Exploit Upside Factors
- For each factor, identify issues that drive upside and downside.
- Assess the quantitative range on each. Create a tornado diagram.
- Focus attention on the top uncertainties–create ideas on how to drive upside (and avoid downside).
- Initiate test projects around these ideas.
- If one succeeds, pivot main projects and drive upside.
Participants in the session saw exploiting upside factors generally and the tornado diagram specifically as a valuable complement to plans and budgeting. They said it would help drive alignment on risks and upsides and by providing this visibility, prepare people to pivot, and shift resources as a project evolves.
Dynamic Portfolio Focus
Not all projects have equal potential, but each one gets a share of management attention. Sometimes the upside of a simple project is bigger than many other projects combined, yet it is difficult to shift focus to this opportunity.
This tool compares the valuation ranges of the various projects in the portfolio. It takes the overall valuation of each project as calculated with the tornado chart and stacks them against each other. This gives a simple visual comparison of their upside potential and downside risk.
Though the bars are ranked in order of expected NPV (the small white line in each bar), that doesn’t mean that they are ranked in order of desirability or priority. A bar that extends further to the right than the one above it may be a better opportunity because of the higher potential for upside growth.
Coupled with the sensitivity analysis from the tornado charts, the project valuation chart helps the portfolio manager construct an upside exploitation plan for the portfolio as a whole. Session participants saw Dynamic Portfolio Focus as a valuable approach to limiting downside risk and pinpointing upside potential across an entire innovation portfolio.
- Understand range of potential value for each project.
- Focus attention and resources on ones with the biggest upside (note: these may not be the ones with the biggest base promise) and invest in upside exploitation plans.
- Increase resources to the big upside projects.
- Decrease resources to low potential projects (or cancel them outright).
- Repeat periodically as you learn more and gain better information (no full-life funding).
Profitable Pivots at MindXchange
- Exploit Upside Factors
- Dynamic Portfolio Focus
- Shift Portfolio Mix
- Learning Plans