Tackling Policy Challenges Through Public Sector Innovation

A Strategic Portfolio Approach

Report

OECD Public Governance Reviews

23 November 2022

2. Working with innovation portfolios

Abstract

This chapter introduces the concept of innovation portfolios and innovation portfolio management, and asks how innovation facets with varying level of directionality and certainty can be steered in the same organisation. Without structured and conscious support across a portfolio, public sector organisational practices can unbalance innovation efforts and result in bias toward the status quo. At the same time, innovation portfolio management is an emerging topic, and well-developed tools do not exist to help public sector organisations review innovation activities in a coherent way. Nevertheless, successful public sector innovation portfolio management is key to tackling ‘wicked’ problems (green transition, aging, etc.) that require systemic action, and anticipating and adapting to change. The chapter outlines the general functions of innovation portfolio management and proposes avenues for further research and tool development.

Innovation is an uncertain investment: there is no guarantee that any single innovation activity will deliver impact, can be implemented in a predictable way, or will avoid unintended or unanticipated consequences. In an uncertain world, overreliance by public sector organisations on a single strategy can result in a precarious situation, as a change in circumstances (e.g., a crisis or disruption) might make a promising or dependable approach suddenly unreliable or unsuitable. Furthermore, large reforms and goals cannot be achieved by single initiatives or programmes. They require concerted innovation across different organisations both within and outside the public sector. An overview of these activities across a portfolio of interventions builds clarity among an ecosystem of actors around the intent of innovation. As this is an emerging topic, this chapter defines innovation portfolio management and its benefits before jumping into the theoretical underpinnings of an innovation portfolio approach. Based on emerging literature, the main functions of innovation portfolio management are covered in cases identified through qualitative research.

As such, this chapter builds on the semi-systematic literature review carried out in summer 2021, in addition to interviews with current innovation portfolio practitioners. The former were identified during the 2020 OPSI “Government after Shock” conference during an OECD facilitated portfolio workshop session. Prior to the workshops participants were given tools to facilitate their own portfolio discussion in their own organisations using the OECD’s Portfolio Exploration Tool (see further in Box 2.14, Chapter 2) (OECD, n.d.[1]). Following the conference, an external researcher conducted semi-structured interviews with the portfolio workshop participants at the “Government after Shock” conference. This was followed up by case study interviews conducted by the OECD during the summer of 2021. Consequently, the chapter is based on the desktop analysis, qualitative case study analysis and explores how public sector leaders and managers can understand the variety of innovation types that happen in reality in conjunction and in competition with each other. The chapter specifically concentrates on how a portfolio approach to innovation can serve as sense making, coordination and decision-making devise.

Innovation portfolio management

Portfolio management is a dynamic decision-making process that involves regular reviews of ongoing activities and ensures coherent distribution of resources (investment, time, human resources, etc.) between strategic options (Box 2.1). A portfolio approach to innovation – managing multiple activities, support structures, and investments – is a way to spread risk, with numerous investments to mitigate the chance of loss if one investment fails, as others might succeed. It is also a way to identify and analyse synergies between actions, evaluate results beyond single interventions and avoid lock-in to ineffective or unsuitable innovation strategies.

Box 2.1. What does portfolio management involve?

Innovation portfolio management involves a variety of practices to detect, assess and develop new opportunities by managing resources across selected projects, programmes or other interventions. Innovation portfolios include the following aspects:

Portfolio logic and perspective provides strategic focus on a diversity of activities by connecting short-term actions to long-term goals, rather than focusing on individual projects.
Responsibility distribution identifies accountable areas for innovation portfolio management and its components.
Knowledge co-ordination integrates, synthesises and translates subject expertise between disciplines. This includes outreach to partners and knowledge external to the organisation.
Tailored project investments recognise that different types of innovation can require different types of funding. Most small-scale projects do not require heavy investment, while transformational efforts might need consistent and extensive funding.
Co-ordination of innovation activities provides an overview of the innovation lifecycle, including identification challenges, and evaluation of expected impacts and costs. It also establishes stage-gate (gatekeeping) controls to ensure continuity of the process and effective resource optimisation.
Holistic view of innovation efforts helps develop a shared vision of innovation activities and find common understanding and systemic linkages across the entire innovation portfolio.

Source: Holden, A. et al. (2018[2]), Developing Innovation Portfolios for the Public Sector, https://www2.deloitte.com/content/dam/insights/us/articles/4727_Innovation-portfolios/DI_Innovation-portfolios.pdf; Nagji, B. and G. Tuff (2012[3]), “Managing your innovation portfolio”, https://hbr.org/2012/05/managing-your-innovation-portfolio; Meifort, A. (2016[4]), “Innovation portfolio management: A synthesis and research agenda”, https://doi.org/10.1111/caim.12109; Cooper, R., S. Edgett and E. Kleinschmidt (1997[5]), “Portfolio management in new product development: Lessons from the leaders-I”, Research Technology Management, Vol. 40, pp. 16-28.

In the public sector, investing in several innovations and focusing on activities that draw on different types of innovation can increase the chances of achieving a desired or intentional result. Of course, investing in innovations connected to the same issue could increase costs and result in redundancy. But when viewed from a portfolio perspective, these costs appear as investments in strategic options, rather than one-off bets with no guarantee of success. Some innovations are more likely to pay off, while others can be opportunities for learning. What matters is success at the portfolio level, which implies that riskier and learning-friendly innovation environments can also be supported. From a strategic perspective, a well-coordinated portfolio of projects is a better bet than a single, all-or-nothing effort, especially if the operating environment is uncertain and public sector organisations cannot be confident about where (or when) an innovative response is needed. This approach can also avoid a longstanding problem with innovation in the public sector: that projects become too big to fail, with investments continued on the assumption that they will lead to success due to a lack of alternatives.

In response to these pressures and challenges, public sector organisations in OECD countries and beyond are experimenting with portfolio approaches to innovation. Portfolio approaches can maintain distinct simultaneous activities and supports for both current operations (exploitation) and new opportunities (exploration). With differentiation and equilibrium between activities, an organisation can be more flexible, adaptable and responsive to disruptive contexts. Consequently, to set an overall direction for innovation, it is necessary to have a systematic view of efforts and an ability to steer them at a portfolio level. A portfolio approach is therefore a way to moderate the stream of different innovations within a system.

Nevertheless, as many approaches are still at an early stage of development, there is a diversity of perceptions and practices regarding innovation portfolios in public sector organisations.

Portfolio approaches to innovation management arise mostly from reflections by practitioners on emerging needs. For example, Sitra (2020[6]) in Finland adopted innovation portfolio approaches in response to the realisation that previous innovation management approaches were short-sighted, fragmented and ineffective (see Box 2.2). Meanwhile, Climate KIC, an organisation supported in part by the European Institute of Innovation and Technology (EIT) and focused on innovation to mitigate and adapt to climate change, acquired a new understanding of the strategic role of the public sector in directing innovation (see Box 2.6). At the global level, the United Nations Development Programme is pioneering portfolio approaches to coordinate complex international and local, public sector and third sector stakeholder landscapes (UNDP, 2022[7]).

Box 2.2. Relational sense-making in Finland

Sitra is Finland’s public innovation fund, operating as both a think-tank and an investment company. It employs approximately 180 people and works on topics such as climate change, data, democracy and the circular economy. Sitra adopted an innovation portfolio approach to systematise and develop its capacities for renewal. Portfolio management provides a way to experiment with individual projects within a wider framework of multiple experiments. Sitra’s portfolios include strategic goals and user interviews to understand the broader context and relevance of projects. These highlight the “pain points” and desired outcomes of innovation work. At their core, the portfolios map all ongoing projects in the relevant area, establishing links with the overall strategic goals they support. Portfolio approaches also enable “relational sense-making”: the idea that understanding an innovation ecosystem depends on knowledge spread among different individuals. By joining together, they create a greater, shared understanding that would be otherwise unattainable.

Source: OECD interview (2021).

The main benefits of innovation portfolios are:

Avoiding fragmentation and ‘projectification’. A project-centric view of innovation can be problematic, and public sector organisations struggle with ‘projectification’ (Box 2.3): the division of policy problems into smaller, manageable, time-bound actions without an overview of their collective impact. In isolation, innovation activities that need to fit into neat project formats influence the types of problems considered suitable for innovation. For instance, pre-determined timeframes can imply that the main target of innovation is not to uncover the most effective or creative solutions, but to make projects work within the given time span.
Tackling risk-aversion and learning on the portfolio level. Innovation portfolio management can provide a view over a range of projects, which facilitates resource dissemination and increases the tolerance for risk and investment in organisations. This involves the ability to distribute risk among multiple investments while developing new intelligence and skills to move swiftly in the unknown. Failure, which is a natural part of innovation, becomes more manageable when viewed at a portfolio level.
Finding synergies between projects and activities. Portfolios do not perform in isolation. Rather, they form part of an organisational or systemic context. Portfolio approaches to innovation can highlight the breadth of available resources and actors (not only in the public sector but also in the private and third sectors), to reallocate them in accordance with public value. A benefit is the setting of objectives and prioritisation of resources, even when the innovation activities themselves are unclear, such as when using part of the innovation portfolio to stress-test current policies and services, or responding to rapidly changing technological context or user needs.
Building value chains between different project areas. The processes associated with portfolio management bring operational clarity and understanding of the entire innovation value chain, allowing practitioners to evaluate the potential to scale up innovation. They can also mobilise partners, sources of knowledge and resources to help innovation activities move between exploration to exploitation.
Keeping tabs on layered activities connected to big reforms. Innovation portfolios can be analysed at the team/unit, organisational or ecosystemic level in terms of both innovation activities and desired impacts. The types of the impact pursued by public sector innovation determine the level at which the innovation activity should be analysed. Portfolio approaches provide ways to coordinate, measure and align innovation at multiple levels towards an overall strategy.
Planning across ecosystems. Portfolios offer a holistic view of innovation efforts and the systemic capacity for solution-based design to address complex problems. In many cases, challenges span several sectors and require alignment of innovation activities across ecosystems, such as innovation in basic research and local action to achieve the climate transition (Box 2.4). In multi-project environments, performance should be considered in a joint manner rather than divided between projects, programmes and portfolio.
Avoiding lock-in and capture by innovation fads and fashions. Due to the complex nature of ‘wicked’ problems, innovations linked to these challenges must be open-ended and interconnected, and avoid rigid, pre-determined models and pathways to solutions.

