Strategic Innovation, Foresight and the Deployment of Project Portfolio Management under Mid-Range Planning Conditions in Medium-Sized Firms

Abstract

The purpose of this paper is to examine the ability of a firm to innovate and absorb its innovative developments by borrowing concepts and models from project portfolio management (PPM). Using past research and the existing literature, it evaluates the potential to apply PPM to the medium-term strategic planning efforts of small- and medium-sized firms. The implementation of strategic innovation requires organizations to develop both a dynamic culture and flexible internal systems that yield to major external changes in their industry as well as internal resource changes. Such changes could include supply or value chain adjustments, changes in consumer behavior, re-allocation of internal resources or the responses of competitors. This paper examines the planning and implementation of project portfolio management tools in small- and medium-sized enterprises (SMEs) (50–250 employees) with a mid-range (2–4 years) planning horizon that are required to innovate in a strategic context to remain competitive or to take advantage of new opportunities. It relates strategic foresight to the ability of the firm to adjust tactically, including in the utilization and development of internal tools, processes, systems and culture. This paper contributes to the literature by examining the potential for PPM methodologies and models to support decision making in a strategic context in SMEs, an area that is under-represented in the research on strategy. It also relates this foresight with strategic innovation and draws parallels between the strategic management planning process and the use of project portfolio management models. It argues that strategic innovation is closely tied with the ability not just to innovate but to absorb this innovation within the organizational processes and build organizational maturity. It also examines the potential use of project portfolio management models to aid strategic innovation. The use of PPM models in support of strategic innovation may contribute to the sustainability of SMEs as businesses and to the potential to identify new business models that enhance the sustainability of a firm’s competitive advantage, particularly in the medium-term.