Opportunity Cost vs. the Cost of Opportunities
By David Matheson
5 min read
One of the biggest factors in valuation of an innovation portfolio is opportunity cost. Unless you have sufficient management bandwidth, technical capability, time, and money to execute every idea in your innovation portfolio, you will only be able to fully pursue some of the projects. The remaining projects will either be set aside completely or, worse, be underfunded and understaffed, never getting the resources necessary to reach either success or failure. It’s usually straightforward to understand the cost of opportunities you pursue, but sometimes you can lose sight of the opportunity cost of the portfolio choices you make.