Theoretical underpinnings of a portfolio approach

Given the diverse and shifting environment in which public sector organisations operate, it is unwise to lean heavily on a narrow approach to innovation. Relying on a single strategy or solution will limit an organisation’s capacity to balance managing current operations (exploitation) with engaging new opportunities (exploration). While exploitation enhances knowledge and expertise when searching for efficiency, exploration means experimenting to find the most novel solution for a transformational change (Andriopoulos and Lewis, 2009[8]). Equilibrium between these modes allows a more flexible, adaptable and responsive approach to disruptive contexts (Turner, Aitken and Bozarth, 2018[9]). This aptitude is associated with the notion of “ambidexterity” (Andriopoulos and Lewis, 2009[8]; O’Reilly and Tushman, 2013[10]; Koryak et al., 2018[11]) – a dynamic capability organisations need in the face of complex and uncertain scenarios.

Most private sector innovation portfolio management literature (e.g., Sicotte, Drouin and Delerue (2014[12])) tends to draw upon Teece, Pisano and Shuen’s (1997[13]) “dynamic capabilities” framework: the capacity to reshape existing resources into novel solutions to address a changing operational environment. While there are many examples of how private sector organisations handle ambidexterity and grow dynamic capabilities (Birkinshaw, Zimmermann and Raisch, 2016[14]; Randhawa, Wilden and Gudergan, 2021[15]), the adroit management of exploration and exploitation activities in the context of public sector organisations is at an early stage of development, especially when it comes impact on innovation processes. To set a direction for innovation, an organisation needs a systemic view of innovation efforts (Osborne and Brown, 2013[16]). Central to this reflection is a portfolio approach to moderate the stream of different types of innovation (Popadić, Pučko and Černe, 2016[17]). Yet there are diverse perceptions of this practice, considering the variety of factors and of contexts in which they could be employed.

The private sector uses innovation portfolios to transform vague ideas into novel activities, often by spreading risk at the level of investment in innovation. Nagji and Tuff (2012[3]) describe innovation portfolio management as an overview of multiple projects that facilitates resource dissemination and increases the tolerance for risk and investment in organisations. This involves distributing risk among multiple investments while developing intelligence and skills to move in the unknown (Nagji and Tuff, 2012[3]). In this line, Meifort (2016[4]) highlights four perspectives in relation to portfolios: (1) optimisation – developing a list of projects based on strategies inspired by financial sector stock portfolios, finding the most suitable combination of projects; (2) strategy – turning plans into action by allocating resources in alignment with the organisational target; (3) decision-making – initiating a deliberative process that includes stage-gate controls to engage with the constantly changing environment; (4) organisational – develop multi-level strategic perspectives to coordinate the views of different departmental decision-makers while respecting budget constraints.

In the public sector context, however, a project-centric view of innovation can be problematic. Public sector innovation and policy pilots often struggle with ‘projectification’ (Lundin et al., 2015[18]; Hodgson et al., 2019[19]; Midler, 1995[20]) (Box 2.3). Innovation activities that must fit into neat formats influence the types of problems considered suitable for innovation. Public sector innovation becomes forced into established timeframes. In such cases, the goal becomes not to uncover the most effective or creative solutions, but to make them work in the given time span (Hodgson et al., 2019[19]). Pre-determined timeframes might be too short for measuring long-term impact, decreasing the usefulness of evaluation. Without measures for long term impact, it is difficult to coordinate with other projects in the wider ecosystem and monitor progress against the overall organisational purpose.

Box 2.3. The problem of ‘projectification’

‘Projectification’ is the reliance on project-management methods to organise activities (Midler, 1995[20]; Packendorff and Lindgren, 2014[21]). This approach organises a company around projects as central elements for arranging work. However, such a project-based mentality can lead to:

organisational de-integration with services defined by teams rather than the whole organisation
service fragmentation with purpose dispersed across disjointed assignments
lack of consistent organisational transformation because activities follow a project-to-project mindset
political disincentives when project results are limited to the duration of a political agenda
standardisation of policy targets in terms of both implementation and evaluation limits innovation
instrumental and rationalised approaches to the innovation process overshadow social aspects of the goals
limited time to implement operations and deliver results within the project timeframe

Source: Hodgson, D. et al. (2019[19]), The Projectification of the Public Sector, Routledge, Abingdon.; Midler, C. (1995[20]), “’Projectification’ of the firm: The renault case”, Scandinavian Journal of Management, Vol. 11/4, pp. 363-375; Packendorff, J. and M. Lindgren (2014[21]), “Projectification and its consequences: Narrow and broad conceptualisations”, https://doi.org/10.4102/sajems.v17i1.807.

Given the diversity of values the public sector pursues and the partnerships it needs to develop, public innovation portfolios must be broader than individual projects or investments. Considering the complex nature of ‘wicked’ problems, innovation must be open-ended, inter-connected and without pre-determined pathways to solutions (Rittel and Webber, 1973[22]). The innovation portfolio management process aims to align all projects in the portfolio to an overall strategy (Box 2.4). Advancing a shared purpose while creating insights to produce impact on a broader scale is a desirable feature of innovation portfolios in the public sector (Seppälä, 2021[23]). This holistic view of the innovation efforts outlines the need to both look at innovation portfolios from an organisational level and analyse the systemic ability to design solutions by mobilising the whole ecosystem to address complex problems. The private sector analyses this through the concept of ‘alliance’ portfolios, which look at complimentary relationships and diversity of sources of knowledge and resources (Cui and O’Connor, 2012[24]). In the public sector, it could be even broader: innovation portfolios can encourage societal transformation by connecting projects for strategic goals and creating an enabling and collaborative environment (Seppälä, 2021[23]). A proactive and cooperative approach is preferable for dealing with complex systems.

Box 2.4. Managing the climate transition through a portfolio approach in Sweden

Viable Cities is a strategic innovation programme hosted by the Royal Institute of Technology (KTH), aligned with other Swedish innovation agencies such as Vinnova (see also Box 5.14) and the Swedish Energy Agency. Their funding amounts to EUR 100 million over 12 years (2017-2030), largely dedicated to grants. The programme focuses on making cities climate-friendly and sustainable.

Viable Cities adopted a portfolio approach in conjunction with a mission-oriented innovation framework to achieve a systemic view of the climate transition. The portfolio approach counters siloed and fragmented efforts that do not sufficiently contribute to climate transition. The programme identified ‘projectification’ (Box 2.3) as an obstacle to innovation work. Therefore, portfolios are not conceptualised as a list of projects and include everything deemed relevant to the mission, such as challenges, needs, barriers or future options. Further aspects might include investment plans, learning and people.

The innovation portfolio approach encourages Viable Cities members and partners to develop a portfolio strategy together. It is hoped that portfolios with an “open interface towards other portfolios” will create a common language and framework, facilitating discussions and exchange of ideas. The portfolio of Viable Cities could thus become compatible with those of other organisations. Aside from being an internal tool for capacity-building, the portfolio also aligns with agencies working on similar projects. However, ensuring compatibility among portfolios requires understanding the varied international, national and municipal institutional levels at which they operate. Viable Cities focuses on city-level innovations where concrete implementation measures are taken.

Source: OECD interview (2021).

Drawing on the discussion above, innovation portfolios can be analysed at the team/unit level, organisational level or wider ecosystem level in terms of both innovation projects and the strategic impacts they seek. The dimension of impact targeted determines the level at which innovation activity should be analysed. On the other hand, processes associated with innovation portfolio management improve operational clarity and understanding of the whole process (Cooper, Edgett and Kleinschmidt, 2001[25]; Schultz, Søren and Talke, 2013[26]; Teller et al., 2012[27]; Kock and Gemünden, 2016[28]). Innovation portfolio management can thus increase organisational transparency while allocating available resources and actors in accordance with the organisational mission.

Lessons from the private sector

The theoretical underpinnings of an innovation portfolio approach presented above reveal a reliance on private sector experience in conceptualising innovation portfolio management, and that this might present limitations. Portfolio management methods were first applied in the financial sector with a view to steering investment decision-making (Martinsuo and Dietrich, 2002[29]). Although public sector organisations increasingly use private sector performance metrics, they are also influenced by political and bureaucratic dynamics (Crawford, Simpson and Koll., 1999[30]; Parker and Bradley, 2000[31]; Turner and Keegan, 1999[32]; Boland and Fowler, 2000[33]). Therefore, these theoretical models have not proven effective in the public sector context, and the public sector’s requirements for project portfolio structures and tools have yet to be identified (Martinsuo and Dietrich, 2002[29]).

Public sector organisations are influenced by internal political factors and external public expectations (Määttä and Ojala, 1999[34]). The internal political pressure is created by voters covering the social-economic context of the decision-making process. External public expectations concern activities such as infrastructure and services like education, healthcare, and market-based services for citizens and businesses. To provide high-quality services to citizens, these two aspects of leadership must align. As a result of the interplay between budget constraints and effectiveness, the public sector resists change in political, economic, and technological areas (Määttä and Ojala, 1999[34]). Yet public sector organisations increasingly operate in rapidly changing and complex environments, needing to adapt swiftly to new contexts. Portfolio approaches in the public sector thus aim to steer investment while coordinating and balancing innovation activities that satisfy both internal and external pressures.

