Portfolio Impact Assessment

Purpose

Evaluate each A1.5 candidate not only on individual merit but on its effect on the overall innovation portfolio: capacity utilisation, core / adjacent / transformational balance, dependency integrity, and strategic theme coverage.

This method prevents the most common portfolio pathology: approving individually strong cases until the portfolio is overloaded, unbalanced, or strategically incoherent. A need scoring 14/15 strategic fit may still warrant Defer if the portfolio is at capacity or already saturated with similar initiatives.

When to Use

Use portfolio impact assessment when:

• Any A1.5 validation requiring governance approval—portfolio impact should be standard business case content
• Portfolio utilisation exceeds 70% of capacity—every new approval has displacement consequences
• Initiative is adjacent or transformational— affects portfolio balance targets (70/20/10)
• Initiative has dependencies on existing portfolio projects (shared platforms, prerequisite deliverables, shared team members)
• Multiple A1.5 candidates compete for same governance cycle—relative portfolio value must be compared

Do NOT use when:

• Organisation has no formal portfolio management (I1)—portfolio assessment requires baseline data; recommend establishing I1 first
• Initiative is fully self-contained with no portfolio interaction (own budget, own team, no dependencies)—rare in practice
• Portfolio is well below capacity (textless50% utilisation)—light-touch check sufficient (“capacity available: yes”)

Sample Size and Duration

Participants: 1–2 people

• Essential: Innovation Manager (analysis and summary preparation)
• Recommended: I1 Portfolio Manager (data provision, validation, dependency knowledge)

Duration:

• Light-touch (portfolio well below capacity, no dependencies): 1 hour
• Standard (moderate utilisation, some dependencies): 2–3 hours
• Complex (near-capacity, multiple dependencies, trade-offs required): 4–6 hours (may require I1 meeting)

Prerequisites

• I1 portfolio data (current): Active project list with budget allocation, FTE assignment, timeline, and status—data must be 1 month old
• Portfolio balance targets: Defined core / adjacent / transformational split (typically 70/20/10)
• Capacity model: Total available budget, FTE, and functional support hours for innovation portfolio
• Business case resource requirements: From Method: Structured Business Case Development (the referenced method), Step 4
• Participants: Innovation Manager (analysis), I1 Portfolio Manager (data and validation)
• Time: 1–3 hours (see Sample Size and Duration)

Complete Procedure

Step 1: Capacity Check (30–45 minutes)

Assess whether the organisation can absorb this initiative without overloading existing commitments :

1. Query I1 for current portfolio utilisation: itemize
2. Budget: % of total innovation budget allocated to active projects
3. FTE: % of total innovation FTE assigned
4. Functional load: key bottleneck functions (IT, Legal, Regulatory)—% utilised itemize
5. Calculate incremental capacity required by this initiative (from business case resource section)
6. Determine post-approval utilisation: current utilisation + new initiative = X%
7. Decision: itemize
8. ≤85%: capacity available—proceed
9. 85–100%: capacity constrained—identify which existing project(s) could be deferred or reduced to create headroom
10. >100%: capacity exceeded—approval requires explicit de-prioritisation or capacity expansion; document trade-off itemize

Step 2: Balance Check (20–30 minutes)

Assess impact on portfolio balance using 70/20/10 framework :

1. Classify this initiative: core, adjacent, or transformational innovation
2. Calculate current portfolio balance: itemize
3. Current: e.g., 75% core / 18% adjacent / 7% transformational
4. Target: e.g., 70% core / 20% adjacent / 10% transformational itemize
5. Calculate post-approval balance: what shifts if this initiative is added?
6. Decision: itemize
7. Moves toward target: positive signal
8. Moves away from target: flag for governance—approval exacerbates imbalance
9. Example: portfolio already 78% core; approving another core initiative moves to 80%—governance should prioritise adjacent / transformational candidates instead itemize

Step 3: Dependency Check (20–30 minutes)

Map initiative dependencies on existing portfolio :

1. Identify dependencies on existing portfolio projects: itemize
2. Shared platforms or infrastructure
3. Prerequisite deliverables (Project B must complete before this initiative can proceed)
4. Shared team members or functional resources itemize
5. Assess dependency health: is the prerequisite project on track? If delayed or at risk, what is the impact on this initiative's timeline?
6. Identify reverse dependencies: does approving this initiative create new dependencies for existing projects?
7. Flag risks: document dependency assumptions and escalation triggers

Step 4: Strategic Theme Coverage (15–20 minutes)

1. Check whether this initiative reinforces an existing strategic theme in the portfolio (clustering amplifies learning and impact) or opens a new theme (spreading resources)
2. Count active initiatives per strategic theme: itemize
3. Theme with 3+ initiatives: adding another may create redundancy—check for overlap
4. Theme with 0–1 initiatives: adding builds critical mass—positive if theme is priority itemize
5. Check for duplicate efforts: is another team already exploring the same or overlapping need?

