company must be able to execute at all three levels of ambition. Unfortunately, the managerial toolbox required to keep innovation on track varies greatly according to the type of innovation in question. Few companies are good at all three.

Companies typically struggle the most with transformational innovation. A study by the Corporate Strategy Board shows that mature companies attempting to enter new businesses fail as often as 99% of the time. This reflects the hard truth that to achieve transformation-to do different things-an organization usually has to do things differently. It needs different people, different motivational factors, and different support systems. The ones that get it right (GE and IBM are notable examples) have thought carefully about five key areas of management that serve the three levels of innovation ambition.

Talent.

The skills needed for core and adjacent innovations are quite different from those needed for transformational innovations. In the first two realms, analytical skills are vital, because such initiatives call for market and customer data to be interpreted and translated into specific offering enhancements. Procter & Gamble, for example, deploys a cadre of 70 senior employees around the world to help identify promising adjacencies. These "technology entrepreneurs," as the company calls them, are responsible for researching a variety of sources, including scientific journals and patent databases, and for physically observing activities in specific markets in order to find new ideas that can build on P&G's core businesses. The company credits its technology entrepreneurs with uncovering more than 10,000 potential offerings for review.

Transformational innovation efforts, by contrast, typically employ a discovery and concept-development process to uncover and analyze the social needs driving business changes (what's desirable from a customer perspective), the underlying market trends (what kinds of offers might be viable), and ongoing technological developments (what is feasible to produce and sell). These activities require skills found among designers, cultural anthropologists, scenario planners, and analysts who are comfortable with ambiguous data. Thus, when Samsung decided to compete on the basis of innovative design , it recognized that it needed new and different skills. The company moved its design center from a small town to Seoul in order to be closer to a valuable pool of young design professionals. It also teamed with a number of outside firms with strong design skills and created an in-house school, led by industrial design experts, to hone the abilities of designers who exhibited potential. The results speak for themselves: In a decade Samsung has garnered numerous design awards while evolving from a manufacturer of nondescript consumer electronics to one of the most valuable brands in the world.

Integration.

Although the right skills are critical, they are not sufficient. They must be organized and managed in the right way, with the right mandate, and under the conditions that will help them succeed. One of the most important decisions will be how closely to connect the skills and associated activities with the day-to-day business.

In most companies, the majority of people engaged in innovation are working on enhancements to core offerings; they're most likely to succeed if they remain integrated with the existing business. Even teams working on adjacent innovations benefit from the efficiencies that come with close ties to the core business, assuming they're given the appropriate tools to take their work further afield.

However, as Samsung's move suggests, transformational innovation tends to benefit when the people involved are separated from the core business-financially, organizationally, and sometimes physically. Without that distance, they can't escape the gravitational pull of the company's norms and expectations, all of which reinforce an emphasis on sustaining the core.

Funding.

Most efforts related to core and adjacent innovation are fairly small-scale projects that don't need major infusions of cash. They can and should be funded by the relevant business unit's P&L through annual budget cycles.

Bold transformational efforts typically require sustained-and sometimes significant-investment. Their funding should come from an entity (perhaps the executive suite, and ideally the CEO) that can rise above the fray of annual budget allocation. But companies should avoid the "innovation tax" approach, whereby the C-suite asks all areas of the business to contribute a percentage of their budgets to transformational initiatives (under the theory that innovation benefits the whole company, so everyone should support it). Business units rarely see their "contribution" as going to a good cause; they simply perceive that the corporate office is siphoning off 5% of their budgets, and come to regard the innovation team as the bad guys.

Companies might instead create a completely different funding structure for transformational innovation, one that's separate from the regular P&Ls of the business. An example is Merck's Global Health Innovation venture fund, a separate limited liability corporation that invests in interesting health care companies operating at the periphery of Merck's core pharmaceutical, vaccines, and consumer health businesses. The main purpose of the fund is to place bets on components of an evolved future business model for the company. It is also used on occasion to fund organic innovation initiatives, such as Merck Breakthrough Open, a crowdsourcing forum that solicits employee ideas for transformational growth opportunities.

Pipeline management.

Any well-managed innovation process includes mechanisms to track ongoing initiatives and ensure that they are progressing according to plan. Companies typically rely on stage-gate processes to assess projects periodically, recalculate their projected ROI according to any changed conditions, and decide whether they should get a green light. But such projections are only as reliable as the market insight the company can glean. In the case of a core product extension, that insight is usually sufficient: Customers can say whether they would like a proposed product variant and, if so, how much they'd be willing to pay for it. However, if the innovation initiative involves an entirely new solution-one that customers may not even know they need-traditional stage-gate processes are dangerous. It's impossible to predict fifth-year sales for something the world has never seen before.

Moreover, whereas pipeline management for core or near-adjacent innovation involves gradually finding a small set of winners from among a vast number of ideas, the process is very different for transformational innovation. Here the challenge is to take a small number of possibly game-changing ideas and ensure that they emerge from the pipeline stronger. A company must spend sufficient time up front exploring what's possible, constantly expanding the options available in pursuit of the right big idea. In other words, transformational efforts are not generally managed with a funnel approach; they require a nonlinear process in which potential alternatives remain undefined for a long period of time. This is another reason why a stage-gate process is so lethal to transformational innovation: It results in the rejection of promising options before they are properly explored.

Metrics.

Finally, there is the question of what measurements should inform management. For core or adjacent initiatives, traditional financial metrics are entirely appropriate. But using such metrics too early in transformational efforts can kill potentially great ideas. For instance, net present value and ROI calculations, commonly used to assess core and near-adjacent initiatives, require assumptions about adoption rates, price points, and other key variables-which in turn require customer input. Such input is impossible to obtain for something the world does not yet know it needs.

Managers should discuss thoughtfully where economic and noneconomic metrics, along with external and internal metrics, are most appropriate. Stage-gate systems operate at the intersection of economic and external metrics-they estimate how much money the company will make when its innovation is launched in the outside world. And, again, this combination is appropriate for evaluating core or near-adjacent initiatives on the basis of information that is obtainable and largely accurate.

Companies should use the polar opposite-a combination of noneconomic and internal metrics-to assess transformational efforts in their early stages; this can enhance the team's ability to learn and explore. For example, what if the only hurdle an initiative must clear to receive continued investment is that the company is likely to learn (not earn) from it? That is how Google has assessed transformational innovation from the start.

Eventually a company must focus on the hard economics of a transformational project. But that can wait until there's something ready to pilot and launch.

Moving Forward

Managing total innovation will require a significant shift for most companies, which are used to a less orderly approach. But the pathway to such discipline is clear. The first step is to develop a shared sense of the role innovation plays in driving the organization's growth and competitiveness. Managers should agree on an appropriate ambition level for innovation and find common language to describe it.

Next, it makes sense to survey the company's current innovation landscape. A comprehensive audit will reveal how much time, effort, and money are allocated to core, adjacent, and transformational initiatives-and how that allocation differs from the ideal ratio for the company in question. With the difference exposed, managers can identify ways to achieve the desired balance, usually by paring core initiatives down to those focused on the highest-value customers, encouraging more initiatives in the adjacent space, and creating conditions more conducive to breakthroughs in the transformational realm.

Throughout all this activity, leaders must communicate clearly and relentlessly about innovation goals and processes. There's no getting around the fact that to improve the overall return on innovation investments, managers must take a hard look at projects-all of which are attached to people who feel a sense of ownership and pride in them. The imperative is to identify and accelerate the most promising ideas and kill off the rest (some of which may be perfectly viable but don't represent the best use of resources). Open commitments and clear messaging will go a long way toward ensuring that the entire organization knows what is being decided by whom and why, and how those decisions will benefit the business over the short and long terms.