In the private sector, evaluating investment options in portfolios is associated with reducing risk (Nagji and Tuff, 2012[3]). Portfolios in this context usually face resource allocation trade-offs, conflicts between exploitative and explorative activities in organisational routines, bound risks and more uncertain investments (Stettner and Lavie, 2014[35]). The objective is to build a portfolio that ensures the greatest total performance and distributes resources across a diversity of activities. Innovation portfolio management must contend with shifting contexts, opposing strategic goals and the uncertainty of external factors that affect organisational performance (Cooper, Edgett and Kleinschmidt, 2002[36]).

This suits the corporate context where day-to-day processes are optimised and follow a clear line from problem analysis to strategy formulation and execution. The work is typically organised in such a way that funds and efforts follow pre-planned and defined life cycles and milestones (Elenbaas, 2000[37]; Salapatas, 2000[38]). Hence, private sector innovation portfolios often rely on the innovation funnel model, the innovation ambition matrix model, the options portfolio model and the project impact feasibility model (Box 2.5) to make investment decisions. Decision criteria can include uncertainty, risk, feasibility, impact (e.g. variety across different markets, technologies, product categories and project types), and temporality (long-term projects versus short term investments). Usually, the goal is to maximise the monetary value of the overall portfolio, achieve a balance of projects across the criteria and ensure that the portfolio reflects the strategy of the business (Cooper, Edgett and Kleinschmidt, 1999[39]). However, these models tend to bias the portfolio towards investment and financial value logic. In addition, focusing on cost- and project-based models means that large organisations tend to favour exploitation activities over exploration. Consequently, many of these models have been critiqued for biases and blind spots, for both the public and private sectors.

Box 2.5. Private sector innovation portfolio models

The ambition matrix model

The ambition matrix model provides a framework for monitoring ongoing initiatives and the amount of money invested. It assesses innovation based on novelty in the market (Nagji and Tuff, 2012[3]). This matrix identifies three categories of innovation: core, adjacent and transformational. Core innovations are improvements of existing solutions. Adjacent innovations are solutions improved and applied to a new context. Transformational innovations are new solutions that serve new markets.

The options model

The options model assesses the portfolio through a series of options that consider the level of uncertainty (Nagji and Tuff, 2012[3]). Uncertainty is very low in the core business, moderate in platform launches and highest in seeking new solutions and markets. Instead of being restricted to risk, which typically rules out many forms of experimentation, the rationale behind options portfolio investments looks beyond uncertainty to also highlight what organisations can gain in terms of knowledge from an innovation investment (Nagji and Tuff, 2012[3]).

The impact-feasibility portfolio model

The impact-feasibility portfolio model is used when innovation projects focus primarily on investment returns. In such a model, an organisation compiles innovation initiatives based on their potential overall impact and probability of success. It continually evaluates the portfolio using return-on-investment analyses (Nagji and Tuff, 2012[3]). In contrast to the ambition matrix, such frameworks offer an accurate evaluation of viability and impact, instead of relying on the most novel solution (Holden et al., 2018[2]).

Figure 2.3. The impact-feasibility model

Source (Box): Holden, A. et al. (2018[2]), Developing Innovation Portfolios for the Public Sector, https://www2.deloitte.com/content/dam/insights/us/articles/4727_Innovation-portfolios/DI_Innovation-portfolios.pdf; Nagji, B. and G. Tuff (2012[3]), “Managing your innovation portfolio”, https://hbr.org/2012/05/managing-your-innovation-portfolio.

Functions of innovation portfolios

Innovation portfolio management combines a range of techniques for detecting, assessing, and developing new ideas by managing resources across projects (Cooper, Edgett and Kleinschmidt, 1997[5]). This section analyses the following functions of innovation portfolios: creating new knowledge and space for sense-making; mapping innovation portfolios to create a holistic view; creating a diverse supply of innovation; measuring and evaluating the status of the innovation process; and ensuring efficient project co-ordination and portfolio stewardship.

Creating new knowledge and space for sense-making

Spreading organisational assets across a spectrum of activities creates intelligence through practice and collaboration. Holden et al. (2018[2]) point out that innovation investments are not only made to receive the biggest return on investment, but often as a strategic move to learn and develop knowledge about emerging goods or processes. Innovation portfolio management thus improves clarity and understanding of innovation activity (Cooper, Edgett and Kleinschmidt, 2001[25]).

First, expanding innovation activity across a set of projects widens the organisational or systemic perspective. Innovation portfolios influence the long-term perspective as it is crucial to determine the viability of future initiatives and resource dissemination. While many innovations happen on an ad-hoc or provisional basis (Kock and Gemünden, 2016[28]), innovation portfolios can make sense of and reflect on their long-term impacts. Portfolios therefore offer perspective on innovation that aims to remodel society rather than simply provide the financial means to execute operations. Portfolios also put the focus on learning from innovation failures, reframing the negative connotation of innovation failure in the public sector.1 The public sector already plays this role in many cases, providing “patient capital” for research and development (Cooper, Edgett and Kleinschmidt, 1997[5]). But the same logic does not yet apply to public sector activities themselves. Achieving that requires a variety of skills. Analytical ability is essential for developing core and adjacent innovations, while transformational innovations usually require discovery and idea definition (Nagji and Tuff, 2012[3]).

Second, innovation portfolios offer an overview and understanding of ongoing activities and create space for sense-making (Box 2.6). Sense-making in this context means the ability to identify needs for innovation, and ownership of problems and initiatives, using this process to develop organisational expertise (Weick, Sutcliffe and Obstfeld, 2005[40]). Through a structured understanding of innovation needs, portfolio owners can pick up on patterns of significance for organisations or ecosystems (ibid.). In other words, sense-making means understanding, arranging and interpreting complex environments to provide a comprehensible view of current endeavours (Weick, Sutcliffe and Obstfeld, 2005[40]). When confronted with complex situations, managers need “to change what ‘facts’ they pay attention to and ‘frame’ new course of action” (Fligstein, 2006, p. 950[41]) within their innovation portfolio.

Box 2.6. Climate KIC

Climate KIC is a Knowledge and Innovation Community (KIC) co-funded by the European Union to identify and support innovation to mitigate and adapt to climate change. Climate KIC is also involved with the Transition Cities project, in which eight European cities form thematic clusters around the topics of energy networks, mobility and buildings. The need to understand, map and visualise the activities of the innovation system motivated Climate KIC to use an innovation portfolio approach looking at governance structures, and the skills and types of activities in the cities. A mapping exercise and formulation of a portfolio were the starting point for discussing and creating alignment around a common vision. A common vision creates an opportunity to develop an action plan, especially relevant where various organisations respond to different funding calls. In this case, a portfolio overview enabled project managers to adopt an ecosystemic perspective when conceptualising problems and strategies.

Source: OECD interview (2021)

Sense-making broadens the institutional view of paths and possibilities within and beyond the existing innovation portfolio, to compare potential investments and chose the most viable (Chôra Foundation, 2021[42]). These pathways shape and trace new forms of exploration rather than leading to the discovery of forgotten or ignored information. This practice generates assets and capabilities for the organisation to gain new skills and expand its perspective, resulting in more tolerance for constant shifts and uncertainty. However, by generating new knowledge and ways of learning, sense-making challenges traditional structures and bureaucratic frames (Kvilvang, Bjurström and Almqvist, 2020[43]). The ability to balance business-as-usual against challenging the status quo and searching for novel solutions for potential scenarios is a capacity connected to “innovation’s dilemma” (Christensen, 1997[44]) and can influence portfolio positioning between exploratory versus exploitative actions.

In the innovation facets sense, enhancement-oriented innovation and mission-oriented innovation receive more high-level leadership attention due to their need for high investment levels and political visibility. This could mean that anticipatory and adaptive action, while important to organisations, are discounted in the broader portfolio. Balancing innovation activities and analysing them in a broader context must thus be part of organisational sense-making activities.

Mapping a holistic view of innovation

Another relevant aspect of portfolios is to create a holistic ‘portfolio mindset’ (Smithson, 2010[45]). Innovation portfolios present innovation assets and activities from different perspectives and enable organisations or systems to swiftly shift resources such as investments, talent and leadership to more promising opportunities in quickly changing contexts (Box 2.7). Innovation portfolios enable management decisions based on knowledge of all initiatives in the portfolio and how each connects and contributes to the overall long-term strategy (Kester et al., 2011[46]). This requires innovation portfolio managers to monitor and map innovation activities so that decisions can be made holistically. A portfolio mindset gives strategic focus both across organisational siloes, programmes and projects, and across the whole organisation or ecosystem by contributing to more all-inclusive thinking and mobilisation of resources towards broader goals. Portfolios allow decision-makers to optimise resources across projects and tailor them in accordance with new contexts or changes in the operating environment. Innovation portfolios reveal options while making sense of current actions, initiating social dialogue and rethinking shared purposes while allocating resources. The public sector has applied this, for example, to the field of education planning for schools and sharing their resources across districts by developing portfolio networks (Campell, 2012[47]) (Box 2.8).

