It is not uncommon for companies to be working on many innovation projects simultaneously. However, making sure that your strategic priorities are reflected under tight resource constraints is not always easy. Often times, quick and easy projects can be prioritized over longer reach projects – even though the more radical innovation projects can be important to the long term survival of your company. There are many examples of large companies getting caught in this trap. It can also be tricky to assign priorities to projects that are so different, because classic project valuation tools, like NPV, are not well suited for evaluating radical innovation projects.
The Strategic Buckets framework is a great tool for making sure your resource allocations reflect your strategic priorities and keeping a firewall between different types of innovation projects. Once you have determined your innovation portfolio, define strategic buckets that reflect your strategy. The strategic buckets should group common projects and can have names like ‘Continuous Improvements’ or‘New Technology Platforms’. Allocate resources to each bucket and assign all of the projects in your innovation portfolio to a bucket. Within each bucket, it is much easier to prioritize your projects, because they have many similar characteristics. Using the resource budget assigned to each, begin allocating resources at the top of the priority list. Once you run out of resources, you know you cannot take on any more projects. You can also be assured that all the different parts of your portfolio are properly resourced.