Step 5: Prepare Portfolio Impact Summary (30–45 minutes)

Create a single-page summary (or slide) for the business case and governance presentation:

Quality Criteria

Excellent portfolio impact assessment demonstrates:

1. Current data: Portfolio snapshot 1 month old; utilisation quantified (not “manageable”)
2. Capacity quantified: Before/after utilisation shown for budget, FTE, and key bottleneck functions
3. Balance assessed: Core / adjacent / transformational classification and shift documented against 70/20/10 targets
4. Dependencies mapped: Prerequisite projects identified with health status and risk flags
5. Trade-offs explicit: If capacity constrained, specific de-prioritisation options named (not “we'll manage”)
6. Theme coverage checked: Clustering vs. spreading implications noted

Theoretical Foundation

Seminal references:

• : Landmark study establishing that new product portfolio management requires three simultaneous evaluations: strategic alignment (does each project fit?), portfolio balance (is the mix right?), and value maximisation (is aggregate return optimised?). Demonstrated that organisations evaluating projects individually without portfolio context systematically overcommit resources and produce unbalanced portfolios. Introduced the strategic buckets method for resource allocation across innovation types.
• : Foundational portfolio theory demonstrating that optimal portfolios are selected based on risk-return profiles of the aggregate, not individual assets. While developed for financial portfolios, the core insight—diversification across risk profiles produces superior aggregate outcomes—directly applies to innovation portfolios where core (low risk, low return), adjacent (moderate risk, moderate return), and transformational (high risk, high return) projects must be balanced.
• : Introduced the aggregate project plan, showing that organisations must manage the portfolio of projects as a system, not individual projects in isolation. Key insight: resource capacity is the binding constraint—approving projects without capacity verification produces universal under-resourcing and portfolio-wide delay.

Contemporary references:

• : Established the 70/20/10 framework (core / adjacent / transformational allocation) based on empirical analysis of innovation portfolio performance across multiple industries. Provides the specific balance targets used in Step 2 of this method.
• : Updated portfolio management research with evidence from 200+ firms, confirming that portfolio overload remains the dominant pathology (average firm has 2–3× more projects than resources can support) and introducing pipeline management and capacity-based kill decisions as remedies. Directly informs the capacity check logic in Step 1.
• : Extended the 70/20/10 model with implementation guidance for governance bodies, showing how to track portfolio balance dynamically and when to rebalance. Influences the portfolio impact summary format in Step 5.

Challenges and Solutions

Challenge 1: Stale Portfolio Data

Symptoms:

• I1 data is 3+ months old; actual utilisation unknown
• Approval granted based on outdated capacity assumptions; portfolio overloads

Solutions:

• Require I1 portfolio snapshot 1 month old for any A1.5 submission
• If I1 data unavailable, estimate from project status reports and flag uncertainty to governance
• Recommend I1 process improvement if data staleness is chronic

Challenge 2: No Willingness to De-Prioritise

Symptoms:

• Portfolio at 95%+ capacity; governance approves new initiative without removing anything
• All projects under-resourced; none succeed

Solutions:

• Make trade-off explicit in portfolio impact summary: “Approving this requires deferring Project X or Y”
• Present alternative: “Approve 20 projects, resource adequately, succeed on 12 (60%) vs. approve 50, resource inadequately, succeed on 3 (6%)”
• Escalate to B1 if governance chronically refuses trade-offs—signals strategic over-commitment

Challenge 3: Balance Targets Undefined

Symptoms:

• No agreed core / adjacent / transformational targets
• Balance check impossible; all cases evaluated individually

Solutions:

• Use industry benchmark (70/20/10) as starting point; note it is provisional
• Flag to I1 and B1 that balance targets need formal definition
• Still assess: describe current balance even if target undefined—governance can judge qualitatively

Relationship to Other Methods

Portfolio Impact Assessment receives input from:

• I1 Portfolio Management: Current portfolio data (utilisation, balance, dependencies)
• Structured Business Case Development (the referenced method): Resource requirements (budget, FTE, timeline)
• Scenario-Based Financial Modelling (the referenced method): Investment size and return range

Portfolio Impact Assessment provides input to:

• Structured Business Case Development (the referenced method): Portfolio impact section (Step 6)
• Governance Presentation Design (the referenced method): Portfolio fit slide and trade-off discussion
• I1 Portfolio Rebalancing: If approval triggers de-prioritisation, I1 executes portfolio adjustment

Tools and Templates

• Portfolio Impact Summary (single-page template integrated into A1.5 Governance Presentation, the referenced method)
• I1 portfolio dashboard (source data)
• Portfolio balance calculator (spreadsheet)
• Dependency map (visual or tabular)

• B. Nagji & G. Tuff (2012). Managing Your Innovation Portfolio. Harvard Business Review. 90(5). pp. 66–74.
• G. Tuff & B. Nagji (2012). Managing Your Innovation Portfolio. Harvard Business Review. 90(5).
• H. Markowitz (1952). Portfolio Selection. The Journal of Finance. 7(1). pp. 77–91.
• R. G. Cooper, S. J. Edgett & E. J. Kleinschmidt (1997). Portfolio Management in New Product Development: Lessons from the Leaders. Research-Technology Management. 40(5). pp. 16–28.
• R. G. Cooper, S. J. Edgett & E. J. Kleinschmidt (2011). Portfolio Management for New Product Development: Results of an Industry Practices Study. R&D Management. 31(4). pp. 361–380.
• S. C. Wheelwright & K. B. Clark (1992). Revolutionizing Product Development: Quantum Leaps in Speed, Efficiency, and Quality. Free Press.