Box 2.7. Innovation mapping in Gipuzkoa, Spain

The provincial council of Gipuzkoa initiated the Building the Future programme in 2015 with the aim to work collectively to detect and address future challenges facing the province. The programme is built on an open and collaborative governance model, with structures for understanding needs and ideas, proposing and initiating experimental projects, and learning from and scaling up results. It uses an innovation portfolio approach to identify connections and align and gain synergies between co-creation activities. In 2019, the provincial council began work to support and further a collaborative governance approach for the programme, focused on developing participatory processes of understanding and interpreting, co-creating and scaling, and learning and development for systemic transformation. These efforts were catalysed by the Climate KIC’s (Box 2.6) selection of Gipuzkoa as one of eight Deep Demonstration projects, which provide a standard process and support for system innovation. The initial phase included clarifying intent with the owners of challenges, mapping the system of existing initiatives and connections between them, and analysing the innovation portfolio. This approach improves understanding of the actors across the programme, builds a common language for them, and identifies innovation needs and intervention points for change. Initial anchoring work (with political leaders and other challenge owners), to establish a collective strategic intent and understanding of the system, will provide a base for further work on managing and catalysing change through innovation.

Source: OECD interview (2021).

Box 2.8. Portfolio mindset transforming school education in the United States

To enhance the quality of education and make it more inclusive, four urban school districts in the United States (New York, New Orleans, Chicago, and the District of Columbia) explored models for novel educational frameworks. These models were developed based on the idea of “portfolio school districts” to learn and exchange expertise and practices with the best-performing schools, and to replicate them at under-performing institutions. The aim of the portfolio districts approach was to generate sustained progress by combining multiple approaches from different actors in the educational system (e.g., local schools, educational bodies, non-profit organisations, firms and universities). The portfolios were adapted to the needs and requests of the different areas. The schools, not the districts, were responsible for distributing resources to provide high-quality learning environments for their students. The institutional diversity was considered particularly beneficial for generating new approaches and skills to meet the needs of pupils. There was no standard procedure for developing a portfolio district, which typically started with exchanging practices and was later adjusted to needs and context.

Source: Hill, P., C. Campbell and D. Menefee-Libey (2009[48]), Portfolio School districts Project: Portfolio School Districts for Big Cities: An Interim Report, Center for Reinventing Public Education.

Creating a diverse supply of innovation

Innovation often involves risk and uncertainty. Creating a diverse supply of innovation activities and expertise in an organisation’s or ecosystem’s portfolio spreads financial risk and develops higher adaptability to changing contexts. Portfolio management is often associated with financial strategies, as the primary concern of investors is to lower portfolio risk (Fabozzi and Markowitz, 2011[49]). In the investment community, theories connected to investment risk and return are an essential component of sound portfolio management as they form a basis for the investment strategy (Elton, Gruber and Busse, 2004[50]). Rather than putting big amounts of money in one place, it is advisable to build a varied portfolio of several investments. This is called diversification – a risk-reduction strategy that allocates investments over a wide variety of financial tools, sectors and other categories in a portfolio (Ansoff, 1957[51]).

In the public sector, short-term financial, reputational and programmatic risks play a role in shaping innovation portfolios. While diversification in investment portfolios can be a standard approach to mitigating risk, in the public sector it requires a change in the outlook of innovation efforts: from perceiving innovation as a distinct activity to considering it part of the whole organisation (Holden et al., 2018[2]). A diverse innovation portfolio allows governments to deal with individual failures by leveraging rewards across the portfolio to compensate losses and continue funding further rounds (Mazzucato, 2011[52]; Rodrik, 2015[53]). Furthermore, financial arguments might not be the only considerations public organisations need to consider in diversifying their innovation portfolios. Strategic aims connected to goals and challenges might justify higher risk tolerance due to their broader value proposition (Laplane and Mazzucato, 2020[54]).

Another benefit of innovation portfolio diversification is the ability to adapt or lead a public sector organisation’s innovation activity in a different direction when faced with a threat to its mission, remit or purpose. For risk preparedness, organisations and systems must diversify supply and allocation of budget, technology, human resources and knowledge across innovation activities (Box 2.9). Some risk reduction is possible through allocation optimisation and redundancy across innovation activities supporting similar outcomes. The purpose of diversification is to reduce the instability of the portfolio by offsetting a poorly performing innovation activity with a better one. This creates ‘portfolio agility’ (Sull, 2009[55]):2 the capacity to switch resources swiftly and efficiently from less to more favourable fields of work. In decision-making, agility contributes to portfolio optimisation by detecting activities unsuitable to new contexts and prioritising more promising opportunities (Kester et al., 2011[46]). This requires is enough buy-in from senior leaders to address power balances within organisations if reallocations and changes are needed (Kuilboer, Ashrafi and Lee, 2016[56]). Hence, a key portfolio activity is to create an sufficient supply of innovation to support both long- and short-term needs, and adequate investment in diverse innovation activities overall.

Box 2.9. Resource allocation across Lund’s innovation portfolio in Sweden

Future by Lund (FBL) is an innovation platform for the Swedish municipality of Lund. It aims to implement governance mechanisms that support stakeholder dialogue about collective assets, activities and strengths of the local innovation ecosystem. FBL plans to introduce clearer processes to identify problems and opportunities for collective action across different focus areas. It will also address the curation and strategic development of a portfolio of innovation activities across multiple organisations, actor groups and thematic boundaries.

As a first step, FBL is mapping innovation assets and collaborative innovation activities (leveraging the OECD’s Public Sector Innovation Facets model, among others). With this base, FBL will facilitate dialogue between stakeholders to set a collective direction and identify possibilities to align efforts and resources or initiate activities.

Over the past seven years, FBL developed its role through work on longer-term and future-oriented development activities (i.e., anticipatory innovation), co-ordinating and facilitating collaborative action where multiple organisations see potential but resources are thin and collaboration is essential for progress. Structured processes of innovation portfolio management will be important to reveal and provide evidence of the ripple effects and continued legitimacy for this role.

Source: OECD interview (2021).

Taking these arguments into account and drawing on the diversification strategy, the OECD Observatory of Public Sector Innovation (OPSI) developed the four-facet innovations model3 (Chapter 1), which looks at public sector innovation portfolios beyond financial aims (including, missions, adapting to citizens need, ensuring value for money, and preparing for uncertain events and investments outside the private sector). Governments should not strictly focus on innovation portfolio balance. Organisations should develop each of the facets, but depending on their organisational goals the weight of each in the portfolio may differ. They should have multiple ongoing innovation activities aligned with the strategy or purpose of the organisation while investing in other types of innovation to avoid lock-in and stay in touch with citizen needs. A good portfolio has elements of all the innovation facets. Reflecting diversification strategies used by the financial industry, public sector organisations should spread their innovation efforts across the facets while developing organisational abilities in various directions. As governments are expected to act in a challenge-driven and anticipatory way, different evaluation models will help them assess return on investment beyond monetary terms.

Measuring and evaluating innovation portfolios

It is important to evaluate the success of innovation portfolio implementation, taking into consideration the type of innovation, the expected accomplishments and lessons learnt. The measurement and evaluation of individual innovation projects is distinct from that of innovation portfolio management. The ‘stage-gate process’ is a mechanism to control and evolve innovation efforts from rough ideas through to implementation (Cooper, 1990[57]). Stage-gate processes can evaluate innovation projects and activities at regular intervals to ensure they fit new contexts and align with organisational purpose (Holden et al., 2018[2]). The evaluation process ensures effective resource management and establishes benchmarks to assess project performance. Reflection on the results helps create knowledge and inform future directions of projects.

In contrast, measurement and evaluation of the whole portfolio of projects requires a different approach. Innovation portfolio managers, who might be responsible for analysis, decision-making or both, should measure and evaluate how the portfolio performs in delivering impact against the organisation’s remit, purpose, or mission. While it is notoriously difficult to track, measure and evaluate, innovation portfolio managers should develop mechanisms to address a few key questions: (1) Is the portfolio aligning activities and projects with the overall organisational purpose or mission?; (2) Is the portfolio creating and maintaining distinct and suitable strategies for managing different types of innovation activity?; (3) Are new linkages across innovation activities being made and is learning happening between them (Box 2.10)?; (4) Are innovation activities in the portfolio shifting based on identified gaps, changed operating environments, or new opportunities or threats? Finally, as a meta-evaluation question, innovation portfolio managers should consider whether portfolio analysis is sufficiently connected with decision-making about how resources are allocated to innovation activities.

Box 2.10. Portfolio learning in Chicago, United States

The Office of Innovation forms part of the City of Chicago and is assigned the role of a “fixer” when problems arise in departmental innovation processes. The impetus to use innovation portfolios stemmed from the realisation that innovation teams did not possess a mandate to innovate, largely because public sector innovation was not perceived as possible or legitimate. The Office of Innovation was created to centralise innovation assistance and introduce relevant performance metrics. A second motivation was to improve the continuity of projects by fostering institutional memory and longevity, regardless of changes in the political administration. To this end, the Office of Innovation created a database of innovation projects, which tracks ideas, successes and failures, and provides a systemic overview of progress. This approach encourages a culture of learning and understanding failure as a normal aspect of innovation work.

Source: OECD interview (2021).

Ensuring efficient project co-ordination and portfolio stewardship

The increasingly interconnected nature of public policy calls for new concepts to help public servants adapt (Lindquist, 1992[58]; Paquet, 2009[59]). Especially in the context of innovation management, the state has an important role in shaping and steering technological and economic development towards a societal vision. In this context, stewardship means the interrelated attitudes, roles and behaviours that public sector leaders enact and promote to help their organisations adapt to the evolving context in which they operate (Wilson, 2013[60]).

Although the concept of stewardship is not new to the public sector, a scarcity of empirical studies limits understanding and application of this notion by public leaders in their organisational context. Stewardship as proposed by Kass (1988[61]) describes the capability of public servants to gain public trust with effective and ethically sound behaviour while building synergies and collaboration at a team, organisation or ecosystem level. The role of the steward is to balance the long- and short-term perspective of projects, and enhance the visibility and coordination of innovation activities. The purpose of innovation portfolios is to transform plans into strategic actions (Eggers, 2012[62])).

