The worst thing you can do about the future is be surprised by it. That’s why your opportunity portfolio must be balanced according to risk.
A balanced enterprise rarely falls victim to unpleasant surprises. That’s because they address and fine-tune balance in a thoughtful, conscious, and strategic way.
The best way to measure balance is to monitor the number of high risk vs. low-risk projects in play. A company needs to assess its appetite and ability to invest in high-risk projects and the proportion of risk in relation to other projects.
Exploring high-risk projects
Risk taking will bring insights into the organization that will help the whole pipeline. It’s shortsighted to only invest in low risk projects. Considering and investing in all levels of risk will bring value to the organization even if it doesn’t deliver exactly the way it’s designed.
Higher risk opportunities are deemed such because we need to explore the opportunity. We’re working with less information, and as we get more details and become better informed, the risk is reduced.
Often that information is of value to other opportunities. In a competitive sense, an organization is learning things it wouldn’t have if it didn’t take the risk.
Balance also is measured by the difference between projects in total alignment with current strategy and those on the periphery of strategy. We call these peripherals wild cards. They’re different from risk because the consideration is based on an organization’s current strategic direction.
A consumer packages client of mine is interested in wild-card innovations because they create opportunities to grow existing lines and expand outside industries it services. Organizations grow when they’re able to create new channels in new places.
The key is to balance the pipeline of opportunities that relate to today’s core business, those on the peripheral of the core business, and those considered breakthrough. Each of them delivers value in their own way and requires different resources and energy.
Timing also is important. You don’t want all of the opportunities in your pipeline to hit the marketplace at the same time. Innovation projects should be well-timed to avoid gaps.
Most enterprises know that putting all of their eggs in one basket doesn’t work. But not all enterprises can say their portfolio is balanced enough to eliminate surprises. Can you?
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