7 Unintended Barriers to Innovation

I’ve worked in several orgs at Microsoft over the years that managed portfolios.

I’ve seen how different leaders managed their portfolios.

Some leaders unleashed innovation, while other leaders unintentionally drove innovation out of the portfolio.

They didn’t even realize it.

It’s a byproduct of enforcing portfolio management best practices.

In the article Find Pearls and Drive More Innovation in Your Portfolio, David Matheson frames the challenge really well.

The good news is awareness if half the bottle.

Once you realize how you’re potentially blocking or limiting innovation, you can take deliberate steps to adjust your approach and create a portfolio environment that actively encourages and supports innovation.

This shift can help drive the development of groundbreaking ideas, foster a culture of creativity, and ultimately lead to a more successful and adaptable organization.

7 Unintended Barriers to Innovation from Common Portfolio “Best Practices”

Here is how Matheson summarizes the consequences of common portfolio management best practices and how they can limit innovation efforts:

Portfolio Management “Best Practice”	Unintended Barrier Against Innovation
Stage Gate process	1,000 ways to say “no”
Hold people accountable to results	People lower aspirations
Make and follow plans	Focus on activity, stay in comfort zone
Mitigate risk	Distracts people from developing the upside
Business case analysis	Lowers credibility of innovative projects
Get the data	Favors “me too” and bread and butter projects
Start with strategy	Incrementally extends the past into the future

When I reviewed Matheson’s table, I could instantly relate.

I’ve experienced the unintended barriers against innovation hundreds, if not thousands of times.

I think if more leaders were aware of the consequences, then they could at least make more conscious choices.

With that in mind, let’s step into each of the portfolio management best practices that can unintentionally undermine your innovation efforts…

1. Stage Gate process

The Stage Gate process is a widely accepted approach used to manage and evaluate projects or initiatives at various stages throughout their lifecycle.

The process is designed to help organizations make informed decisions about which projects to prioritize, continue, modify, or terminate as they progress through different phases.

Unintended barrier to innovation:

1,000 ways to say “no”:

• When organizations implement the Stage Gate process rigidly, they often require stringent criteria for project advancement.
• This leads to numerous stages and gates where ideas must meet specific criteria for approval, creating many opportunities for rejection.
• As a result, teams find themselves with a multitude of reasons to say “no” to innovative ideas, hindering their progress.

2. Hold people accountable to results

Holding individuals accountable for achieving results is a practice aimed at ensuring performance and goal attainment.

Unintended barrier to innovation:

People lower aspirations:

• When people are held accountable solely for results, they may become risk-averse and avoid pursuing innovative ideas that carry uncertainty.
• The fear of falling short of objectives can lead individuals to lower their aspirations, focusing on safer, more predictable endeavors rather than pushing boundaries.

3. Make and follow plans

Creating detailed plans is a common approach to guide projects and initiatives, providing a structured path forward.

Unintended barrier to innovation:

Focus on activity, stay in comfort zone:

• Overemphasis on planning can lead to a mindset where the plan becomes the primary focus, and individuals may resist deviating from it.
• This can discourage innovation because people are more inclined to stay within their comfort zones, following the pre-established plan rather than exploring novel approaches.

4. Mitigate risk

Risk mitigation is a fundamental practice aimed at identifying potential risks and taking actions to minimize their impact.

Unintended barrier to innovation:

Distracts people from developing the upside:

• While risk mitigation is crucial, an excessive focus on risk can distract individuals from identifying and seizing opportunities.
• Innovation often requires taking calculated risks, but an overemphasis on risk mitigation can divert attention away from developing the upside potential of new ideas.

5. Business case analysis

Business case analysis involves evaluating the feasibility and potential returns of a project before committing resources.

Unintended barrier to innovation:

Unintended Barrier Against Innovation: Lowers credibility of innovative projects:

• When organizations demand rigorous business case analysis for all projects, innovative ideas without a well-established business case may struggle to gain support.
• This practice can lower the perceived credibility of innovative projects, making it difficult for them to secure the necessary resources and sponsorship.

6. Get the data

Collecting data and relying on empirical evidence is considered good practice to inform decision-making.

Unintended barrier to innovation:

Favors “me too” and bread and butter projects:

• Overreliance on data can favor projects that are based on historical data and align closely with existing offerings (“me too” or incremental improvements).
• Truly innovative ideas may lack historical data, making it challenging to gather sufficient evidence to support their potential.

7. Start with strategy

Aligning initiatives with the organization’s strategy is a common best practice to ensure that resources are allocated effectively.

Unintended barrier to innovation:

Incrementally extends the past into the future:

• When organizations prioritize initiatives that align closely with existing strategy, they may miss opportunities to explore disruptive innovations.
• This can result in an incremental extension of past approaches into the future, hindering the organization’s ability to adapt to evolving markets and customer needs.

How To Address the Unintended Barriers to Innovation?

A helpful solution to address the unintended barriers to innovation is to implement a more flexible and adaptive portfolio management approach that allows for innovation while maintaining core best practices.

Here are some key steps and strategies:

1. Create a Dedicated Innovation Portfolio: Establish a separate portfolio or segment within the portfolio specifically dedicated to innovation projects. This provides a space where innovative ideas can be nurtured without the strict criteria of traditional projects.
2. Set Different Criteria for Innovation: Define criteria for evaluating innovation projects that differ from those used for traditional projects. Instead of focusing solely on ROI or business case analysis, consider criteria like strategic alignment, market potential, and customer impact.
3. Implement Agile and Lean Practices: Incorporate Agile and Lean principles into the innovation portfolio. These methodologies emphasize iterative development, quick feedback, and adaptation, allowing for faster experimentation and learning.
4. Encourage Experimentation: Create a culture that encourages experimentation and risk-taking. Recognize that not all innovation initiatives will succeed, but each failure provides valuable insights for future endeavors.
5. Diversify Resources: Allocate resources, both financial and human, to support innovation initiatives. Ensure that teams working on innovation projects have the autonomy to explore and iterate without excessive bureaucracy.
6. Embrace Open Innovation: Collaborate with external partners, startups, or industry experts to bring fresh perspectives and ideas into the innovation portfolio. Open innovation can expand the pool of innovative concepts.
7. Continuous Evaluation and Learning: Regularly review and assess the progress of innovation projects. Use metrics that focus on learning, adaptation, and customer feedback rather than just financial outcomes.
8. Celebrate and Learn from Failure: Create a culture that views failures as opportunities for learning and improvement. Encourage teams to share their experiences, both successes and setbacks, to foster a culture of continuous improvement.
9. Support Innovation Champions: Identify and empower individuals within the organization who are passionate about innovation. These “innovation champions” can advocate for innovative ideas and help drive them forward.
10. Senior Leadership Buy-In: Ensure that senior leadership is aligned with the importance of innovation and is willing to support innovative initiatives. Their commitment and support can significantly impact the success of innovation efforts.

By implementing these strategies and adapting portfolio management practices to accommodate innovation, you can effectively address the unintended barriers that often limit creative and forward-thinking projects.

This approach allows you to explore new ideas while still maintaining accountability and alignment with strategic objectives.

Recognize Your Unintended Barriers to Innovation

By consciously modifying portfolio management practices, you can actively encourage and support innovation efforts.

It’s important to understand that while these best practices are valuable in many contexts, you need apply them thoughtfully to avoid unintentional consequences.

Balancing structure and flexibility, risk management, and strategic alignment with an openness to innovation can lead to a portfolio that can thrive where adaptability and creative thinking keep up with the market.

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