Is It Real? Can We Win? Is It Worth Doing?
By: Day, George S.,
Harvard Business Review,
Dec 2007, Vol. 85, Issue 12
From 1990 to 2004 the percentage of major innovations in development portfolios dropped from 20.4 to 11.5 - even as the number of growth initiatives rose.
The aversion to Big I projects stems from a belief that they are too risky and their rewards (if any) will accrue too far in the future. Certainly the probability of failure rises sharply when a company ventures beyond incremental initiatives within familiar markets. But avoiding risky projects altogether can strangle growth. The solution is to pursue a disciplined, systematic process that will distribute your innovations more evenly across the spectrum of risk.
Two tools, used in tandem, can help companies do this. The first, the risk matrix, will graphically reveal risk exposure across an entire innovation portfolio. The second, the R-W-W ("real, win, worth it") screen, sometimes known as the Schrello screen, can be used to evaluate individual projects. Versions of the screen have been circulating since the 1980s, and since then a growing roster of companies, including General Electric, Honeywell, Novartis, Millipore, and 3M, have used them to assess business potential and risk exposure in their innovation portfolios; 3M has used R-W-W for more than 1,500 projects. I have expanded the screen and used it to evaluate dozens of projects at four global companies, and I have taught executives and Wharton students how to use it as well.
George S. Day (firstname.lastname@example.org) is the Geoffrey T. Boisi Professor, a professor of marketing, and a co-director of the Mack Center for Technological Innovation at the University of Pennsylvania's Wharton School in Philadelphia. His most recent article for HBR, "Scanning the Periphery" (written with Paul J.H. Schoemaker), was published in November 2005.