Whereas innovation might arise from different units in an organisation or actors in a system, it is essential to maintain interconnection between activities while balancing the approaches of different decision-makers – considering them pieces of a broad strategy or mission (Cooper, Edgett and Kleinschmidt, 1997[5]). In multi-project environments, different types of performance should be considered jointly rather than distinguishing among projects, programs and portfolios (Müller, Martinsuo and Blomquist, 2008[63]). Portfolios do not perform in isolation. Rather, they are part of a broader organisational context (ibid.). Their role can be assessed from the perspective of balancing conflicting interests based on the strategic actions of the organisation (Müller, Martinsuo and Blomquist, 2008[63]). Thus, portfolio decisions should be in line with the organisational or ecosystem strategy (Turner and Müller, 2005[64]).

The success of the portfolio stewardship role becomes evident in the interpretation and alignment of strategic actions and balancing of conflicting interests within the organisation. Innovation portfolios are thus a fundamental part of decision-making (Loch and Bode-Greuel, 2001[65]), especially for large, coordinated efforts (Box 2.11). Consequently, a dynamic decision-making process involves regular reviews of ongoing projects in the portfolio, ensuring suitable resource distribution between projects or activities (Mathews, 2010[66]) and contributing to organisational learning and institutional memory of what works in which contexts and why. Other stewardship functions include setting objectives for different parts of the portfolio, owning decisions, facilitating learning across activities and with internal and external actors, identifying systemic patterns and windows of opportunity, and establishing priorities for available resources (Fricke and Shenhar, 2000[67]) These enhance co-ordination based on broader strategic aims.

Box 2.11. Innovation co-ordination in Helsingborg, Sweden

In 2019, Helsingborg (population approximately 110 000) launched H22, a city-wide innovation initiative to improve quality of life for all residents. The administrative structure of the city comprises nine departments and approximately 12 000 employees, and innovation is the responsibility of the individual departments. As a result, primary importance was given to co-ordinating their efforts and creating a framework for cross-departmental work. This was the central reason for adopting innovation portfolios.

Helsingborg strives to include diverse types of innovation in its portfolio. This includes idea-driven innovation: the city identified 17 challenges to encourage mission-driven innovation. Meanwhile, possibility-driven innovation focuses on the unknown potential of certain technologies, such as blockchain or Artificial Intelligence. Weekly cross-departmental meetings co-ordinate initiatives and Helsingborg uses external websites, the intranet and other channels to disseminate information and encourage participation among large segments of society.

Source: OECD interview (2021).

Tools and methods

Various fields, including the public sector, introduce portfolio practices to coordinate and steer organisational efforts to enhance performance (Roussel, Saad and Erickson, 1991[68]; Dye and J.S., 1999[69]; Cooper, Edgett and Kleinschmidt, 2001[25]; Martinsuo and Dietrich, 2002[29]). There is a wide variety of frameworks and tools for managing a portfolio (Cooper, Edgett and Kleinschmidt, 1997[5]; Roussel, Saad and Erickson, 1991[68]). Tools can be placed inside the government or outside, such as outsourcing services in the form of inter-ministry committees, working groups, central and inter-strategy departments, representing different ways to steer public management (Van De Walle and Groeneveld, 2011[70]). Managing in complex contexts, as in the case of public sector, often means that governments must simultaneously lead towards several goals using a variety of tools.

Portfolio practices in the public sector can be supported using tools designed to illustrate the distribution of resources and activities, promote understanding of portfolio activities, and oversee complex innovation systems. However, in practice there is a lack of mature tools for developing innovation portfolios across functions in the public sector. Evaluation, measurement and benchmarking tools are particularly needed. At present, tools tailored to risk management, resource allocation and understanding the underlying ecosystems connected to innovation portfolios are being trialled in the public sector following their use in the private sector.

Risk-balance and resource allocation

One of the functions of innovation portfolios is to create a risk tolerant environment in which managers can balance high risk opportunities with more promising projects (Morris, 2010[71]). In this sense, innovation portfolios in the public sector function in the same way as portfolio management for any other kind of investment and require a profound understanding of the innovation activities involved to allocate resources efficiently (Kock and Gemünden, 2016[28]).

One tool is the Risk-Reward Bubble diagram (Cooper, Edgett and Kleinschmidt, 1999[39]) (Box 2.12). Its main criterion is the added value and possible impact an initiative could have for the organisation or ecosystem. The diagram shows decision-makers the trade-offs between a single initiative and its effects on the portfolio (Cooper, Edgett and Kleinschmidt, 1999[39]). Adding a project decreases the resources available for others, which requires careful distribution of assets. The model shows the “dynamic decision-making process” in action: projects should be documented and compared, and resources balanced across a variety of activities (Cooper, Edgett and Kleinschmidt, 1999[39]). The archetypes in the diagram display the probability of success and reward associated with different activities. A balanced portfolio enables the organisation to concentrate on certain sectors or business areas, and manage the related risk (Doorasamy, 2015[72]). Hence, the archetypes are helpful for framing a portfolio.

Box 2.12. Risk-Reward Bubble diagram in portfolio management

The Risk-Reward Bubble diagram depicts the balance of resource allocation and projects in a portfolio. It plots and classifies prospective projects as follows:

Pearls – core projects with high probability of success expected to produce big rewards.
Oysters – projects with strong potential, but needing capital, energy and sometimes cutting-edge innovation, where the possible reward is big but the odds of success are very low.
Bread and butter – simple, minor projects likely to succeed but bring little reward.
White elephants – projects that absorb enormous resources but offer almost nothing in return.

Figure 2.4. The risk reward public diagram

An example of resource and risk allocation in the public sector, the US government 10x agency funds innovation exploration activities and uses stage-gating funding to learn and assess exploitative potential over time (Box 2.13) and invest resources accordingly. As a result, projects and activities funded at highest levels have a lower risk of failing to implement because early warning signals or insurmountable barriers were resolved during earlier stage-gates.

Box 2.13. Investing in public sector innovation portfolios in the United States

10x is a US government organisation that drives innovation projects in the public sector with a unique, portfolio approach to selecting, developing and scaling innovation investments. Its biannual call for ideas invites all federal government employees to briefly describe in a few sentences the problem they are attempting to solve. This low-barrier approach draws on employees’ knowledge and can circumvent chains of command that might complicate the communication of insights. 10x applies specific criteria to select projects based on these submissions: the organisation aims for moon shots and transformational ideas, but also makes its selection based on feasibility (e.g., whether the ideas require more seed funding than 10x can supply). 10x accepts failure as an essential part of innovation that should be seen as normal and beneficial when it occurs fast and achieves progress or learning. Otherwise, even promising projects can be shut down early on.

Selected projects move through three phases. In the first phase, 10x conducts an investigation to understand the problem space. The second phase narrows the selection of projects by applying stricter criteria and asking what problem needs to be solved and what the solution entails. This phase requires deeper research and development, and a grasp of the current state of the field, the contextual fit, the timelines involved, regulatory issues and how the innovation might scale. In the third phase, the project team must make a case to 10x investments for further funding. This involves rigorous scrutiny and most proposals are deselected at this stage. At this stage, 10x requests a prototype or solution uncovered in the previous phase. The 10x team works with a portfolio of projects in each round and allocates resources to balance creating safe-to-fail spaces for exploration and learning with lower-risk resource allocation to solutions that are most likely to scale.

Source: OECD interview (2021).

Understanding current portfolio activities

Assessing the current state of the portfolio offers a clearer view of what processes and methods already exist, identifies gaps, and creates a strategy for launching the portfolio management process in line with the organisational vision. This shared vision will guide decisions taken across the organisation, aligning them with the organisational objective (PMI, 2013[73]). Portfolio management is a continuous process. Unlike individual projects or programmes that have planned start and end dates, portfolios require constant monitoring of activities to help the organisation respond to change and uncertainty (PMI, 2013[73]). This requires tools for understanding the bigger picture of ongoing innovation activities within an organisation or ecosystem, and for generating evidence to make decisions at a portfolio level.

One tool that supports decision making at a portfolio level is the Portfolio Exploration Tool (PET) developed by OPSI (Box 2.14). The PET helps consider and comprehend the different innovation activities in an organisation or ecosystem. It is based on the Public Sector Innovation Facets model, which differentiates between four types of innovation activities (Chapter 1). The PET allows for self-assessment of capacities and innovation types in an organisation or ecosystem. The results provide an overview of innovation patterns and help teams or systems develop a more deliberate innovation strategy in which excessive focus on one type of innovation does not limit the ability to respond to future challenges.

Box 2.14. Portfolio Exploration Tool

The Portfolio Exploration Tool (PET), developed by OPSI and funded by the European Union’s Horizon 2020 programme, is a self-guided digital tool to map the innovation activities and the capabilities of an organisation or ecosystem.

PET comprises three parts. Module 1 represents a quick snapshot of the organisational capabilities for innovation. Module 2 goes further by providing a project-based mapping of innovation types. Module 3 is a deep portfolio analysis based on the data obtained from a broad perspective.

The resulting overview of innovation strengths helps select systemic and structured innovation. The PET also assesses the directionality of organisational activities and indicates possible gaps in innovation approaches and asset management. The tool is based on the OECD’s Public Sector Innovation Facets model developed.

Another purpose of the tool is to build a global repository of user data to inform OPSI’s long-term research on innovation developments and patterns. This exercise enables OPSI to deepen its analysis of innovation theory and understand trends and patterns of innovation through the prism of the daily challenges that public sector organisations face.

