Innovations

Innovations
Introduction
Growing competition and increasing consumer’s expectations require an ongoing development of innovative products and services (Klingebiel, Rammer (2014). Key to success in this situation is to effectively manage innovation, independent from which sources the innovation comes from (internal, lead-user or open) and regardless of whether it is about a product or service innovation, or both. Innovation without profound management however bears the danger that an innovative project becomes irrelevant as long as it cannot be marketed (Grönlund, J. etaltera, 2010). Portfolio Management addresses this topic.
Portfolio Management
Portfolio Management provides both a method and criteria which enables management to select investments but also decides on product and service innovations to be initiated (Boyd, Headen, 1978). Since the author of this paper is employed with a family owned small and midsized enterprise (SME), his particular interest applies to Portfolio Management in this level of organisation. Although SME’s in principle are not different to larger organisation if it comes to threats and opportunities they may meet in their business environment, the management structure – particularly if family is involved – is very much different (Kraiczy et. altera, 2014). As for the author’s company it is significant to which detailed extent the family – represented by their managing partner – is involved in decision making processes, not the least because of the costs which may occur when developing new products and processes. Critics may argue that such deep involvement of top management could rather hinder an innovative atmosphere among employees knowing that they always have to argue for their projects. On the other hand this issue could be looked at from the perspective of management which encourages their followers to carefully reconsidering projects and double-check them with respect to their feasibility in order not to waste resources.
Competitive Advantage
One of the aims of Portfolio Management is to create Competitive Advantage. As a machine producer which is facing enormous competition from organisation located in developing countries such as China, the author’s organisation puts lots of efforts and financial resources into innovating new products and services. The interesting aspect in this contexts is that both product- and service innovation (e.g. operational measurement tools, retro-fit, customer training workshop) are recently very much related to the fact that industrial customers increasingly request solutions on trouble-free operations of their machines; these requests though are directly related to the considerable pressure these organisations themselves are exposed to by their end customers.
Strategic Implication
The strategic component of Portfolio Management is defined by setting “corporate goals and objective and manage resources to archive these goals” (Boyd, Headen, 1978). As with any other business strategy, a business decision process has to be defined for the implementation of Portfolio Management measures (Boyd, Headen, 1978). Though, the particular circumstances of the organisation in question, e.g. the size of corporation, industry, business environment, geographic area etc. have to be put into consideration.
Boston Box matrix
In case, the author of this paper would be engaged as an external adviser to his company, he probably would, based on the Boston Box Matrix as one of the strategy tools management can use in order to focus on the profitable parts of a company’s portfolio (Morrison,Wensley, 1991),, recommend to concentrate on the existing machine pool rather than extend the business into a high competitive market, e.g. industrial washing or wet blasting machines, areas the company has no intrinsic competence in but would need to buy in external expertise.

References:
Boyd, H., Headen, R., S., (1978), ‘Definition and Management of the Product-Market Portfolio’, Industrial Marketing Management, 7 (4), pp. 337-346;
Grönlund, J., Sjödin, D.R., Frishammar, J., (2010), ‘Open Innovation and the Stage-Gate Process: A REVISED MODEL FOR NEW PRODUCT DEVELOPMENT’, California Management Review, 52 (3), pp. 106-131;
Klingebiel, R., Rammer, C., (2014), ‘Resource allocation strategy for innovation portfolio management’, Strategic Management Journal, 35 (2), pp. 246-268;
Kraiczy, N.D., Hack, A., Kellermanns, F.W., (2014), ‘New product portfolio performance in family firms’, Journal of Business Research, 67 (6), pp. 1065-1073.
Morrison, A., Wensley, R.,(1991), ‘Boxing up or Boxed in?: A Short History of the Boston Consulting Group Share/Growth Matrix’, Journal of Marketing Management, 7 (2), pp. 105-129;
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