Most companies are not really aware of all of the innovation projects they are working on.
Let alone which project mix they should be working on.
This is where a tool called the Ambition Matrix is extremely useful, and it is a tool I use with clients all the time to gain clarity on what their current innovation portfolio looks like.
Originally developed by the strategy consultants at Monitor (now part of Deloitte) and made famous by a breakthrough article in Harvard Business Review by Geoff Tuff and Bansi Nagji, the Ambition Matrix is a tool which helps companies identify ways to execute their strategy around where to play and how to win. Here is the original image of the Ambition Matrix from the article:
Original Image of the Ambition Matrix from HBR 2012
Along the bottom axis are the three ways to answer the question of “How to Win?”, which is related to the products and solutions you already have, and which new innovations you need to develop.
Along the vertical axis are the three ways to answer the question of “Where to Play?”, which relate to which customer groups and markets you are trying to sell to.
At the intersections between these questions are the horizons of your Innovation Ambitions. These can be classified broadly as innovations which are:
- Core: Incremental Innovations which optimise your existing products for existing customers
- Adjacent: Expanding from core existing business into “new to the company” businesses, which could be primarily new offerings for the same customers, or new customers for the current offerings (or new similar products for new similar customers)
- Transformational: Breakthrough innovations for markets that don’t yet exist in the business (or even the world)
These are the three primary ambitions levels of innovation.
It really helps companies understand the true mix of the innovation efforts collectively, instead of just looking at each project individually. And often, it is the first time that a leadership team can see the actual ambitions of their portfolio of projects, and be able to compare this to what their strategy is hoping to achieve.
A company can use the matrix by starting with a template like the one below (which I use):
If you would like a FREE PDF copy of this Ambition Matrix template for your team to print and use, just click this button here:
Then, the company would assess all of their current (and potentially planned for the future) innovations, to see what scale of ambition best describes them.
Is this project trying to provide more value to our current customers, or find new customers?
Is this project trying to develop a business model which is completely new to our organisation?
Is this project an innovation at all?
One of the most interesting insights that teams often find when looking at their projects is how different the naming and categorisation of the projects is compared to what the innovation project is actually meant to achieve.
For example, in one client workshop, a representative from the IT team had listed “Transform our IT Systems through new software upgrade” as a core Transformational Innovation project, because their internal team was talking about how large-scale and transformational it was.
Yet when I asked them to describe what it would achieve (a software upgrade for people’s PCs), they soon realise that it was far from Transformational, it was clearly a Core Innovation.
This shocked the team, and especially the management team, who realised that what they thought would be highly innovative (because of the words being used internally) was actually just mildly incremental and not add much value to the end customers.
When you then plot which projects are at which ambition level, taking into account the innovation projects’ size and scope, you might end up with a summary of the Innovation Portfolio which looks like this:
Example summary of Innovation Portfolio (Nick Skillicorn)
This is an incredibly valuable way of visualising a company’s entire innovation portfolio. And it often highlights surprises to the company’s decision makers about what types of innovation their teams are actually working on.
I’ve even had other colleagues who before submitting to the board their findings of what a client’s portfolio really looked like, were asked by middle management to change the definitions of the ambition levels so that more of their projects would appear as adjacent and transformational, because otherwise they felt like it would make them look bad.
But there is nothing wrong with working on primarily core innovations. In fact, it is necessary for a healthy balanced innovation portfolio.
In an upcoming blog article, I will show how a mix of ambitions is actually the most important aspect of an innovation portfolio which is more likely to succeed, along with a suggested mix.
But for now, I suggest you try to develop a portfolio view of your own Innovation Ambition using the matrix tool.
If you would like a FREE PDF copy of this Ambition Matrix template for your team to print and use, just click this button here:
Nick Skillicorn
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