Managing complex systems

Portfolio management requires complex, multi-level organisational governance because it usually involves several decision-makers and units with different strategic visions and goals (Cooper, Edgett and Kleinschmidt, 1999[39]; Meifort, 2016[4]). Complexity theory, as applied to public management, offers an approach to understanding the factors that enable managers to make more effective decisions (Rhodes and MacKechnie, 2003[76]). Complexity theory and public management share a perspective on monitoring and providing feedback when steering behaviour in organisational systems. This advocates for a holistic perspective from which public service should be developed.

Complex adaptive systems (CAS) consist of independent elements that act as an integrated body and develop new knowledge based on experience while adapting to a changing environment (Holland, 2006[77]). CAS increase their survival ability by adapting to shifting circumstances based on dynamic networks of interactions. Complex systems support understanding and anticipating the most difficult societal problems (e.g., climate change, the COVID pandemic). In a CAS, the system and its stakeholders cannot be separated; the system is more than just an aggregate of actors or elements (Dooley, 1997[78]). The different components of the system must be coordinated and connected, leading to the creation of new knowledge that is otherwise difficult to obtain by simply observing single interactions.

Many public sector organisations operate in environments of ambiguity, involving multiple interconnected stakeholders and systems. Portfolio management thus requires tools to understand and manage complex systems. One example is the Cynefin framework (Box 2.15) used in collective sense-making to facilitate collective decision-making (Kurtz and Snowden, 2003[79]).

Box 2.15. The Cynefin framework

Cynefin is a decision-making tool to make sense of unknown problems by offering new perspectives on old challenges. Its usefulness lies in exploring and creating knowledge on emerging ideas by arranging decisions in five domains:

Obvious (known knowns) – options are clear and there are causal connections. This is the domain of best practices where problems and solutions are rational and clear to everyone.
Complicated (known unknowns) – different approaches to the same problem can be valid, and causal relationships remain. Decision-making starts with making sense of the situation, exploring good practices, usually with expert analysis, and selecting the best response. Viewpoints from different backgrounds are relevant to choosing the best solution.
Complex (unknown unknowns) – there are no experts and the focus is on practices that emerge from communication between agents. The best approach is to probe-sense-respond. Finding the optimal solution requires experimentation and considers failure as part of learning.
Chaotic (unknowable unknowns) – there is no causal relationship and the environment is disorganised and turbulent. Criteria to make decisions are unclear as there are no best practices to explore. The approach is to act fast and firmly to mitigate the chaos, sense the impact and respond. It is possible to enter this domain deliberately to unlock opportunities for innovation.
Disorder (not determined) – it is unclear which of the previous categories dominates and it is difficult to make sense of the situation. People usually rely on individual decisions and aim to gain understanding and move into a known domain to adopt adequate measures.

Another approach to developing understanding of innovation activities is to analyse the different sub‑systems within a complex environment. The Pentagon framework is used in systems thinking and multi-faced complexity management (Akgün, Van Leeuwen and Nijkamp, 2012[80]) to address the idea that public sector management should be developed in a context of partnership and coordination. The Pentagon framework visually captures the interactions in a system that can produce an impact on a wider ecosystem level (Box 2.16).

Box 2.16. The Pentagon framework for ecosystem management

Governments often operate in complex, uncertain and interdependent contexts. Public sector organisations do not perform in isolation but instead are part of a broad, interconnected ecosystem. The Pentagon framework supports a nuanced comprehension of complex sub-systems through clear delineation of the problem and influences within an ecosystem. It help teams narrow challenges, and map and shape measurements to address future performance.

Using portfolios to balance innovation

Finding a balance between different types of innovation activities in organisations is difficult. However, the ambidexterity to balance exploring and exploiting innovation is desirable for long-term organisational success (Raisch et al., 2009[81]): successful organisations find equilibrium between reinforcing current operations and searching for new opportunities. In the public sector context, an organisation faced with significant levels of uncertainty requires a provisional approach to reflect on possible outcomes before heavily engaging a certain idea or project. To achieve success over time, most organisations need to sustain a variety of innovation activities that enable them to consider varied alternatives (O’Reilly and Tushman, 2013[10]).

Duncan (1976[82]) proposes that organisations achieve ambidexterity in a gradual manner and adapt their structures over time to balance conflicting alignments in accordance with the organisational purpose. In contrast, Tushman and O’Reilly (1996[83]) argue that organisations should explore and exploit at the same time in the context of quick change by developing the “ability to simultaneously pursue both incremental and discontinuous innovation and change results from hosting multiple contradictory structures, processes, and cultures within the same firm” (Tushman and O’Reilly, 1996, p. 24[83]). Thus, they suggest that exploration and exploitation should take place in separate units connected by a shared goal (Tushman and O’Reilly, 1996[83]).

At the same time, Stettner and Lavie (2014[35]) suggest that organisations spread their resources in exploring emerging areas of work while focusing on standard practices by designing a portfolio that gives an overview of organisational activities. Raisch et al. (2009[81]) note the need for more in-depth understanding of the connections and tensions between exploitation and exploration. This can be done using portfolio practices to gain insights into future and ongoing activities that the organisation is developing.

Another approach is to balance innovation portfolio gaps inside organisations with partnerships and collaborations with stakeholders strong in areas the internal portfolio lacks (Chesbrough, 2006[84]). This is known as inbound open innovation (Majhi et al., 2020[85]). This requires an organisation’s absorptive capacity to understand what is missing in its innovation portfolios and integrate external knowledge. Human resource practices, internal learning mechanisms, international diversification and corporate governance rules can play a role in the ability to source knowledge externally (Ardito et al., 2020[86]). In many cases, these relationships are a must because impacts are co-created in a public service setting.

According to Rhodes (1996[87]; 2012[88]), governance should be equal to a space where actors communicate and co-operate. Supporting this view, Klijn and Koppenjan (2012[89]) suggests that an emphasis on connection between organisations to enhance co-operation and collaboration to deliver better services is among the most relevant functions of governance (Agranoff and McGuire, 2001[90]; Torfing, 2012[91]; Rhodes, 1997[92]). This is echoed in literature on collaborative innovation inside the public sector over the last decade (e.g., Sørensen and Torfing (2011[93]); Crosby, ‘t Hart and Torfing (2017[94]); Wegrich (2019[95])).

Consequently, portfolio balance can be archived within a broader innovation ecosystem, rather than only inside the organisation. This makes it necessary to make sense of portfolios within a network or ecosystem perspective, rather than assess projects or programs individually.

Action points and takeaways

Innovation portfolio management is assuming an increasingly central role in the public sector. While innovation portfolios – whether managed or not – already exist, their effectiveness in delivering on governments’ long-term goals is currently more ad hoc than deliberate. Much more investment is needed in innovation portfolio approaches, as is uptake in public sector organisations where practical lessons can be learnt. Many political, institutional and social factors can influence innovation portfolio composition in the public sector that might not even merit consideration in the private sector.

Portfolio approaches help address a variety of issues connected to innovation management in the public sector, such as risk aversion, failure, fragmentation, alignment of action across policy cycles, etc. But portfolio approaches in the public sector are only now developing, and there is a need for more research, testing and development of different models to address diverging needs. Tools and methods are essential to help visualise, monitor, evaluate and act regarding innovation portfolios. There are obvious limitations to the innovation portfolio management tools available today given the variety of portfolio approaches and the broad contexts to which they can be applied. The tools and methods are still too abstract and distant from day-to-day challenges in the public sector, with little or no empirical testing and validation. There is also a distinct lack of comparative research to compare portfolio management experiences with other organisations, or tools and methods shared in the same ecosystem. These questions require exploration in theory and practice.

Of course, tools are only useful if the people and roles they support are positioned to steward innovation portfolios – including those that span across and between organisations. The role of an innovation portfolio manager is not only analysis and decision-making, but also collective sense-making, shared learning and agenda-setting. This role is particularly important for innovation that supports grand societal challenges and missions such as green transformation. Spanning local, regional and national and even supranational bodies, innovation portfolio managers encourage uptake of innovation activities not only among public actors, but also among firms, citizens and the third sector. A systemic view of innovation efforts is vital to allow the public sector and its partners to gauge whether their efforts are sufficient to meet the challenges involved in such missions.

Portfolio practices can also help organisations avoid traditional innovation pitfalls, such as incentivising people not to draw attention to risks, addressing failure on a project basis, and favouring exploitation over exploration and short-term gains over long-term investment. An adequate and intentional supply of innovation activity across a portfolio is important for the public sector to avoid the biggest risk of all: the inability to adapt or lead when faced with a threat to its mission, remit, or purpose, thereby missing the opportunity to create public value or address the biggest global challenges of our time.

Performed well, innovation portfolio management is a continuous activity that spans institutions. Innovation portfolios can be examined within and between units and teams, and across entire organisations. The key question is how to build synergies between these practices that translate into learning and decision making supportive of innovation across the whole organisation. Research is needed on differentiated models of innovation stewardship and portfolio management, not only to fit different organisations but also to meet the needs of government called to steer innovation for the public sector or an ecosystem as a whole.

References

[90] Agranoff, R. and M. McGuire (2001), “Big questions in public network management research”, Journal of Public Administration Research and Theory, Vol. 11/3, pp. 295-326, https://doi.org/10.1093/oxfordjournals.jpart.a003504.

[80] Akgün, A., E. Van Leeuwen and P. Nijkamp (2012), “A multi-actor multi-criteria scenario analysis of regional sustainable resource policy”, Ecological Economics, Vol. 78, pp. 19-28, https://doi.org/10.1016/j.ecolecon.2012.02.026.

