Adapt to Win

Chapter 13Innovation Portfolio Management and Innovation Ecosystems

Directed Innovation

There’s an old saying that to support innovation, organizations should “scatter a million seeds, so a thousand flowers may bloom.” That’s a great way to create a field full of nasty weeds. The only flowers the company wants to fertilize, water, cultivate, and harvest are the flowers that help realize the company’s strategic objectives. Everything else is waste.

The current state of corporate innovation investment is not well directed, as exemplified by artificial intelligence (AI) investment. The recent excitement about AI has driven most large companies to sponsor AI initiatives, often consuming tens of millions of dollars, with little more direction than “Go find some AI stuff to do with AI!” Not surprisingly, a recent MIT study found that 95% of generative AI pilot projects fail.¹

Organizations that take innovation seriously invest in creating an innovation ecosystem that can effectively sponsor and direct both the front end and the back end of innovation to maximize corporate returns from innovation investments. The front end of innovation is the stage where the organization is attempting to generate a large inventory of ideas to explore. The back end of innovation winnows down that inventory of ideas to identify the ideas that are viable and aligned with the strategic objectives of the firm. It also encompasses integrating promising innovations into the larger firm in a way that ...