For many companies, innovation will remain a sprawling collection of activities, energetic but uncoordinated. And for many managers, it will remain a source of frustration. For the best managers, however, it represents the most exciting and important challenge of all. By figuring out how to manage innovation as an integrated system within overall portfolio goals, they can harness its energy and make it a reliable driver of growth.

A version of this article appeared in the May 2012 issue of Harvard Business Review.

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Management knows it and so does Wall Street: The year-to-year viability of a company depends on its ability to innovate. Given today's market expectations, global competitive pressures, and the extent and pace of structural change, this is truer than ever.

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Collaboration Centers

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Consumer Trend Canvas

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Understand and apply any consumer trend. Today.

CONSUMER TREND CANVAS:
An easy-to-follow framework that will help you not only unpack and understand any consumer trend, but also help you apply it to launch successful consumer-facing innovations of your own.

Consumer trends are, at their heart, an essential part of uncovering innovation opportunities. Otherwise they're just intellectual masturbation: diverting, pleasant and entertaining, but with little real purpose ;)

Yet we frequently hear that 'trends' feel mysterious and opaque. Which is where the CONSUMER TREND CANVAS* comes in.
* Generously 'inspired' by Alex Osterwalder's Business Model Canvas ;)

How and when to use the canvas.

1. Download a blank CONSUMER TREND CANVAS - Print it out, as big as you can! Use it to structure an innovation session with your team or a client.

2. Take a trend - Either from us or elsewhere.

3. Start with the left hand side 'Analyze' - Add supporting insights, data and examples. Keep circling back to re-examine how the segments relate to each other. Insights in one segment may highlight other elements of the trend and help you uncover truly novel concepts.

4. Then turn to the right hand side 'Apply' - To identify how, where and for which consumers you could apply the trend.

5. Finally capture your new innovation ideas! - Congratulations! Your new ideas will be deeply grounded in what consumers want, and therefore more likely to be successful!

Consumer trends - and consumer behaviors more broadly - are ultimately driven by these rarely-if-ever-changing basic human needs and desires. Identifying these underlying needs is central to understanding any consumer trend.

Where to start? How about these:
Social status / Self-improvement / Entertainment / Excitement / Connection / Security / Identity / Relevance / Social interaction / Creativity / Fairness / Honesty / Freedom / Recognition / Simplicity / Transparency

To analyze change, think Shifts and Triggers.

Shifts are the long-term, macro changes that are playing out across years or even decades, that while not consumer trends themselves, will shape both the direction and flavor of a specific trend. For a good summary of the macro shifts currently shaping the world, see Bain's overview of Big Trends (such as urban transition, ageing world and climate challenge).

Triggers are the more immediate changes that drive the emergence of a consumer trend. These can include specific technologies, political events, economic shocks, environmental incidents, and more. For example, the Covid pandemic accelerated the 'HANDS OFF-BUT HUMAN' trend.

Try looking at the data behind the trend. Rapid growth or sudden shifts, even if the absolute numbers might be small, are worth attention.

ANALYZE

Emerging Consumer Expectations

What new consumer needs, wants and expectations are created by the changes identified above?
Where and how does this trend satisfy them?

New consumer trends emerge when basic human needs bump up against external change to create (or unlock) new needs, wants and desires. And identifying these unmet needs and wants is the holy grail of understanding trends, as it will present you with compelling innovation opportunities.

To identify emerging needs, wants and desires, look for expectation gaps between what consumers want, and what they currently have.

Try asking yourself "What do the consumers embracing the brands, products and services that embody this trend now want and even expect?".

One further tip: pay careful attention to other industries. Consumers don't think in industry silos. New expectations of quality or service will usually be set outside your industry, but they won't remain there for long.

Seeing what other businesses, entrepreneurs, non-profits, governments even, are already doing with the trend is a great way to better understand it (and gain inspiration ;).

Indeed, very few 'innovations' are totally new. Most (successful) innovation comes from combining seemingly unrelated elements, or taking something and deploying it in a new context.

So try this: look at existing business innovations, understand them, then adapt them to your business. To gain as wide a perspective as possible, look specifically at other industries, other regions or cultures, or other types of business (e.g. corporate versus start-ups).

We've long said that when thinking about a consumer trend, it helps to consider how and where it could impact your business using these four areas:

Vision: How will the deeper shifts underlying this trend shape your company's long-term vision?

Business Model: Can you apply this trend to launch a whole new business venture or brand?

Product / Service / Experience: What new products and services could you create in light of this trend? How will you adapt your current products and services?

Campaign: How can you incorporate this trend into your campaigns, and show consumers you speak their language, that you 'get it'.

How and where you apply the trend will depend on your business. Not all trends apply equally to all businesses or regions.

Say 'trends' and many people instantly think of demographics. And of course, consumers that share certain traits (whether in age, income, lifestyle, tribe, location etc.) will often have similar tastes and preferences.

But when it comes to applying consumer trends, try thinking beyond those who are currently living the trend. Indeed, thinking about what changes you would have to make, to make this trend relevant for other (new) demographics is a great way to come up with new innovations.

Need further inspiration? Then look to the margins and at what extreme users are currently doing. New consumer behaviors usually start with certain (niche) segments, before evolving and spreading throughout the mass market.

NEXT

Use it!

The CONSUMER TREND CANVAS is just a tool. It's only as useful as you make it.
Download a printable blank canvas, grab a trend, and start filling it in.
Or even better, schedule a session with your team or a client and see what you come up with.

NEXT

Have some fun!

Trend watching is about coming up with (and launching) exciting new meaningful products and services for your customers, nothing more and nothing less. It shouldn't be scary, or boring (if it is, you're doing it wrong ;).

NEXT

Get going!

Billions of consumers crave brands, products and services that make life more exciting, more efficient, more sustainable, and simply better than it currently is.
While a relentless, global horde of smart brands and entrepreneurs is already striving to meet these cravings.
Will it be you that delivers, or someone else?

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Understand and apply any consumer trend. Today. CONSUMER TREND CANVAS: An easy-to-follow framework that will help you not only unpack and understand any consumer trend, but also help you apply it to launch successful consumer-facing innovations of your own. Consumer trends are, at their heart, an essential part of uncovering innovation opportunities.

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Play-to-Win Strategy Vanvas

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Idea Validation Checklist

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Strategic Innovation Portfolio

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Facing increasingly dynamic and unpredictable environments, firms are required to develop convenient innovation strategies, constantly adapt them to changing conditions and properly implement strategically aligned initiatives throughout their organizations. Innovation portfolio management (IPM) can act as the pivotal tool to translate strategic objectives and priorities into project-based innovation activities. Furthermore, it provides a framework to convert raw ideas into real investment opportunities, based on their risk profile.

This is a two-part article, co-written by Kevin McFarthing and Ralph-Christian Ohr. Here, we introduce the concept and give some ideas on how IPM can be implemented in the organization. IPM can be divided into a strategic and an operational part. Strategic Portfolio Management (SPM), covered by the first part of this article, makes sure the right innovation initiatives are pursued ("doing the right things") and backed with resources. The second part outlines Operational Portfolio Management (OPM), aimed at successfully executing the selected projects ("doing things right").

