Prioritizing Enterprise Innovation Activities: 18 Constraints and Factors to Consider

Imagine walking into a control room filled with blinking lights, each one a live project competing for your attention. Some promise bold breakthroughs. Others whisper incremental gains. And all of them come with risk, resource demands, and relentless pressure to deliver results.

Welcome to enterprise innovation management.

In this high-stakes environment, prioritization isn’t just a project management task, it’s the backbone of growth. But here’s the catch: most organizations don’t prioritize for impact. They prioritize for noise, reacting to what’s loudest or most urgent instead of what actually moves the needle.

That’s where growth innovation flips the script. Instead of guessing which idea might succeed, it starts by identifying the revenue gaps that must be closed, and then aligns innovation activities accordingly.

In this blog, we’ll explore the key constraints and contextual factors every innovation leader should consider, helping you turn a sprawling portfolio into a powerful growth engine.

When managing an innovation portfolio, accurately prioritizing projects is critical. Failing to assess and rank initiatives accurately eventually has you pursuing less potent ideas, misallocating resources, and seeing a weakened return on the entire portfolio. But as you create a workable framework for prioritizing innovation projects, your likelihood of experiencing breakthroughs across your entire portfolio increases exponentially. 

Unfortunately, there is a lot of prioritization advice out there, and the worst of it focuses on superficial strategies rather than clear objectives. If you’re unsure of the goal, prioritization becomes about triage—a reactive, emergency-driven method of prioritizing whatever’s on fire. To prioritize effectively, you have to step back and take a cohesive look at where you are and where you need to be. 

All innovation prioritization begins with identifying your gaps

Growth innovation is a management philosophy that prioritizes enterprise growth as innovation’s most critical outcome. This means prioritization should be centered around the tasks that help the organization hit its targets within its specific constraints. 

This starts with thoroughly assessing your innovation portfolio’s current state and clearly articulating its ideal state. The goal is to identify the distance between where your portfolio is and where it needs to be. Once those gaps are identified, you have your foundational rationale for all future prioritization decisions. 

It’s important to note that even though we’re using prioritization language to describe ranking projects for execution, the prioritization is really happening for revenue gaps. We are identifying the revenue gaps that need to be addressed first, and then creating or choosing projects to fill those gaps. 

You can dive deeper into this idea in “Gaps-First Prioritization: A Results-Driven Approach to Innovation Management.” 

This article will focus on some secondary factors innovation managers must consider when allocating resources and assigning priorities to specific innovation activities.

5 general prioritization factors to consider for your innovation portfolio

Once you identify the gaps that need to be addressed in innovation management, you can consider other important factors. These five areas will impact how projects are addressed and proceed through the pipeline, and how other projects in the portfolio will be affected. 

1. Outcomes: What can we expect from our innovation activities?

The anticipated benefits of completing projects are obviously a key factor. After all, we’re counting on these outcomes to close the gaps. An assessment of outcomes should consider: 

• Financial return
  What is this project's projected financial return? This analysis should go beyond potential revenue and include cost savings, profitability, shareholder value, etc. 
• Market impact
  What can be expected from launching this product or service? We need to know what unmet needs it may fill or if we’re expecting it to present a significant disruption. Does it provide an essential competitive advantage? 
  
  

2. Constraints: What parameters define success? 

We’ve projected the potential value of our projects. Now it’s time to examine the limitations and requirements that must be considered. These conditions define each project’s boundaries and include: 

• Strategic alignment
  We want to ensure that this initiative lines up with our enterprise objectives. The more a project is aligned with the organization’s primary goals, the more organizational support it will receive and the easier it will be to move it through the pipeline. 
• Regulatory requirements
  Sometimes, the red tape necessary to get a project through the pipeline is a considerable consideration. This includes things like safety standards, sustainability issues, and industry-specific requirements. 
• Risk tolerance
  Identifying the potential risks for a project is as critical to prioritization as assessing the benefits. Can the enterprise absorb the potential failure of this project? 

