Innovation: Analyze & Design of complexity and Uncertainty
What differs Innovation from the running business? And does it require a different approach and tooling?
Working in the field of innovation will put you up with some typically challenges during the execution of innovation programs. How do you handle the high level of uncertainty in new technology and market developments? How do you manage complex decision making processes for innovation and business board members?
In a traditional program approach during the several stage gates of innovation a static business case is created and is one of the key tools to take decisions and used as an indication for future business value. Once a business case is approved in the start of the innovation program, it isn’t used in the next steps of the innovation process to take the complex decisions needed. The majority of the innovation programs delay in time in generating value compared to the original business case. Besides the delay you don’t know if possible alternative scenario’s can bring even higher value at all.
Decision makers for innovation programs and portfolio urge for better decision supporting tools on program and portfolio level. Once an innovation program is started a need for a more dynamic Track & Trace tool regarding the performance of the program is required. The lack of “speed of innovation” is one of the most critical business case “killers” which need to be monitored on a continue basis. Many organizations lack of the right capabilities and tools to do this. Working with our clients we experienced that doubling the future business value in your current innovation portfolio is likely to show up.
What do you need to double the future value in the portfolio?
It starts with installing the basic capabilities and tools of “scenario thinking” and “Dynamic Business Case” into your organization.
The Innovation Business Case Method is a Discounted Cash Flow (DCF) models, which help managers ask the right questions when judging projects and make better-founded decisions in complex and high uncertainty environment. A manager’s toolbox is not complete without this model and should be used throughout the life cycle of a product.
Free cash flow will fluctuate in the course of the project due to technical risks and market uncertainties. There are a number of possible scenarios, each with its own specific net present value and likelihood of occurring.
All these scenarios ought to be worked out and set against the likelihood that they may occur. This will be done using a Monte Carlo simulation. The various outcomes are presented as a distribution of NPV
A start-up company INPAQT developed an Innovation Management Suite and expertise support not only to install the tool but is focussed on the development of the capabilities of your organization. It’s one of the very few proposition in the market based on academic research and development of Monte Carlo scenario’s for innovation dynamic business cases.