Adapting innovation portfolio management to accommodate for emerging digital technologies

An exploration of the IPM practices of organizations that aim for digital innovation outcomes

Sammendrag

Innovation portfolio management (IPM) is recognized in the literature as a managerial method for making decisions in relation to the innovative activities of any organization that operates in competitive and changing markets. However, as organizations are influenced by emerging digital technologies such as artificial intelligence, IPM practices are changing accordingly. While there is a burgeoning literature on the link between emerging digital technologies and innovation management, only few studies have investigated the consequences for IPM practices. Therefore, it is the purpose of this thesis to explore the case of IPM practices in selected organizations that aim for digital innovation outcomes. Extant literature on IPM has examined the potential of applying emerging digital technologies directly in IPM processes to optimize efficiency. These studies indicate positive effects particularly for organizations that engage in new product development. However, based on recent literature from the broader field of digital innovation and specific calls from reviews of the IPM literature, it is essential to also explore the consequences that emerging digital technologies have on IPM practices when the technologies are an integrated part of the products and longterm outcomes. In this context, the literature argues for increased complexity in part due to the openness, generativity and relational aspects that naturally follow emerging digital technologies. This thesis seeks to extend the existing IPM literature by, first, focusing on the influences that emerging digital technologies have on current IPM practices (research question 1). This is accomplished through a review of the extant literature and an inductive exploration of the challenges faced by IPM practitioners in the context of large incumbent organizations that aim for digital innovation outcomes which comprise emerging digital technologies. Articles I and II are used as a multiple case study and an empirical illustration, respectively, to answer the first overall research question. Second, and building on the findings from the initial inductive part of the study, the thesis uses an abductive approach to explore the adaptations to IPM as a method for strategy deployment in organizations that aim for digital innovation outcomes (research question 2). For this purpose, the thesis applies foundational theories including public value theory (Benington & Moore, 2011) in article III, which explores a funding agency as a single case study, and technological logics (Thompson, 1967) in article IV which comprises a multiple case study. Both articles are used to interpret how IPM practices are adapted to accommodate for emerging digital technologies and thereby provide an answer to the second research question. The inductive part of the thesis finds that (1) there is widespread portfolio heterogeneity which practitioners struggle to accommodate for due to its inherent opaqueness, (2) organizations engage in distribution of decision power by empowering local projects environments and (3) actors in the ecosystem are involved in decision processes for work on digital innovation. These findings speak to the indirect influence of emerging digital technologies on IPM practices, which entails distributed control measures rather than the integration and formalization that constitute the primary arguments of extant literature. The abductive part of the study indicates that IPM practices are adapted (and interpreted) in different ways. When it comes to the public value perspective, article III develops the notion of holistic portfolio management (HPM) and argues that practices characterized and influenced by high degrees of reciprocal interdependence, relational governance structures, multiple value interpretations and different levels of external involvement. In addition, article IV adapts IPM practices by developing three distinct innovation portfolio configurations, comprising (1) the product portfolio that focuses on the sequential development of products and services, (2) the platform portfolio that facilitates contact between relevant actors in the ecosystem and (3) the problem portfolio that considers individual projects unique and in need of intimate understanding. Together, the findings from articles III and IV constitute important adaptations to IPM practices in the context of organizations that aim for digital innovation outcomes. This also speaks to the implications for managers that are required to engage in differentiated IPM practices depending on the context and nature of the projects in question. The study also has implications for Clevel managers who are ultimately responsible for organizing the IPM function and deciding on an appropriate mandate that allows for such differentiation. Future research should first and foremost examine the propositions that are put forward in the current study quantitatively. However, additional qualitative research is also necessary to further explore the frameworks (for example related to HPM or the innovation portfolio configurations) in different contexts.