Integrating strategy and execution via portfolio management

Uncertainty and rising levels of complexity make it impossible for companies to precisely determine the future. Recent research [Rita Gunther McGrath: The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business, Harvard Business Review Press (2013)] indicates that the notion of a sustainable competitive advantage is likely to be abandoned. Strategy today needs to align to a more fluid nature of business environments. It has to be flexible enough to adapt constantly to changing external and internal conditions, even though the aspiration to serve shareholders remains constant.

Key issues for companies to succeed in these highly dynamic and interconnected marketplaces are:

Continuous integration of strategy development and refinement with execution to deliver tangible results. Many companies struggle, not because they haven't any suitable strategy in place, but because they fail to translate it into adequate initiatives and integrate it across the organization.

Allocation of scarce resources and capital across a range of initiatives to maximize value, while reducing risk for the entire company. Due to resource constraints, only 5-10% of project requests can actually be realized in practice.

Strategy today needs to be flexible enough to constantly adapt to changing business environments.

Establishing a portfolio management system can address these issues. Portfolio management is positioned as a "transmission belt" between qualitative strategy definition and metrics-based project execution (figure 1). It ensures that the critical requirements of SPM and OPM are integrated.

NASA - one of this year's Innovation Management Award winners - does! Other winners can teach you how to increase innovation participation by 500% or train your workforce in best practices, and more. Learn from this year's Innovation Management Award winners!

Figure 1: Portfolio management as integrator of strategy definition and project-based execution.

Like a more conventional strategy, portfolio management is best driven by a corporate center or project management office (PMO) and a supportive senior management. The hallmark of a portfolio management approach is the willingness to continuously assess and optimize the portfolio. Portfolio management can be defined as balanced planning and steering of a portfolio of initiatives, aiming to provide the highest overall value for the entire company. This process can be enhanced by using IT-based platforms. The portfolio is frequently assessed according to qualitative and quantitative criteria:

What is the project's contribution to corporate strategy? (qualitative and quantitative)

What is the project's associated risk level? (qualitative)

What is the project's expected financial return? (quantitative)

Portfolio management balances a portfolio of initiatives, aiming to provide maximum value for the company.

As research suggests, there seems to be some upside performance potential around this topic for most companies. The 2013 survey of 800 members of the PMI (Project Management Institute) showed that only a small proportion of respondents believe their organizations are "mature" in their practice of project (17%) and portfolio (12%) management. This stark observation came in a context where more projects are being delayed; since 2008, the percentage of projects that project managers say have met their original goals and business intent has declined 10 percentage points (from 72% in 2008 to 62% in 2012).

Using portfolios in the context of innovation management also requires following balances to be managed:

The innovation portfolio is required to cover both short-term and long-term initiatives.

It needs to feature a variety of initiatives in the portfolio without losing focus.

Balancing short-term and long-term innovation

Innovation is required to lead to short-term returns through optimization of existing products, services and business models. However, it also plays a central role to secure long-term survival by exploring new territories, whether geographic or new business. Many companies unintentionally harvest their core business through pushing short-term performance while losing out on long-term investments to stay ahead of the game. Sustainable innovation management must therefore be targeted at identifying and developing future businesses in parallel to optimizing current ones. Successfully integrating different time horizons turns out to be an imperative in innovation management. Related to this balance, simultaneous management of incremental and radical innovation via ambidextrous organizational setups is crucial to build a dynamic innovation capability.

The " three horizons " can serve as a convenient model to categorize and manage innovation initiatives across different time frames. The characteristics of the different innovation horizons can be taken from table 1.

Table 1: Characteristics of the three innovation horizons

Innovation portfolios need to cut across three horizons.

Innovation portfolio management needs to carefully pay attention to Horizon 2 activities. This is "strategy's no-man's-land" between short-term budgets and long-term focus [Geoffrey A. Moore: To Succeed in the Long Term, Focus on the Middle Term, Harvard Business Review (2007)]. Horizon 2 efforts must be insulated and isolated from core business until it can produce material revenues (which, depending on the size of the company, possibly range from $50 million to $100 million). This particularly involves enforcing portfolio commitments by blocking resource migration across horizon boundaries. During this adolescentphase, such projects require customized processes, metrics and performance targets.

Case in point: IBM

IBM acts as a prime example on how the introduction and pursuit of a balanced innovation portfolio enhances overall innovation capability, adaptability and organizational ambidexterity [Charles A. O'Reilly, J. Bruce Harreld, Michael L. Tushman: Organizational Ambidexterity: IBM and Emerging Business Opportunities, California Management Review (2009)]. In September 1999, Lou Gerstner (then CEO of IBM), was reading a monthly report that indicated that current financial pressures had forced a business unit to discontinue funding of a promising initiative. He asked: "Why do we consistently miss the emergence of new industries?" IBM's strategy group also confirmed that the company had failed to capture value from 29 separate technologies and businesses. A detailed analysis revealed that IBM's mistake had been an unwitting focus on Horizon 1 and 2 businesses to the exclusion of Horizon 3. Interviews with senior managers confirmed this conclusion.

Armed with this understanding, IBM decided to balance their portfolio by identifying and implementing experimental Horizon 3 initiatives, the "Emerging Business Opportunities" (EBO) program. In 2000 there were seven EBOs, including Linux, Life Sciences, Pervasive Computing, Digital Media, Network Processors and e-Markets. Since their inception, 25 EBO's have been launched by 2009. Three of these have failed but the remaining 22 produced well more than 15% of IBM's revenue at this time. The defined criteria to move from an EBO to a separate growth business were:

a strong leadership in place

a clearly articulated strategy for profit contribution

early market success

a proven value proposition

The process has since been more decentralized so that separate lines of business develop their own EBOs. Throughout the company, they are used to extend capabilities and to scale business models.

Balancing variation and focus of innovation initiatives

In a time of increasing change and uncertainty, we must be clear on what will not change to not get distracted.

As the future is hard to foresee, firms need to be comfortable with experimentation, i.e. testing new technologies, products and business models. A recent study [A di Alon, Wouter Koetzler, Steve Culp: The Art of Managing Innovation Risks, Accenture, http://www.accenture.com/us-en/outlook/Pages/outlook-journal-2013-art-of-managing-innovation-risk.aspx] has identified portfolio management as one major area to manage innovation risks adequately. Proper risk management enables experimentation, being conducive to radical and breakthrough innovation and counteracting the tendency to "play safe" by solely supporting incremental innovation. This involves spreading small bets across various innovation options, expecting that some of them turn out to produce large returns and cover the investment required for experimentation. And since a portfolio of experimental initiatives prepares for various future conditions, it's obvious that not all of the initiatives will become relevant and return value. Indeed, as in nature, variation appears to be a major precondition for successful adaptation in changing environments. However, in order to avoid spreading commitment, resources and capital too thinly across too many and too diverse initiatives, it's mandatory for organizations to focus on underlying, more predictable, drivers that are shaping business environments (such as digital technology progress, aging population or emerging market development). Since these fundamental forces will over time shape a broad array of surface events, developing indicators may help anticipate upcoming scenarios and therefore constrain the number of indicated experiments and initiatives. According to John Hagel, this can be considered a strategy paradox: in a time of increasing change and uncertainty, we must be clear on what will not change to not get distracted.