[8] Andriopoulos, C. and M. Lewis (2009), “Exploitation-exploration tensions and organizational ambidexterity: Managing paradoxes of innovation”, Organization Science, Vol. 20/4, pp. 696-717.

[51] Ansoff, H. (1957), “Strategies for diversification”, Harvard Business Review, Vol. 35/5, pp. 113-124.

[86] Ardito, L. et al. (2020), “The influence of inbound open innovation on ambidexterity performance: Does it pay to source knowledge from supply chain stakeholders?”, Journal of Business Research, Vol. 119, pp. 321-329.

[14] Birkinshaw, J., A. Zimmermann and S. Raisch (2016), “How do firms adapt to discontinuous change? Bridging the dynamic capabilities and ambidexterity perspectives”, California Management Review, Vol. 58/4, pp. 36-58, https://doi.org/10.1525/cmr.2016.58.4.36.

[96] Bloch, C. and M. Bugge (2013), “Public sector innovation – From theory to measurement”, Structural Change and Economic Dynamics, Vol. 27, pp. 133-145.

[33] Boland, T. and A. Fowler (2000), “A system perspective of performance management in public sector organizations”, International Journal of Public Sector Management, Vol. 13/5, pp. 417-446.

[47] Campell, C. (2012), “The portfolio mindset: Innovation starts from the ground up”, https://files.eric.ed.gov/fulltext/ED532631.pdf.

[84] Chesbrough, H. (2006), “The era of open innovation”, in Mayle, D. (ed.), Managing Innovation and Change, Sage Publishing.

[42] Chôra Foundation (2021), The Future of Development: “Make Happen” with Portfolios of Options, Chôra Foundation.

[44] Christensen, C. (1997), The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail, Harvard Business School Press, Boston, MA.

[57] Cooper, R. (1990), “Stage-Gate systems: A new tool for managing new products”, Business Horizons, Vol. 33/3, pp. 44-54, https://doi.org/10.1016/0007-6813(90)90040-I.

[36] Cooper, R., S. Edgett and E. Kleinschmidt (2002), “Optimising the stage-gate process: What best practices companies do-II”, Research Technology Management, Vol. 45, pp. 21-27.

[25] Cooper, R., S. Edgett and E. Kleinschmidt (2001), Portfolio Management for New Products, 2nd ed., Perseus Publishing, Cambridge, MA.

[39] Cooper, R., S. Edgett and E. Kleinschmidt (1999), “New product portfolio management: Practices and performance”, Journal of Product Innovation Management, Vol. 16, https://doi.org/10.1016/S0737-6782(99)00005-3.

[5] Cooper, R., S. Edgett and E. Kleinschmidt (1997), “Portfolio management in new product development: Lessons from the leaders-I”, Research Technology Management, Vol. 40, pp. 16-28.

[30] Crawford, L., S. Simpson and W. Koll. (1999), “Managing by projects: A public sector approach”, in Artto, K., K. Kähkönen and K. Koskinen (eds.), Managing Business by Projects, Vol. 1, Helsinki, Finland.

[94] Crosby, B., P. ‘t Hart and J. Torfing (2017), “Public value creation through collaborative innovation”, Public Management Review, Vol. 19/5, pp. 655-669.

[24] Cui, A. and G. O’Connor (2012), “Alliance portfolio resource diversity and firm innovation”, Journal of Marketing, Vol. 76/4, pp. 24-43, https://doi.org/10.1509/jm.11.0130.

[78] Dooley, K. (1997), “A complex adaptive systems model of organization change”, Nonlinear Dynamics, Psychology, and Life Sciences, Vol. 1, pp. 69-97, https://doi.org/10.1023/A:1022375910940.

[72] Doorasamy, M. (2015), “Product portfolio management for new product development”, Problems and Perspectives in Management, Vol. 13/4, pp. 102-114.

[82] Duncan, R. (1976), “The ambidextrous organization: Designing dual structures for innovation”, The Management of Organization, Vol. 1, pp. 167-188.

[69] Dye, L. and P. J.S. (1999), Project Portfolio Management. Selecting and Prioritizing Projects for Competitive Advantage, Center for Business Practices, USA.

[62] Eggers, J. (2012), “Falling flat: Failed technologies and investment under uncertainty”, Administrative Science Quarterly, Vol. 57/1, pp. 47-80, https://doi.org/10.1177/0001839212447181.

[37] Elenbaas, B. (2000), “Staging a project - Are you setting your project up for success?”, Paper presented at Project Management Institute Annual Seminars & Symposium, Houston, TX, Project Management Institute, Newtown Square, PA.

[50] Elton, E., M. Gruber and J. Busse (2004), “Are investors rational? Choices among index funds”, Journal of Finance, Vol. 59/1, pp. 261-288.

[49] Fabozzi, F. and H. Markowitz (2011), The Theory and Practice of Investment Management: Asset Allocation, Valuation, Portfolio Construction, and Strategies, Second Edition.

[97] Feller, I. and E. Feller (1981), “Public-sector innovation as “conspicuous production””, Policy Analysis, Vol. 7/1, pp. 1-20.

[41] Fligstein, N. (2006), “Sense making and the emergence of a new form of market governance: The case of the European defense industry”, American Behavioral Scientist, Vol. 49, pp. 949-960.

[67] Fricke, S. and A. Shenhar (2000), “Managing multiple engineering projects in a manufacturing support environment”, IEEE Transactions on Engineering Management, Vol. 47/2, pp. 258-268.

[48] Hill, P., C. Campbell and D. Menefee-Libey (2009), Portfolio School districts Project: Portfolio School Districts for Big Cities: An Interim Report, Center for Reinventing Public Education.

[19] Hodgson, D. et al. (2019), The Projectification of the Public Sector, Routledge, Abingdon.

[2] Holden, A. et al. (2018), Developing Innovation Portfolios for the Public Sector, Deloitte, https://www2.deloitte.com/content/dam/insights/us/articles/4727_Innovation-portfolios/DI_Innovation-portfolios.pdf.

[77] Holland, J. (2006), “Studying complex adaptive systems”, Journal of Systems Science and Complexity, Vol. 19, pp. 1-8, https://doi.org/10.1007/s11424-006-0001-z.

[61] Kass, H. (1988), “Stewardship as a fundamental element in images of public administration”, Dialogue, Vol. 10/2, pp. 2-48.

[46] Kester, L. et al. (2011), “Exploring portfolio decision-making processes”, Journal of Product Innovation Management, Vol. 28/5, pp. 641-661.

[89] Klijn, E. and J. Koppenjan (2012), “Governance network theory: Past, present and future”, Policy and Politics, Vol. 40, pp. 587-606.

[28] Kock, A. and H. Gemünden (2016), “Antecedents to decision-making quality and agility in innovation portfolio management”, Journal of Product Innovation Management, Vol. 33/6, pp. 670-86.

[11] Koryak, O. et al. (2018), “Disentangling the antecedents of ambidexterity: Exploration and exploitation”, Research Policy, Vol. 47/2, pp. 413-427.

[56] Kuilboer, J., N. Ashrafi and O. Lee (2016), “Business intelligence capabilities as facilitators to achieve organizational agility”, https://www.guidedbees.com/~ruben/EDSI/papers/kuilboer_business.pdf.

[79] Kurtz, C. and D. Snowden (2003), “The new dynamics of strategy: Sense-making in a complex and complicated world”, IBM Systems Journal, Vol. 42, pp. 462-483.

[43] Kvilvang, N., E. Bjurström and R. Almqvist (2020), “Making sense of complexity in governance: the case of local public management in the City of Stockholm”, Policy Studies, Vol. 41/6, pp. 623-640, https://doi.org/10.1080/01442872.2019.1577372.

[54] Laplane, A. and M. Mazzucato (2020), “Socializing the risks and rewards of public investments: Economic, policy, and legal issues”, Research Policy, Vol. X/2, p. 100008.

[58] Lindquist, E. (1992), “Public managers and policy communities: Learning to meet new challenges”, Canadian Public Administration, https://doi.org/10.1111/j.1754-7121.1992.tb00685.x.

[65] Loch, C. and K. Bode-Greuel (2001), “Evaluating growth options as sources of value for pharmaceutical research projects”, R & D Management, Vol. 31, pp. 231-248.

[18] Lundin, R. et al. (2015), Managing and Working in Project Society: Institutional Challenges of Temporary Organisations, Cambridge University Press, Cambridge.

[34] Määttä, S. and T. Ojala (1999), “A challenge for the balanced success in the public sector towards more proactive strategic management”, Valtiovarainministeriö, Helsinki.

[85] Majhi, S. et al. (2020), “The synergistic role of individual absorptive capacity and individual ambidexterity in open innovation: A moderated-mediation model”, in Managing Knowledge, Absorptive Capacity and Innovation.

[29] Martinsuo, M. and P. Dietrich (2002), “Public sector requirements towards project portfolio management”, Paper presented at PMI® Research Conference 2002: Frontiers of Project Management Research and Applications, Seattle, Washington. Newtown Square, PA.

[66] Mathews, S. (2010), “Innovation portfolio architecture”, Research Technology Management, Vol. 53/6, pp. 30-40.

[52] Mazzucato, M. (2011), “The entrepreneurial state”, Soundings, Vol. 49/49, pp. 131-142.

[4] Meifort, A. (2016), “Innovation portfolio management: A synthesis and research agenda”, Creativity and Innovation Management, pp. 251-269, https://doi.org/10.1111/caim.12109.

[20] Midler, C. (1995), “’Projectification’ of the firm: The renault case”, Scandinavian Journal of Management, Vol. 11/4, pp. 363-375.

[71] Morris, L. (2010), “Managing innovation portfolios”, An InnovationLabs White Paper.