3. Budget: What resources must be allocated to deliver outcomes within these constraints?

The resources necessary to deliver on an innovation project are also a factor that needs to be considered when ranking projects, and budget considerations should involve:

• Investment required
  This is your fundamental budgeting question: How much will this project cost? This must factor in various stages: R&D, prototyping, testing, marketing, etc.
• Payback period
  Once we have a budget, we need to know how long it will take the project to return its initial investment. A shorter payback period can make a big difference when prioritizing projects.
• Budget allocation
  Not only do we want to know the investment required to fund a project, but we also want to know if this project fits within the ideal allocation of funds across different kinds of projects and varying stages. Does the enterprise have a strategy for allocating budget percentages across various pipeline stages? Is there an expectation that a smaller percentage of the budget is allocated for high-risk or disruptive inventions?  
  
  

4. Capabilities: What internal factors impact the enterprise’s ability to deliver outcomes within constraints?

With certain innovation projects, internal factors can provide obstacles, potentially leading to delays and cost overruns. How these projects are prioritized can significantly impact how smoothly the pipeline functions. These factors include things like: 

• Technical expertise
  Some projects require scientific, engineering, or technical skills that must be recruited from outside the organization. 

• Research and development capacity
  Prioritizing projects requires some mindfulness about pipeline bottlenecks. If R&D is at or near its capacity, the ripple effects will be felt throughout your portfolio. 

• Organizational structure and culture
  Some projects require more cross-functional involvement from other departments. An understanding of the number of these kinds of projects the enterprise can support can impact which projects get bumped to the front of the line. 

5. Environment: What external factors determine the enterprise’s ability to deliver outcomes within constraints?

You’ll also want to consider the factors outside the organization that might impact project development. These external factors may include:

• Economic conditions
  Could dominant economic conditions like inflation, interest rates, and international trading factors impact this project’s progress or outcome? 
• Political landscape
  Considering the possible impact of variables like elections, tax incentives, or environmental regulations is an imperative. 
• Competitive environment
  Don’t forget to consider competitors in this area. Being in a race to market can dramatically influence how projects are prioritized. 

These five general factors are typically the innovation manager’s go-to considerations; rightly so, they’re critical to managing a thriving portfolio. But let’s dive a little deeper into what a gaps-first prioritization methodology looks like, and then flesh out the factors that should impact your project ranking. 

Growth innovation prioritization in both strategy and execution 

The most effective innovation management will align your organization’s strategic objectives with the realities of on-the-ground innovation, and it becomes truly tactical when it adopts a gaps-first approach. 

Gaps-first prioritization within a growth innovation framework starts with clarifying our enterprise’s financial goals and its current trajectory. This information gives us the revenue gaps that we’re working to close. With this information in hand, we can begin prioritizing, and that process breaks down into three segments: prioritization in strategy, prioritization in execution, and the activities to be prioritized. 

1. Prioritization in strategy

This is where we find the meat in gaps-first prioritization. With the right organizational data, we can become more tactical in choosing how we tackle our projects. By identifying these revenue objectives, we can set our portfolio up to close those gaps most efficiently. 

And the more effective we become in ordering our initiatives and projects, the more confidence we engender from the rest of the organization, and the greater the likelihood that lesser prioritized initiatives will receive the support they need to be successful. 

Prioritization in strategy focuses on two key ingredients:

A.) Revenue planning

These parameters examine which revenue gaps should be prioritized for closing.  

B.) Portfolio creation

This is where projects and initiatives are created and ranked for closing those prioritized revenue gaps. 

2. Prioritization in execution 

With our innovation portfolio set up to bridge revenue gaps, we begin executing the strategy. This is where reviews become paramount. We must remain aligned with our approach, recognize obstacles early, and ensure we’re on track to deliver our game plan, and this is why tactical, productive KPIs are so valuable. We want to stay aligned with our strategic, financial, and operational goals. 

To better understand tactical innovation metrics, check out “11 KPIs for Measuring Innovation Success.” 

Factors to consider when prioritizing innovation activities

The following list outlines prioritization factors to consider as you align your portfolio with your enterprise objectives. The factors are grouped into their pertinent level of portfolio management. Some of these parameters are applicable throughout revenue planning, portfolio creation, and portfolio reviews, but it’s helpful to hone in on them at specific points in the process. 

Remember that these factors aren’t intended to be prescriptive but to help you prioritize revenue gaps. Their relevance should be considered fluid and context-dependent. 

Key prioritization factors in revenue planning

These factors are commonly used to prioritize revenue gaps, helping you ensure that financial considerations are properly emphasized. 

It begins by defining the desired revenue outcomes. Understanding each project’s specific revenue target helps focus efforts on opportunities with the most significant potential impact.

