The Portfolio Hierarchy and the Strategically Agile, Innovative Organisation

This chapter considers why managers continue to find it helpful to apply portfolio logic despite the lack of one best way to think in portfolio terms that can work for all decision-makers at all organisations. To understand why this might be the case, we review the literature on the three levels of portfolio (the “portfolio hierarchy”): the corporate, product and innovation, and project portfolios. The review confirms that the portfolio concept remains popular, despite its naysayers, because it allows key decision-makers to adopt a useful “common language”—one that allows everyone within the organisation to understand how growth through diversification and different innovation objectives can be viably pursued. Crucially, given that our interconnected world continues to change faster than it has ever done before and only strategically agile, innovative organisations are likely to succeed in the future, when one portfolio within the portfolio hierarchy is changed to pursue an opportunity, success is more likely if the whole portfolio hierarchy is changed using agile principles. To illustrate this point, a framework is developed in this chapter that explicates the different organisational agility levers that make success possible and the importance of investing in the continual refinement of the portfolio hierarchy as a multi-level phenomenon. The chapter concludes with a brief discussion of the implications of our findings for research and practice.