[63] Müller, R., M. Martinsuo and T. Blomquist (2008), “Project portfolio control and portfolio management performance in different contexts”, Project Management Journal, Vol. 39/3, pp. 28-42, https://doi.org/10.1002/pmj.20053.

[3] Nagji, B. and G. Tuff (2012), “Managing your innovation portfolio”, Harvard Business Review, pp. 66-74, https://hbr.org/2012/05/managing-your-innovation-portfolio.

[74] OECD (2021), Public Sector Innovation Facets: Innovation Portfolios, Observatory of Public Sector Innovation, OECD, Paris, https://oecd-opsi.org/wp-content/uploads/2021/10/OECD-Innovation-Facets-Brief-Innovation-Portfolios-2021.pdf.

[75] OECD (n.d.), Analyse Your Organisation’s Innovation Portfolio, Observatory of Public Sector Innovation, OECD, Paris, https://oecd-opsi.org/pet.

[1] OECD (n.d.), Portfolio Exploration Tool, Observatory of Public Sector Innovation, OECD, Paris, https://oecd-opsi.org/pet/.

[10] O’Reilly, C. and M. Tushman (2013), “Organizational ambidexterity: Past, present, and future”, Academy of Management Perspectives, Vol. 27/4, pp. 324-338.

[16] Osborne, S. and L. Brown (2013), The Handbook of Innovation in Public Services, Edward Elgar Publishing Ltd.

[21] Packendorff, J. and M. Lindgren (2014), “Projectification and its consequences: Narrow and broad conceptualisations”, South African Journal of Economic and Management Sciences (SAJEMS), Vol. 17, pp. 7-21, https://doi.org/10.4102/sajems.v17i1.807.

[59] Paquet, G. (2009), Scheming Virtuously: The Road to Collaborative Governance, Invenire Books, Ottawa.

[31] Parker, R. and L. Bradley (2000), “Organizational culture in the public sector: Evidence from six organizations”, International Journal of Public Sector Management, Vol. 13/2, pp. 125-141.

[73] PMI (2013), The Standards for Portoflio Management – Third Edition, Project Management Institute, Inc.

[17] Popadić, M., D. Pučko and M. Černe (2016), “Exploratory innovation, exploitative innovation and innovation performance: The moderating role of alliance portoflio partner diversity”, Economic and Business Review, Vol. 18/3, pp. 293-318, https://doi.org/10.15458.

[81] Raisch, S. et al. (2009), “Organizational ambidexterity: Balancing exploitation and exploration for sustained performance”, Organization Science, Vol. 20, pp. 685-695.

[15] Randhawa, K., R. Wilden and S. Gudergan (2021), “How to innovate toward an ambidextrous business model? The role of dynamic capabilities and market orientation”, Journal of Business Research, Vol. 130, pp. 618-634, https://doi.org/10.1016/j.jbusres.2020.05.046.

[76] Rhodes, M. and G. MacKechnie (2003), “Understanding public service systems: Is there a role for complex adaptive systems theory”, Emergence, Vol. 5/4, pp. 57-85.

[88] Rhodes, R. (2012), “Waves of governance”, in Levi-Faur, D. (ed.), The Oxford Handbook of Governance, Oxford University Press, https://doi.org/10.1093/oxfordhb/9780199560530.013.0003.

[92] Rhodes, R. (1997), “Understanding governance: Policy networks, governance, reflexivity and accountability”, in Public Policy & Management, Open University, Philadelphia.

[87] Rhodes, R. (1996), “The new governance: Governing without government”, Political Studies, Vol. XLIV, pp. 652-667.

[22] Rittel, H. and M. Webber (1973), “Dilemmas in a general theory of planning”, Policy Sciences, Vol. 4, pp. 155-169, https://doi.org/10.1007/BF01405730.

[53] Rodrik, D. (2015), “From welfare state to innovation state”, Project Syndicate, Vol. 14/1.

[68] Roussel, P., K. Saad and T. Erickson (1991), Third Generation R&D: Managing the Link to Corporate Strategy, Arthur D. Little, Inc., USA.

[38] Salapatas, J. (2000), “Best practices - The nine elements to success”, Paper presented at Project Management Institute Annual Seminars & Symposium, Houston, TX, Project Management Institute, Newtown Square, PA.

[26] Schultz, C., S. Søren and K. Talke (2013), “Measuring new product portfolio innovativeness: How differences in scale width and evaluator perspectives affect its relationship with performance”, Journal of Product Innovation Management, Vol. 30/1, pp. 93-109.

[23] Seppälä, M. (2021), Radical Uncertainty Requires Radical Collaboration, Finish Innovation Fund Sitra, Helsinki.

[12] Sicotte, H., N. Drouin and H. Delerue (2014), “Innovation portfolio management as a subset of dynamic capabilities: Measurement and impact on innovative performance”, Project Management Journal, Vol. 45/6, pp. 58-72, https://doi.org/10.1002/pmj.21456.

[6] Sitra (2020), “Innovation portfolio sensemaking and management workshop”, https://www.sitra.fi/en/blogs/lab-log-12-innovation-portfolio-sensemaking-and-management-workshop.

[45] Smithson, C. (2010), “The changing face of portfolio management”, The Project Manager, Vol. 29/3, pp. 22-23.

[93] Sørensen, E. and J. Torfing (2011), “Enhancing collaborative innovation in the public sector”, Administration & Society, Vol. 43/8, pp. 842-868.

[35] Stettner, U. and D. Lavie (2014), “Ambidexterity under scrutiny: Exploration and exploitation via internal organization, alliances, and acquisitions”, Strategic Management Journal, Vol. 35, https://doi.org/10.1002/smj.2195.

[55] Sull, D. (2009), “Competing through organizational agility”, McKinsey Quarterly.

[13] Teece, D., G. Pisano and A. Shuen (1997), “Dynamic capabilities and strategic management”, Strategic Management Journal, Vol. 18/7, pp. 509-533.

[27] Teller, J. et al. (2012), “Formalization of project portfolio management: The moderating role of project portfolio complexity”, International Journal of Project Management, Vol. 30/5, pp. 596-607, http://dx.doi.org/10.1016/j.ijproman.2012.01.020.

[91] Torfing, J. (2012), “Governance and meta-governance”, in Levi Faur, D. (ed.), The Handbook of Governance, Oxford University Press.

[64] Turner, J. and R. Müller (2005), “The project manager’s leadership style as a success factor on projects: A literature review”, Project Management Journal, Vol. 36/2, pp. 49-61, https://doi.org/10.1177/875697280503600206.

[9] Turner, N., J. Aitken and C. Bozarth (2018), “A framework for understanding managerial responses to supply chain complexity”, International Journal of Operations & Production Management, Vol. 38, https://doi.org/10.1108/IJOPM-01-2017-0062.

[32] Turner, R. and A. Keegan (1999), “The versatile project-based organization: Governance and operational control”, European Management Journal, Vol. 17/3, pp. 296-309.

[83] Tushman, M. and C. O’Reilly (1996), “Ambidextrous organizations: Managing evolutionary and revolutionary change”, California Management Review, Vol. 38/4, pp. 8-29, https://doi.org/10.2307/41165852.

[7] UNDP (2022), System Change: A Guidebook for Adopting Portfolio Approaches, United Nations Development Programme, Bangkok, Thailand.

[70] Van De Walle, S. and S. Groeneveld (2011), “New steering instruments: Trends in public sector practice and scholarship”, in Van De Walle, S. and S. Groeneveld (eds.), New Steering Concepts in Public Management, https://Ssrn.Com/Abstract=1958173.

[95] Wegrich, K. (2019), “The blind spots of collaborative innovation”, Public Management Review, Vol. 21/1, pp. 12-20.

[40] Weick, K., K. Sutcliffe and D. Obstfeld (2005), “Organizing and the process of sensemaking”, Organization Science, Vol. 16, pp. 409-421.

[60] Wilson, C. (2013), “Moving from leadership to stewardship”, Prepared for Second Annual CAPPA Conference in Public Management, Oakham House, Ryerson University, Toronto, Ontario, 27-28 May 2013.

Notes

← 1. Traditionally, innovation failures in the public sector are penalised more than successes are rewarded (Feller and Feller, 1981[97]), contributing to a culture of risk-aversion and fear of failure often highlighted as barriers to innovation (Bloch and Bugge, 2013[96]).

← 2. Sull (2009[55]) identifies three types of organisational agility: operational, portfolio, and strategic agility.

← 3. See https://oecd-opsi.org/projects/innovation-facets/ for detailed information about the OPSI innovation facets model.

Featured topics

Agriculture and fisheries

Climate change

Development

Digital

Economy

Education and skills

Employment

Environment

Finance and investment

Governance

Health

Industry, business and entrepreneurship

Regional, rural and urban development

Science, technology and innovation

Society

Taxation

Trade

Energy

Nuclear energy

Transport

Featured topics

Agriculture and fisheries

Climate change

Development

Digital

Economy

Education and skills

Employment

Environment

Finance and investment

Governance

Health

Industry, business and entrepreneurship

Regional, rural and urban development

Science, technology and innovation

Society

Taxation

Trade

Energy

Nuclear energy

Transport

Countries A - C

Countries D - I

Countries J - M

Countries N - R

Countries S - T

Countries U - Z

Regional and global engagement

Countries

Countries A - C

Countries D - I

Countries J - M

Countries N - R

Countries S - T

Countries U - Z

Regional and global engagement

Publications

Publications

Featured publications

Data

Data

Featured data

News & Events

News & Events

Featured Events

About OECD

About

Engage with us

Work with us

Featured topics

Agriculture and fisheries

Climate change

Development

Digital

Economy

Education and skills

Employment

Environment

Finance and investment