The Handbook of Technology and Innovation Management

7.4. Lessons from the Field

The preceding discussion has critiqued the various models and methods proposed in the literature for project and portfolio selection at a high level. However, a deeper exposure to the problems raised by particular managerial contexts and the practices that have evolved as a result of these contexts can provide useful insights into the challenges facing future researchers in this arena. In this respect, we identify two specific contextual cases that raise challenges to existing theory, and use qualitative data from industry interviews to highlight firms' approaches to dealing with these challenges.

7.4.1. Environments with high uncertainty over project outcomes

In industries characterized by high uncertainty over the outcome of individual projects, the application of existing project evaluation and portfolio management techniques proves problematic. This problem is particularly striking in industries where there is no clear understanding of the causal model linking a product's design to its performance in the marketplace. For example, both the movie industry and the video game industry exhibit such characteristics. In these industries, the distribution of returns is highly skewed; the result is that a few successes (or 'hits') have to pay for a large number of failures (see De Vany, 2004; MacCormack et al., 2004). Furthermore, there are few proven 'ingredients' to increase the chances that a project will succeed. For example, although a 'star' director ...