2. Annual estimated revenue

Realistically estimating long-term revenue helps identify the attractiveness of specific innovation projects.

3. Margin percentages 

Analyzing the potential profit margins associated with various opportunities is critical. A higher margin percentage can help push initiatives to the front of the pack. 

This metric takes into account revenue's geographic distribution. Enterprise objectives will often dictate not just how much revenue needs to be earned overall, but a specific breakdown of where the revenue should come from. 

This factor examines the income distribution of various brands in the company’s portfolio. This ensures you drive innovation toward target markets and achieve a desired market presence across multiple brands. 

You’ll need to factor in the competitive landscape in a crowded market. It's shrewd to prioritize based on your competition’s strengths, weaknesses, and market share. 

7.  Ease of production
If a product can be produced quickly and efficiently, a faster time to market can give it a leg up in the prioritization process. 

8. Supply chain reliability
Prioritizing products with a dependable supply chain reduces risk and helps ensure consistent availability. 

When the enterprise’s sales force supports an initiative, it can give it a huge boost in the market. When this buy-in from the sales force aligns with the external business ecosystem (consumers, customers, and suppliers), prioritization can be a no-brainer.

Key prioritization factors at the portfolio creation level 

These considerations come into play as you establish which projects need to be initiated to close revenue gaps.

10. Product age and life cycle

The product’s position in its life cycle is often considered when determining whether or not it belongs in the innovation portfolio. As products age, they decline in relevance and competitiveness—which influences its role in and importance to the enterprise’s strategy.

11. Sustainability by mix

Sustainability is quickly becoming an organizational imperative. Having the right percentage of “green” projects may affect how your portfolio is arranged.

12. Digitization by mix

Incorporating smart technologies and artificial intelligence into products and services can be essential for staying competitive. If your enterprise plans for the portfolio to deliver a specific percentage of digital innovations, it will impact how projects are bumped higher or lower in priority.

13. Product safety

A project may check all the boxes that would move it to the front of the line, but if potential safety issues are identified, the project may need to be deprioritized until those issues are resolved.

14. Reliability of production

Understanding production's reliability and scalability minimizes delays and quality issues, and should be factored into prioritization. 

Key prioritization factors at the portfolio review level

Here, we outline factors commonly used to prioritize orchestration activities within the existing innovation portfolio. These elements help ensure that ongoing projects remain on track, aligned with strategic goals, and deliver the expected value.

Reviewing the margins of ongoing production projects ensures that projects remain viable and aligned with the budget, or whether they need to be reevaluated and addressed.

16. Reliability of production for new products and services

Any production issues will impact availability and potentially customer satisfaction, affecting the project’s ability to close the necessary gaps. Problems here may require action or a pause until these issues are resolved. 

17. Supply chain reliability for the new products and services

Similar to production reliability, potential breakdowns in the supply chain can significantly impact a project’s ability to deliver on its potential. 

Analyzing buyer feedback can offer critical insights into improving a product or service’s ability to close revenue gaps or make adjustments to keep projects on track. 

19. Product service progress
For products requiring ongoing service, reviewing the effectiveness of that service can lead to changes that improve customer experience and retention. 

20. Product marketing and branding progress

A project may be progressing through the pipeline on schedule, but obstacles in the go-to-market phase may impact portfolio prioritization. 

21. Reliability of resource allocation
Any hiccups in resource allocation (budget, personnel, technical) can significantly impact production. Reviewing these elements is just as crucial to portfolio prioritization as project monitoring. 

Everything flows from your enterprise’s growth objectives 

Looking at a list of potential prioritization factors can seem overwhelming. That’s a lot of potentially conflicting elements to juggle for every project and initiative in your portfolio. However, it becomes infinitely more manageable with a growth innovation methodology that embraces a gaps-first approach to prioritizing actions. 

Growth innovation makes growth the primary outcome of the innovation process, and that growth comes from identifying where the revenue gaps exist and prioritizing the activities that will close those gaps. With that as your primary focus, the other factors become easier to parse. Because ultimately, the questions you’re asking are:

1. Which gaps do we need to close?

2. Which projects will close the gaps?

These prioritization factors become a more granular way of answering these questions, making the whole prioritization process much less complex.

For a more detailed look at growth innovation, check out “How to Craft a Growth Innovation Strategy” and then download the Growth Innovation Strategy Canvas worksheet. This worksheet will help you crystallize and communicate your strategy externally and internally.