By Oliver Narraway | July 17, 2025
In our previous article, we discussed the importance of leadership and culture in innovation and why a diverse portfolio of innovations is best. Though the concept of a diverse portfolio might seem simple, it raises more questions than it answers. Answering those questions is key to getting innovation right.
But first, it’s worth starting with a basic question.
A diverse innovation portfolio consists of a blend of higher risk/higher impact, lower risk/lower potential impact innovations and several that fall somewhere in between on the continuum. Typically, a diverse portfolio consists of three types of innovation:
Creating a diverse portfolio requires going beyond simply categorizing projects in terms of risk and reward. Though a diverse portfolio works for most companies, what constitutes diverse can mean very different things.
When we talk about diverse portfolios, context is key. In practice, the nature of risk, its impact and therefore the characteristics of a balanced portfolio itself vary depending on many factors. For instance:
For example, a pharmaceutical or biotech company is likely to have a very long time to market and therefore rely more on big bets with frequent failure, which is accepted as a necessary cost of doing business. Their idea of a diverse portfolio might look very different than that of a 100-year-old construction company where a new idea might be ready to test/deploy relatively quickly.
Determining what diverse means requires a nuanced understanding of risk, project impact and organizational capabilities.
Start by looking at your company, its business and geography and country strategies to understand where and how the organization is targeting growth. Consider client feedback, financial performance and the hard “outcome” data — to understand if you’re really delivering what is needed in terms of impact. Take time to consider and analyze key factors such as your tolerance for risk, industry, investor expectations, competition, regulatory environment, market conditions and more.
Break down your analysis to understand the needs of each area of the organization; it’s highly likely that there’s a wide variety of strategies, risk tolerance and growth goals. Consider short- versus longer-term impacts. To what extent is short- versus long-term impact a priority?
Consider how best to quantify the blend of initiatives in your portfolio. This might be the gross number of initiatives that are high risk, high impact, a strong strategic fit, etc. Or it might be understanding how much is being spent on each category. In an ideal world, you will have a good sense of what percentage of revenue will be dedicated to high-risk, high-impact innovations, how much to low-risk innovations, etc.
Creating a bottom-up inventory of innovation initiatives is key. Where are the ideas coming from? How do they align to the desired blend of risks, impacts and other criteria? If you categorize all the initiatives underway, you should be able to understand how well your pipeline of innovations supports your desired portfolio.
A first exercise is to assess each project. Are there initiatives that are a poor fit with the desired portfolio that should stop immediately? For instance, are there high-risk, low-impact projects, where stopping now might free up investment for better use elsewhere?
Look for gaps versus the desired blend of innovations. Is there enough high-impact, or is there likely to be a gap in the pipeline in two years? Analyze what might be driving those gaps. Do you need more ideas overall, or additional ideas around specific priorities? Are there proposals from the past that should be reconsidered? Are you asking the right people for ideas, or are there specific populations in the company that might help drive more of the ideas you need?
It’s one thing to conduct a one-time analysis of your innovation portfolio, but the key to long-term success is process and governance. It requires regular assessment across the parameters you’ve established to ensure continued strategic alignment. It also requires reviewing the way you measure your progress to ensure your metrics remain fit for purpose. It’s challenging because the business climate is always changing, and your program must adapt to it. Not much remains static. At least not for long.
Fundamentally, governance requires a continuous review of the portfolio to quickly terminate projects that no longer make sense and scale others to ensure the success of the overall program. Deciding when to shut programs down can be as difficult as it is essential. It also requires ensuring you have the right mix of projects, and that means having a good understanding of what’s in the pipeline.
WTW maintains a diverse portfolio of innovations and ensures that new ideas come from different sources through a multifaceted approach:
Horizons generates a naturally diverse pool of ideas by being open to all colleagues. To ensure their efforts are targeted, we provide client problem areas that give colleagues a starting point to focus on challenges that are strategic priorities for the organization. Senior leaders review ideas to ensure they are driving the right blend of impact and risk for the company. Horizons has generated a wide range of strategic solutions including:
By combining these strategies, WTW ensures that new ideas come from different sources and that a diverse portfolio of innovations is maintained, enhancing our ability to solve complex client problems and stay ahead in the market.
Balancing innovation approaches to build a portfolio is essential for the long-term success and resilience of any organization. By defining what diverse innovation means for your business, assessing the gaps in your current innovation pipeline and providing ongoing governance, you can ensure that your innovation efforts are aligned with your strategic goals. Combining core, adjacent and transformational innovations, the blended approach can sustain long-term innovation and growth.