Strategic Portfolio Management

As outlined above, strategic portfolio management translates innovation strategy into an aligned project portfolio. The portfolio is reviewed on the basis of defined criteria. Typically, a Portfolio Management Board (PMB) is in charge for this strategic decision making. The PMB should include those executives that can best decide on the strategic alignment as well as the executives that are responsible for the resources involved. The PMB's main tasks are:

1. Periodic evaluation and prioritization of the entire innovation portfolio

The innovation portfolio is periodically assessed by means of strategic, financial and risk-related criteria. In most cases, scoring methods are used for this assessment. Based on the evaluated criteria, projects are re-prioritized, or stopped in case minimum requirements are not met. It's important that evaluation and prioritization is carried out in a transparent and consistent manner for the entire portfolio. However, the evaluation process should also allow for exceptional reasons to fund an initiative that doesn't meet the required numbers. These reasons and well-informed decisions need to be communicated transparently throughout the organization as well. From a practitioner's point of view, prioritization should be carried out in groups (e.g. "top 5", medium etc.), rather than as a sequential numbered list.

One major advantage that comes along with the introduction of a portfolio approach is the ability to adapt to changing conditions. As prioritization criteria and assessment of individual projects may change over time, frequent reviews allow adjusting the organization's directions of impact.

Managing a portfolio of innovation initiatives should obey one central principle: evolutionary selection.

Managing a portfolio of innovation initiatives should obey one central principle: evolutionary selection. The decision on whether or not to scale up an initiative, e.g. a new technology or business model, is made when further information has been gained from the previous project stage. Much of this needed familiarity can come only through experimentation and testing, rather than from vision or analysis. This suggests staging investments across the innovation portfolio depending on the associated risk and uncertainty. Therefore, big bets are usually made in horizon 1, medium bets in horizon 2, whereas the high-risk profile of activities in horizon 3 suggests making little bets. This highlights the importance of pilot projects, prototypes and iterative market-testing and -learning before initiatives become scaled up.

Indeed, research [Bansi Nagji, Geoff Tuff: Managing Your Innovation Portfolio, Harvard Business Review, http://hbr.org/2012/05/managing-your-innovation-portfolio/] reveals: firms that allocate in average 70% of their innovation funds to incremental innovation (short-term), 20% to adjacent innovation (mid-term) and 10% to radical/breakthrough initiatives (long-term) outperform their peers, typically realizing a P/E premium of 10% to 20%. The individual allocation depends on industry, competitive position and the firm's stage of development (figure 2).

Figure 2: Innovation portfolio matrix across the three horizons.
The size of the circle represents the project's economic value.
Portfolio management follows a staging investment from horizon 3 (uncertainty) towards horizon 1 (familiarity).

2. Strategic and priority-based resource allocation

On a strategic level, portfolio and resource management must be fully aligned.

As the prioritization of the portfolio is supposed to show impact, resources are required to be allocated accordingly. This sounds self-evident - but isn't always in practice. Portfolio prioritization and resource management (on a strategic level) should be fully aligned. A feasibility check that decisions and priorities are backed with the needed resources is mandatory. Strategic resource management is about including resource availability constraints into the analysis of alternative portfolio compositions. If a portfolio proposal will overload the available resources, this can either affect the portfolio composition (delay or abandon projects) or the resource pool size (e.g. by hiring or Open Innovation). In order to give tactical resource allocation (as part of OPM) a fair chance of succeeding, strategic resource allocation must be coupled with the strategic portfolio management process.

3. Release and exit of innovation initiatives

The selection of new, strategically-aligned initiatives has to be carried out with due diligence. Particularly in turbulent times or in face of crises this is often not the case, known as: doing things for the sake of doing things. Due to a variety of influence factors, interdependencies and stakeholders, portfolio management features a high complexity. In order to maximize value-creation for the company, the PMB needs to make sure these conditions are properly taken into consideration and initiatives are assessed with relevant and up-to-date criteria. It is also responsible for consequent termination of unattractive or unsuccessful initiatives.

In the next article, we'll discuss Operational Portfolio Management (OPM), where the portfolio directs resource allocation, metrics and reporting.

About the authors

Dr. Ralph-Christian Ohr has been working in several innovation, division and product management functions for international, technology-based companies. His interest is aimed at organizational and personal capabilities for high innovation performance. He authors the Integrative Innovation Blog.

Dr Kevin McFarthing runs the Innovation Fixer consultancy, using insight and experience to help companies improve the effectiveness and efficiency of their innovation. He advises, mentors and teaches innovation and is the author of chapters in two recent books on Open Innovation. He was Head of Strategic Alliances, and Head of R&D for Health & Personal Care at Reckitt Benckiser, a $16bn consumer goods company where 35% of sales come from products launched in the last three years.

Photo: A businessman is performing a strategic portfolio from shutterstock.com

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Managing Innovation Portfolios - Strategic Portfolio Management

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This is a two-part article, co-written by Kevin McFarthing and Ralph-Christian Ohr. Here, we introduce the concept and give some ideas on how IPM can be implemented in the organization. IPM can be divided into a strategic and an operational part.

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Empathy Mapping

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As UX professionals, it is our job to advocate on behalf of the user. However, in order to do it, not only must we deeply understand our users, but we must also help our colleagues understand them and prioritize their needs. Empathy maps, widely used throughout agile and design communities, are a powerful, fundamental tool for accomplishing both.

Definition: An empathy map is a collaborative visualization used to articulate what we know about a particular type of user. It externalizes knowledge about users in order to 1) create a shared understanding of user needs, and 2) aid in decision making.

This article is a guide to empathy mapping and its uses.

Format

Traditional empathy maps are split into 4 quadrants ( Says, Thinks, Does, and Feels), with the user or persona in the middle. Empathy maps provide a glance into who a user is as a whole and are not chronological or sequential.

The Says quadrant contains what the user says out loud in an interview or some other usability study. Ideally, it contains verbatim and direct quotes from research.

"I am allegiant to Delta because I never have a bad experience."

"I want something reliable."

"I don't understand what to do from here."

The Thinks quadrant captures what the user is thinking throughout the experience. Ask yourself (from the qualitative research gathered): what occupies the user's thoughts? What matters to the user? It is possible to have the same content in both Says and Thinks. However, pay special attention to what users think, but may not be willing to vocalize. Try to understand why they are reluctant to share - are they unsure, self-conscious, polite, or afraid to tell others something?

"This is really annoying."

"Am I dumb for not understanding this?"

The Does quadrant encloses the actions the user takes. From the research, what does the user physically do? How does the user go about doing it?

Refreshes page several times.

Shops around to compare prices.

The Feels quadrant is the user's emotional state, often represented as an adjective plus a short sentence for context. Ask yourself: what worries the user? What does the user get excited about? How does the user feel about the experience?

Impatient: pages load too slowly

Confused: too many contradictory prices

Worried: they are doing something wrong

Our users are complex humans. It is natural (and extremely beneficial) to see juxtaposition between quadrants. You will also encounter inconsistencies - for example, seemingly positive actions but negative quotes or emotions coming from the same user. This is when empathy maps become treasure maps that can uncover nuggets of understanding about our user. It is our job as UX professionals to investigate the cause of the conflict and resolve it.

Some of these quadrants may seem ambiguous or overlapping - for example, it may be difficult to distinguish between Thinks and Feels. Do not focus too much on being precise: if an item may fit into multiple quadrants, just pick one. The 4 quadrants exist only to push our knowledge about users and to ensure we don't leave out any important dimension. (If you don't have anything to put into a certain quadrant, it's a strong signal that you need more user research before proceeding in the design process.)

