Innovation Portfolio Management
Assessing the maturity of the start-ups or projects in your portfolio
Daniela Valenzuela — Innovation Consultant
Suppose you are managing a portfolio of projects or start-ups; it could be 5, 10 or 20. It can quickly become overwhelming to analyse multiple KPIs to measure performance and understand each project’s maturity level. But, most importantly, how can you know which projects or start-ups are closer to manufacturing and selling?
This issue can become particularly relevant for incubators or accelerators when you need to provide support and your set of start-ups are at different stages.
Fortunately, Technology Readiness Level (TRL) and Market Readiness Level (MRL) can provide a powerful indicator to assess maturity in a more comprehensive way, considering both the progress of the technology development and the level in which it has engaged with potential customers to be ready for the market.
To assess TRL and MRL indicators, you can use the following questions:
Market Readiness Levels (MRL)
How would you describe the level of market readiness of your product/service? Please choose the highest level that applies to your solution:
Idea Only
0. Hunch: you perceive a need within a market
1. Basic research: you can now describe the need but have no evidence
2. Formulation: you can articulate the need using a customer/user story
3. Validation: you have an initial offering and have engaged with stakeholders
Already Testing
4. Small scale testing: engaging 50 close stakeholders
5. Large scale testing: engaging 100 intended customers
Gaining Traction
6. Proof of traction: 100 paying customers
7. Proof of satisfaction: happy customers evident progress
Growth and Scaling
8. Proof of scalability: sales pipeline allow revenue projections
9. Proof of stability: KPIs overpassed and predictable growth
Technology Readiness Levels (TRL)
How would you describe the level of development of the technology or service delivery behind your product/service? Please choose the highest level of development that applies to your solution:
In Research:
0. Unproven concept, no testing has been performed
1. Basic Research: principles have been observed and reported
2. Formulation: technology concept and application have been formulated
3. Validation: concept has been validated / proof-of-concept has been reached
Under Development
4. Small scale prototype: technology has been validated in lab or experimental environment
5. Large scale prototype: technology has been validated in a relevant environment
6. Prototype system: technology has been demonstrated in a relevant environment
Started Deployment
7. It has only been implemented once
8. It has a few records of implementation
9. Extensive implementation, technology is on general availability
These assessments will give you a score from 0 to 9, which can be represented in a bubble diagram with axes TRL and MRL. A third dimension can be used to allocate a specific size to each bubble. It is recommended to use the number of people working for the project or start-up; it could be thought of as FTE (full-time employees). In summary, each project would have three data points (TRL, MRL, FTE), which you will label according to the project’s name.
As seen in the bubble diagram below, this methodology provides a helpful way to visualise the maturity of your portfolio in one glance.
In the example, you can see how project A, has as TRL of 4, which means it is under development and a small-scale prototype has been developed. However, the MRL is at 1, meaning that the need for this product can be described, but there is no evidence that customers would want it. This is very common for science-based projects emerging from university labs or research centres. The driver is the science and the technology, but usually, there are no capabilities to turn the technology into something that customers would want. In this case, tools for market transfer are needed, and the support should be oriented at testing the technology in relevant settings with potential interested customers.
The opposite case can be seen in the case of project B, the MRL is 4, but the TRL only 2. This means you have engaged users with the potential product or service, but the development behind the product or service is only at a formulation stage, which is far from ready. In this case, the support should be about engaging with technological experts, perhaps outsourcing the technology if it is not within scope, or building technological capabilities within the team. This case is most common for start-ups that want to solve a need or gap they have seen in the market; they are very keen about solving their need but don’t know how to get the technology ready. The classic case is trying to build an app without software development skills within a team.
Other projects might be more balanced and they could be working hand in hand to get the MRL and TRL ready, with strong commercial and R&D teams. They would still need support in both fronts; market and technology. In most cases, the progress will be balanced, because usually by engaging users the feedback is used to improve the product or service, and by developing a better product, you can again test it in a more appropriate environment.
Assessing the evolution of your portfolio
After looking at your portfolio for the first time, you might work hard to provide support and see how this improves the maturity of your start-ups or projects. You might be interested in the evolution over time of your portfolio, especially when you are providing financial support through grants or capacity building through a training programme. You might wonder, is this support making any difference in the progress of the start-up/project portfolio?
You can conduct another assessment to have an additional data set for your projects and then add them to your bubble chart. For example, let’s say you have a measure in 2020 and another in 2021. You could end up with a bubble chart like the following.
Ideally, as reflected here, you will see progress in the maturity of both indicators and, even in some cases, increasing the number of FTE. This will give you a brilliant overview of how your programme’s support has turned into riper start-ups/projects. In the case of the project D, they are probably already selling at a stable rate, with ad portas exponential revenue. A stage of growth and scale which could mean they are ready to be engaged with more matured sources of funding, a great moment to take this start-up into new portfolio view of fully-ready businesses, in which you might analyse revenue and impact and assess new sources of funding, such as venture capital.
Within the scope of the start-ups that are on their way to ripe, you might want to look at their progress. For example, what happened with project E? Why is it not in the bubble diagram anymore? It is very likely that this start-up or project failed or was discontinued, something absolutely common in the start-up world. High risks and high reward means that many projects could fail, even if they had received financial and capacity-building support.
On the other hand, A, B and C are still on their way and still need time or more resources to continue progressing. Therefore, if you are looking to select start-ups for the next phase of the programme, you might want to have a clear cut based on TRL and MRL, for example, a minimum of 5. This means only C and D will progress to the next phase, and A, B and E will not be advancing.
Visualising your portfolio is key, and it can tell a powerful story, especially when looking at the evolution over time of your projects. I recommend using this tool in any scenario in which you are providing support to early-stage projects or businesses with new ideas or prototypes. It is essential to deliberately gather these measures at critical moments to assess the evolution and understand how to provide more tailored support.
If you want to start using this Innovation Portfolio Management Tool, you can download it at the following link. (I recommend using the Microsoft Office Version as Google Sheets has limited functionality for bubble charts)
Any questions? Feel free to contact me!
References:
Goffin, K., & Mitchell, R. (2016). Innovation management: effective strategy and implementation. Bloomsbury Publishing.
Market and Technology Readiness Levels [ https://www.swforum.eu/market-and-technology-readiness-levels ]
