The law of inverse consequence
Some activities have inverse consequences. For example, a project portfolio with only low-risk projects makes the company a high-risk company.
Probably you have experienced that the harder you try to sleep, the less likely you will sleep — an excellent example of the inverse consequence. You try hard to achieve something, but you achieve the opposite effect because you try too hard. One such activity that many companies misjudge is the risk profile in the project portfolio.
In principle, there are only two distinctively different types of development projects:
Doing better - refine and improve the existing product to perfection. Stay on the existing S-curve.
Doing different - replace the existing product with something radically new. Move to a new S-curve.
Most companies have a history of both. They started by "Doing different" and challenged the dominant solution with a disruptive innovation. After that, the company grows by "Doing better."
Two assess the risk level of a company's project portfolio, I use two diagnostic questions:
Question 1. How many projects did your company kill and terminate last year?
Some people will proudly say NONE! My response is – That's bad. And the person in question looks very surprised by my reaction. For them, it doesn't make sense. Isn't that excellent that all of our projects are finished? No, because it means that you are only running low-risk projects. Most "Doing different" projects are high-risk projects and will fail.
Question 2. Could your present best-selling products have been developed today?
Surprisingly many will say NO! The gate processes, bureaucracy, and mentality favor more of the same. They are effectively prohibiting disruptive ideas. Breakthrough ideas don't fit in. Many people understand that but don't know how to fix the problem.
But the answer to fix the problem is in "Question 1". Your company needs more "Doing different" projects in your portfolio. For example, you need to test new concepts, technologies, or business models. Most will fail, but a few have the power to save the company.
Unfortunately, only a few companies survive the shift in the market to the next S-curve. Only a few companies understand the law of inverse consequences.
Only a few companies realize that a low-risk portfolio must also contain high-risk projects.
What is your answer to my two diagnostic questions?
Per och Ulf