One User vs. Multiple-Users Empathy Maps

Empathy mapping can be driven by any method of qualitative research (and can be sketched even if research is lacking). They can help UX professionals understand what aspects of their user they know and where they would need to gather more user data.

Empathy maps can capture one particular user or can reflect an aggregation of multiple users:

One-user (individual) empathy maps are usually based on a user interview or a user's log from a diary study.

Aggregated empathy maps represent a user segment, rather than one particular user. They are usually created by combining multiple individual empathy maps from users who exhibit similar behaviors and can be grouped into one segment. The aggregated empathy map synthesizes themes seen throughout that user group and can be a first step in the creation of personas. (However, empathy maps are not a replacement for personas. But they can be one way to visualize what we know about a persona in an organized, empathetic way.)

Aggregated empathy maps can also become ways to summarize other qualitative data like surveys and field studies. For example, an empathy map can be used to communicate a persona, instead of the traditional 'business card' approach. As more research is gathered about that persona, you can circle back to the empathy map and add new insights or remove those that have changed or been invalidated.

Why Use Empathy Maps

Empathy maps should be used throughout any UX process to establish common ground among team members and to understand and prioritize user needs. In user-centered design, empathy maps are best used from the very beginning of the design process.

Both the process of making an empathy map and the finished artifact have important benefits for the organization:

Capture who a user or persona is. The empathy-mapping process helps distill and categorize your knowledge of the user into one place. It can be used to:

Categorize and make sense of qualitative research (research notes, survey answers, user-interview transcripts)

Discover gaps in your current knowledge and identify the types of research needed to address it. A sparse empathy map indicates that more research needs to be done.

Create personas by aligning and grouping empathy maps covering individual users

Communicate a user or persona to others: An empathy map is a quick, digestible way to illustrate user attitudes and behaviors. Once created, it should act as a source of truth throughout a project and protect it from bias or unfounded assumptions.

Be sure to keep empathy maps 'alive' by revising and adjusting them as you do more research.

Collect data directly from the user. When empathy maps are filled in directly by users, they can act as a secondary data source and represent a starting point for a summary of the user session. Moreover, the interviewer may glean feelings and thoughts from the interviewee that otherwise would have remained hidden.

Process: How to Build an Empathy Map

Go through the following steps to create a valid and useful empathy map:

1. Define scope and goals

a. What user or persona will you map? Will you map a persona or an individual user? Always start with a 1:1 mapping (1 user/persona per empathy map). This means that, if you have multiple personas, there should be an empathy map for each.

b. Define your primary purpose for empathy mapping. Is it to align the team on your user? If so, be sure everyone is present during the empathy-mapping activity. Is it to analyze an interview transcript? If so, set a clear scope and timebox your effort to ensure you have time to map multiple user interviews.

2. Gather materials

Your purpose should dictate the medium you use to create an empathy map. If you will be working with an entire team, have a large whiteboard, sticky notes, and markers readily available. (The outcome will look somewhat like the illustration above.) If empathy mapping alone, create a system that works for you. The easier to share out with the rest of the team, the better.

3. Collect research

Gather the research you will be using to fuel your empathy map. Empathy mapping is a qualitative method, so you will need qualitative inputs: user interviews, field studies, diary studies, listening sessions, or qualitative surveys.

4. Individually generate sticky notes for each quadrant

Once you have research inputs, you can proceed to mapping as a team. In the beginning, everybody should read through the research individually. As each team member digests the data, they can fill out sticky notes that align to the four quadrants. Next, team members can add their notes to the map on the whiteboard.

5. Converge to cluster and synthesize

In this step, the team moves through the stickies on the board collaboratively and clusters similar notes that belong to the same quadrant. Name your clusters with themes that represent each group (for example, "validation from others" or "research"). Repeat themes in each quadrant if necessary. The activity of clustering facilitates discussion and alignment - the goal being to arrive at a shared understanding of your user by all team members.

Once your empathy map is clustered, you can begin to vocalize and align as a team on your findings. What outliers (or data points that did not fit in any cluster) are there? What themes were repeated in all the quadrants? What themes only exist in one quadrant? What gaps exist in our understanding?

6. Polish and plan

If you feel that you need more detail or you have unique needs, adapt the map by including additional quadrants (like Goals the example below) or by increasing specificity to existing quadrants. Depending on the purpose of your empathy map, polish and digitize the output accordingly. Be sure to include the user, any outstanding questions, the date and version number. Plan to circle back to the empathy map as more research is gathered or to guide UX decisions.

Conclusion

As their name suggests, empathy maps simply help us build empathy with our end users. When based on real data and when combined with other mapping methods, they can:

Remove bias from our designs and align the team on a single, shared understanding of the user

Discover weaknesses in our research

Uncover user needs that the user themselves may not even be aware of

Understand what drives users' behaviors

Guide us towards meaningful innovation

Learn and practice empathy mapping in our full-day course Generating Big Ideas with Design Thinking.

References

Bland, D. "Agile coaching tip - What is an empathy map?" 21 April 2016. Retrieved from https://www.solutionsiq.com/resource/blog-post/what-is-an-empathy-map/

Gray, D., Brown, S. & Macanufo, J. 2010. Gamestorming - A playbook for innovators, rulebreakers and changemakers. Sebastopol, CA: O'Reilly Media, Inc.

Gray, D. "Updated Empathy Map Canvas." Medium. 15 July 2017. https://medium.com/the-xplane-collection/updated-empathy-map-canvas-46df22df3c8a

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Empathy Mapping: The First Step in Design Thinking

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Visualizing user attitudes and behaviors in an empathy map helps UX teams align on a deep understanding of end users.

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House of Quality

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Benchmarking

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Customer Projection

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Customer Journey Mapping

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Crowd-Funding

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Scalability Exploration

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QCA Research

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Service / Desktop Walkthrough

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A free method from the #TiSDD book: Desktop walkthroughs can be seen as interactive mini-theater plays that simulate end-to-end customer experiences.

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Lean Management

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Scenario Planning

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Scenario planning is common at the organizational level to make strategic plans more robust and resilient. In today's uncertain times, scenario planning is equally critical at the functional level. Functional leaders who successfully incorporate scenario planning into their planning processes can make small but powerful changes to prepare their own teams to act on the risk and opportunities that come from volatility.
Functional leaders must be ready to contribute to enterprise scenario planning and run their own. Key questions to ask:

What should I know about enterprise scenario planning?

How do I contribute to enterprise scenario planning?

How does scenario planning work differently at the functional level?

How do I turn scenarios into action plans for my function?

Download the scenario planning template and guide and get ready for functional scenario planning.

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Guide to Scenario Planning for Functional Leaders

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Scenario planning is common at the organizational level to make strategic plans more robust and resilient. In today's uncertain times, scenario planning is equally critical at the functional level. Functional leaders who successfully incorporate scenario planning into their planning processes can make small but powerful changes to prepare their own teams to act on the risk and opportunities that come from volatility.

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Indicator Redefinition

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Lean Canvas

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Concise

Lean Canvas forces you to distill the essence of your product. You have 30 seconds to grab the attention of an investor over a metaphorical elevator ride, and 8 seconds to grab the attention of a customer on your landing page.

Effective

Whether you're pitching investors or giving an update to your team or board, our built-in presenter tools allow you to effectively document and communicate your progress.

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Lean Canvas forces you to distill the essence of your product. You have 30 seconds to grab the attention of an investor over a metaphorical elevator ride, and 8 seconds to grab the attention of a customer on your landing page.

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Value Proposition Canvas

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Value Proposition Canvas - Download the Official Template

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A simple way to clarify your customers jobs-to-be-done, pains and gains to design products and services they need and want. Works in conjunction with the Business Model Canvas.

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5S / Shitsuke

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Strategic Partnerships

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Strategy Roadmap

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A strategy roadmap describes the what and the why. An execution plan describes the how.

A strategy roadmap is not a visual Gantt chart of activities with start dates and end dates. It describes what the organization must change, and why the changes are required, in order to achieve the strategic vision.

An execution plan describes how the organization will deliver the outcomes described in the strategy roadmap. Often, an execution plan is represented in a Gantt chart with a specific timeframe, start and end dates, milestones, and resource allocation.

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What Is a Strategy Roadmap? How Is It Different to a Plan? | Jibility

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A strategy roadmap describes the what and the why. An execution plan describes the how. A strategy roadmap is not a visual Gantt chart of activities with start dates and end dates. It describes what the organization must change, and why the changes are required, in order to achieve the strategic vision.

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Student Contests

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Strategy Workshop

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Employee Playgrounds

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Opposite Thinking Canvas

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This is tool asks you to familiarize with the opposite side of things, to stretch the horizon of possibilities.

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SIP / Implementation Plan

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Multipart article

by Kate Eby on Dec 14, 2017

What Is an Implementation Strategy?

To gain an understanding of implementation strategy, we must first define a strategic plan. A strategic plan is the process of defining the strategy by which you (or a team or organization) will accomplish certain goals or make decisions. Organizations make strategic plans to guide organizational direction, a particular department's efforts, or any project or initiative.

Implementation strategy is the process of defining how to bring the strategic plan to life. To execute the objectives outlined in the strategic plan, you must define how you will implement each aspect, from funding and personnel to organization and deliverables. Therefore, without an implementation strategy, it can be difficult to identify how you will achieve each of your stated goals and objectives.

Top tips to help you save time and money on your next project.

What Is the Strategic Implementation Process?

The strategic implementation process is the concrete steps that you take to turn your strategic plan into the actions that help you accomplish your goals and objectives. By nature, there is no single, "correct" implementation process for any project or initiative; rather, the actual implementation steps you take will depend on the specific undertaking. Implementation tactics also vary based on the specific organization and goals.

A strategic implementation plan (SIP) is the document that you use to define your implementation strategy. Typically, it outlines the resources, assumptions, short- and long-term outcomes, roles and responsibilities, and budget. (Later on, we'll show you how to create one.) An SIP is often integrated with an execution plan, but the two are distinct.

The SIP outlines the activities and decisions necessary to turn the strategic goals into reality, and the execution plan is a schedule of concrete actions and activities to achieve goals and drive success. You can consider your strategy "implemented" once you determine that you have the requisite resources to meet your strategic needs, but you haven't "executed" until you've actually taken action and achieved objectives. You can read more about the differences between strategy, implementation, and execution in this article by the Harvard Business Review.

The strategic implementation process is often compared to the following activities:

Organizational Planning: Also called organizational design or organizational structure, this is the high-level process of identifying an organization's general operational goals and then building specific strategies to meet them. While strategic planning centers on evaluating an existing organization's strengths and weaknesses and identifying specific goals for improvement, organizational planning is more concerned with how specific tasks, processes, and decisions will flow within the organization.

Like implementation planning, organizational planning also requires you to create a plan of action. You can use a template to ease the process of writing this complicated plan. Throughout this article, you'll find other free, downloadable templates for a variety of different planning activities.
‌ Download Organizational Change Management Plan

Strategic Management Process: This is the ongoing effort to manage an organization, including both the decisions and actions that flow from the organizational strategy. Continuous strategic management can inform organizational planning by providing a strategy that outlines the organization's goals.

Change Management: Change management is how you prepare and manage organizational planning, from the high-level processes and culture down to individual roles. Effective change management involves strategy and careful monitoring so that you can plan for change rather than react to it.

Download Change Management Process Template

Word | PDF

Differentiated Planning: This is a reordering method that you can use to identify which resources you need based on the frequency with which you typically use them. Separate the items on your reorder list into three categories: routine, regular, and rare. This will give you a rough idea of the different demand levels for each resource, so you don't have to spend time considering whether or not to restock. Because identifying and accumulating resources is an important component of implementation planning, it's useful to understand differentiated planning.

Why Implementation Is Important

Implementation planning largely determines project success because without it, your strategic goals remain unactionable. Therefore, implementation is the necessary step that transforms your strategic plans into action to achieve your goals.

There are many examples where implementation planning heightens project success. In fact, the Harvard Business Review reported that companies with an implementation and execution plan saw 70 percent greater returns.

McKenzie says that implementation planning is critical to project success. "This is the stage which allows the planned strategy to be executed," he says. "The primary benefits to implementation and implementation planning are the abilities to outline the tasks needed to complete the project, identify the personnel and resources needed, and document the timeline for project completion to ensure you're meeting the strategic goals."

Hancock agrees. "If you don't implement your plan - you don't get anything done," she says. "So, implementation is crucial. [Even] if you have the best plan in the world, it's totally irrelevant if you don't put the plan into action," she adds.

The practice of implementation planning is also important in some of today's organizational shifts. Most notably, implementation plays a part in the current shift from reactionary to strategic companies - in other words, organizations that plan for change and adaptation rather than react to it. Additionally, implementation supports the movement toward employee-oriented organizations, which it does by valuing communication, encouraging mutually-supported goals, and emphasizing accountability. Implementation planning is necessarily a human (and team) endeavor and making it a part of your daily processes helps ensure collaboration, trust, and transparency among project team members all the way up to C-suite management.

What Is the Implementation Plan of a Project?

As mentioned, you can create an implementation plan for any organizational undertaking of any size or scope. Implementation is commonly used for discrete projects, technology deployment within a company, and inventory planning (this is an example where differentiated planning is helpful). You can even create an implementation plan for personal use (i.e., for career planning) if it will help you organize and take actionable steps toward your goal(s).

A project implementation plan is the plan that you create to successfully move your project plan into action. This document identifies your goals and objectives (both short and long-term), lists the project tasks, defines roles and responsibilities, outlines the budget and necessary resources, and lists any assumptions. A project implementation plan sometimes includes a rough schedule, but teams usually set the hard timeline in the execution plan.

In the following sections, we'll delve deeper into each component of an implementation plan and show you how to write your own.

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Components of an Implementation Plan

The following are the key components of and questions that drive a successful implementation plan:

Define Goals/Objectives: What do you want to accomplish? The scope of these goals will depend on the size of your undertaking.

Schedule Milestones: While task deadlines and project timelines will be formally set in the execution plan, it's a good idea to outline your schedule in the implementation phase.

Allocate Resources: One of the core purposes of an implementation plan is to ensure that you have adequate resources (time, money, and personnel) to successfully execute. So, gather all the data and information you need to determine whether or not you have sufficient resources, and decide how you will procure what's missing.

Designate Team Member Responsibilities: Assign roles. This doesn't necessarily mean you must define who will execute each individual task, but you should create a general team plan with overall roles that each team member will play.

Define Metrics for Success: How will you determine whether or not you are successful? What data (whether quantitative or qualitative) will you use to measure your results, and how will you accrue the necessary data?

Define How You Will Adapt: Make a plan for how you will adapt, if necessary, to changes in your plan. Be sure to consider factors outside your control that could significantly alter the schedule or success of your project, and create emergent strategies ahead of time, so you don't get derailed down the road - doing so helps build a culture of flexibility, agility, and fast action.

Evaluate Success: In addition to defining your metrics for success, decide how often you will evaluate your progress (e.g., quarterly reviews).

In the following section, we'll break down each element of a successful implementation plan to show you how to write one yourself.

How to Write an Implementation Plan

The steps involved in writing an implementation plan are straightforward, but the process is not quick or easy. Each section should be detailed, combining the information from your strategic plan and incorporating the necessary research and data that makes your objectives actionable. In this section, we'll provide an ordered tutorial for writing each component in an implementation plan.

Introduction: The introduction of your implementation plan explains the purpose, vision, and mission statement of your project or initiative. You should identify the high-level risk areas, include any assumptions, and describe how you will identify the value stream in your proposed work.

Management Overview: In this section, you describe how implementation will be managed. This includes who is managing it, the underlying roles and responsibilities, and key points of contact. You should identify the strategy director, who is the person that develops and steers the strategy (this may or not be the same person who is leading implementation).

Major Tasks: This is where you list and describe the specific tasks, actions, and targets in implementation. You should also note the status of any tasks that are already in progress.

Implementation Schedule: You do not need to create a detailed, inflexible task schedule in your implementation plan - we'll talk later on about how to create a schedule in the execution plan. At this stage, it's appropriate to simply list the task order and predicted phase durations to roughly outline and allot for all the many moving pieces.

Security and Privacy: Discuss the privacy features and considerations of the software tools, processes, or information that you may use in implementation. Address security issues and how to handle sensitive information (personal data, medical history, financials, etc.).

Implementation Support/Resources List: Describe the various tools, activities, and departments that you require to support successful implementation. These might include hardware or software tools, facilities, and additional external human resources or services.

Documentation: In this section, you must attach any other documentation that supports your implementation plan. This could include your strategic plan, confirmation of adequate materials and resources, and a history of past successful projects.

Monitoring Performance: Define the metrics by which you will measure success. How and when will you review your progress?

Acceptance Criteria: How will you define implementation "completion?" This differs from performance monitoring because rather than defining metrics for milestones and appropriate implementation, here, you describe how you will know when you have buy-in from management on your implementation plan.

Glossary: Define any key terms used in your implementation plan.

References: Indicate where you received your information, or list people who support your plan.

Project Approval: If you need management's approval before moving into execution, this section provides space for official signoff.

To make it easy, you can also use a template to write your implementation plan. This will ensure that you don't overlook any steps or sections and also provide a professional layout that you can use to deliver to management, clients, or other stakeholders. Download the template for free, and edit the fields to fit the needs of your specific project - for example, for enterprise resource planning (ERP).
‌ Download Project Implementation Plan Template - Word ‌ Download Software Systems Implementation Plan Template - Word
Software deployment is another common category of initiative that merits an implementation plan. Use the following template to create a software and systems implementation plan.

Implementation Planning Best Practices

Although you should include all the detailed aspects listed above in your implementation plan, simply having all these components will not ensure success. Instead, you should focus on the process of implementation and foster the following behaviors within your team:

Create a Designated Implementation Team: An implementation team is the team responsible for ensuring successful implementation of a particular initiative. While it's possible to move through implementation without creating a specific, organized body to oversee the processes, doing so heightens your chances of success.

Create a Shared Vision among All Team Members: Establish "why" you are making strategic changes so that team members have both a greater understanding of the root cause and a deeper connection to their work. Ensure individual compliance, so people don't feel like their voices went unheard. Adler emphasizes, "Involve the people who will actually be implementing the change during the planning phase. Ideally, the idea will even come from them. This inclusion greatly increases the buy-in and commitment that the team has to actually getting the project implemented."

Choose a Strong Team Leader: The team leader should coach and educate team members along the way and seek out guidance from past implementation plan leaders to improve upon existing implementation processes within the organization. Adler explains that there can be multiple team leaders with slightly different responsibilities: "Each initiative needs a team. The team includes a 'champion,' someone who is ultimately responsible for getting the thing done. They should also have a 'management sponsor,' someone that can help the team get through any blocks they might have," she says.

Define Actionable Goals: Stay specific, define current issues, and identify root causes. Methods for defining current problems include brainstorming, surveys, and new member information forms. You can also use the note card method: Ask each team member to answer three questions anonymously (What is the single biggest issue facing our team?, What will be the most important issue in five years?, What is the best way for our team to be involved in these issues?), separate the cards into piles with similar answers, and count which answers are the most common within the group. Use the highest ranking similar answers to stimulate discussion of how to proceed.

Create an Action-Oriented Plan: Regardless of the size or predicted duration of your goals, create a plan focused on incremental action (rather than on continual planning). Small steps add up, so stay positive and focus on the future. That said, Hancock reiterates that your plan must be realistic: "Make sure your plan is reality-based," she says. "You need to know what problem you really should be solving so that you don't end up solving proxy problems (problems you think are your problem but really aren't - an example of this is praying for rain when your real problem is that you need water on your field). You need to know what is really going to impact your problem so that you don't pray for rain, which doesn't affect anything. And, finally, you need to know what you really need to do to get the work done. What resources do you need? Do you have the resources you need? Can you get the resources you need? If not, your plan won't work" she continues.

Value Communication: The team leader should not only value others' input, but also make active participation an expectation. Open, honest communication keeps processes transparent and helps generate new ideas.

Continually Monitor Incremental Success: Perform analysis and hold regular progress meetings to analyze your development. Closely monitoring your progress enables you to make adjustments before crisis hits and allows you to adapt before processes or expectations become solidified. Additionally, treating incremental milestones as successes helps foster a culture where employees feel valued for their contributions. Adler explains, "Building a culture where employees expect that projects will be successfully implemented is important. Celebrate successes and reference previous projects frequently."

Involve the Correct People at the Correct Times: This includes defining when and why it is appropriate to involve upper management. As McKenzie says, "Include the critical stakeholders that are part of the project. The beginning of planning should only include the decision makers and not every team member that is part of the project. Outline the critical tasks that are needed first. Once the tasks are outlined, dictate the personnel who will be responsible for the tasks. Once you identify the personnel, then bring in the additional resources to find what other tasks are needed to complete the larger tasks. To draft a proper implementation plan, it is imperative to include the critical stakeholders to outline the initiative."

Publicize Your Plan: While you don't necessarily want every stakeholder's input at all times during implementation planning, you do want to maintain transparency with other teams and management. Make your plan available to higher-ups to keep your team accountable down the line.

Difficulties in Implementation Planning

While implementation planning is critical to successful execution, there are several hurdles:

Unless you are disciplined about moving into the execution phase, you can get stuck in planning and never get your project off the ground.

In any project, you may struggle to gain buy-in from key stakeholders.

It can also be difficult to break down every goal into an actionable step. If you keep your goals tangible, you can more easily identify targeted actions that will move you toward them.

No matter how well you plan, all projects have a high propensity for failure. Don't get discouraged, though - dedicated, strategic implementation planning will raise the likelihood of project success.

Although the above hurdles can be time-consuming and tedious, they are investments that will help you create a culture of trust. Because implementation is an ongoing team effort, you can't afford to lack buy-in and commitment from any member of your team or direct stakeholders. So, communicate often and honestly, and prioritize teamwork when implementing your strategic plan.

Still, even though inclusion and teamwork are key to a successful strategy, McKenzie reiterates that implementation planning won't work if too many people are involved. "Implementation planning often gets derailed due to the input from various people that are not involved in the project," he says. "There needs to be a clear line between the implementation team who is responsible for the execution and final project completion and the customers, internal or external, who are the recipients of the project. The customers can outline their requirements, but the implementation, tasks, and deliverables should be guided by the implementation team," he concludes.

Adler explains that another common mistake is taking on too much at once. "It takes a lot of work to get something significantly new implemented," she notes. "For this reason, the fewer initiatives the business takes on simultaneously, the greater the chances of success. Each initiative will take its team members away from their 'normal' work to some degree, and the business needs to be able to support this. If there are six things the business wants to implement, it is better to take on one or two at a time than to try to tackle all six at once," she points out.

Tools for Successful Implementation Planning

While the implementation plan itself can be a relatively low-tech document, software tools can help you track and manage your progress. In this section, we'll discuss some popular tools for implementation planning and their benefits.

A Gantt chart is a graphical bar chart that you can use as a project timeline, and many software programs exist that allow you to create these online charts. As you move from implementation to execution, a Gantt chart can help you track individual task progress, see relationships among tasks, and identify critical or at-risk tasks.
‌ Download Basic Gantt with Dependencies Template
You can use a PERT (program evaluation and review technique) chart to forecast project duration by creating a timeline for individual tasks and identifying dependent tasks. PERT requires you to forecast three separate timetables - the shortest possible, the most likely, and the longest possible - which forces you to stay flexible in your planning, so you can adapt your schedule as factors inevitably change over the course of a project.

When you have successfully implemented your plan, you're ready to move to project execution. Execution planning and monitoring is outside the scope of this article, but below you'll find more helpful templates to move your project toward successful completion.

Download General Action Plan Template

Excel | Smartsheet

Download Monthly Gantt Chart Project Schedule

Excel | Smartsheet

Download Project Charter Template

Excel | Word | Smartsheet

Advancements in information and communication technology (ICT) have led to the development of cloud-based software that allows for anytime, anywhere access and multiple users. This technological capability is especially helpful for group work, in which multiple team members need to access a certain file simultaneously while also avoiding version control issues. For example, organizations commonly use cloud-based software to create a project management system or performance management system.

Using software to manage your implementation plan can provide the following benefits:

Drive Accountability: By creating a single record of project progress, you build transparency (both in team members and processes) and reliability.

Keep Everyone up to Date: All users can access the most current information, which, in turn, cuts out unnecessary communication or erroneous double-work.

Improve Flexibility: Project management software can help you identify bottlenecks and potential problems early on, so you are able to adapt in anticipation. If you are attempting Agile project management, flexibility is crucial.

Support Organizational Commitment: Using a software tool often provides the transparency necessary to get executives to support your project. Once they have visibility into processes and progress, they will be more likely to grant the buy-in you need to procure resources and succeed.

When deciding which tool to use, consider the following:

Buying Tools vs. Developing Software Internally: This will depend on the capabilities and availability of your in-house developers as well as on your budget. Additionally, consider whether or not you have the bandwidth to engage with a vendor and maintain the relationship over time.

Open Source vs. Free vs. Subscription: Open source software provides a great opportunity for organizations with limited budgets and development resources to build on top of the existing open platforms. There are also many free programs available (not open source). However, be wary that free options may have limited functionality. For organizations with larger budgets and a greater need for powerful functionality, most paid platforms bill on a subscription basis.

Usability Requirements: Consider your team's skill level. While you might be drawn to a tool with fancy functionality, it will be pointless (and perhaps even detract from project success) if it is too difficult for your team to use or learn.

Ultimately, software tools are a fantastic way not only to elevate the accuracy of tracking project metrics and progress, but also to save time, build flexibility, and stimulate communication among your team.

Improve Implementation Efforts with Smartsheet

Once you've created your implementation plan, you'll need a way to consistently monitor and track progress against your plan. One way to accomplish this is with a tool that enables you to track and manage schedules, resources, and tasks in one location. Smartsheet is a work management and automation platform that enables enterprises and teams to get from idea to impact fast. Top project management leaders rely on Smartsheet to help align the right people, resources, and schedules to get work done.

Use Smartsheet to create consistent project elements, increase speed, and improve collaboration with scalable options that fit individual work preferences. Hold yourself and your team accountable, improve visibility into team priorities, and ensure nothing slips through the cracks.
Try Smartsheet for Free

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From Strategy to Execution: How to Create a Sustainable, Repeatable Implementation Plan

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by Kate Eby on Dec 14, 2017 To gain an understanding of implementation strategy, we must first define a strategic plan. A strategic plan is the process of defining the strategy by which you (or a team or organization) will accomplish certain goals or make decisions.

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Product Mash-Ups

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Fishbein Analysis

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Fishbein model of consumer behaviour (also called theory of planned behavior or theory of reasoned action) attempts to explain the rationality of choice of the product by the consumer by using measure of his overall attitude towards object. This model helps to understand consumer decision making process and suggest different ways to influence it.

Description of Fishbein Ajzen model variables

Fishbein model distinguishes three basic variables:

customer attitude towards particular object (\(A_o\)),

beliefs that this object has certain attributes (benefits, values, features), it is result of prior knowledge, advertising, etc. (\(B_i\)).

subjective evaluation of this attributes and positive outcomes, benefits from acquiring this object (\(E_i\)).

Symbolically, above variables can be presented in following formula\[A_o = \sum_{i=1}^{n} B_i E_i\]

Attitude of the customer leads to particular behavioural intentions towards object (products, people, companies, and other things about which people hold their beliefs and attitudes). This behavioural intentions usually proceeds particular action (most important for marketers is off course action of buying product from particular company).

Extended Fishbein Ajzen attitude model

This version of model is often called: Theory of Reasoned Action and includes following variables:

overt behaviour (act of actual purchase) towards object (product, service, company),

behavioural intentions resulting from attitudes and beliefs \(B_i\),

attitude about particular behaviour \(A_b = b_i e_i\), where \(b_i\) - beliefs about consequences of this particular behaviour, and evaluation of this consequences \(e_i\).

subjective norms professed by customer \(SN = NB_j MC_j\), where \(NB_j\) are normative beliefs, stemming from social learning, family, etc. (what other thinks about behaviour, object) and \(MC_j\) represents customer motivation to comply to this social norms and pressures.

subjective weights assigned by customer to above mentioned components of the model (\(w_1, w_2\))

Symbolically, extended Fishbein Ajzen model can be presented as on fig. 1. and using following formula\[B \approx B_i = w_1 A_b + w_2 SN\]

Building attitudes in Fishbein and Ajzen model

There are several methods of building attitudes toward specific objects (products, companies):

References

Ajzen, I., & Fishbein, M. (1977). Attitude-behavior relations: A theoretical analysis and review of empirical research. Psychological bulletin, 84(5), 888.

Ajzen, I., & Fishbein, M. (1973). Attitudinal and normative variables as predictors of specific behavior. Journal of personality and Social Psychology, 27(1), 41.

Fishbein, M., & Ajzen, I. (1972). 23.020172.002415 Attitudes and opinions. Annual review of psychology, 23(1), 487-544.

Theory of reasoned action on Wikipedia.

Author: Krzysztof Wozniak

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Fishbein model of consumer behaviour (also called theory of planned behavior or theory of reasoned action ) attempts to explain the rationality of choice of the product by the consumer by using measure of his overall attitude towards object. This model helps to understand consumer decision making process and suggest different ways to influence it.