4 Reasons to Seek Better Innovation Resource Allocation

“4 Reasons to Seek Better Innovation Resource Allocation”

By Darrell Velegol, PhD

2024 July 24

“Envision, create, and believe in your own universe, and the universe will form around you. It's more than just being passionate about what you’re doing; it’s about playing at the right table. Sometimes you might be incredibly talented and working incredibly hard, but if you’re at the wrong table, you’ll never achieve your full potential.” -- Tony Hsieh, late CEO of Zappos, from his book, "Delivering Happiness”

You Have to Play at the Right Table!

Is your company effectively allocating resources to its innovation portfolio? Proper allocation leads to these 4 remarkable improvements:

1. Increase Your IRR. Efficient resource allocation can significantly enhance your internal rate of return (IRR). By properly allocating among your portfolio, you will achieve far better financial outcomes.

2. Enhance Communication Across Functions. Proper allocation fosters improved communication between corporate functions such as R&D, marketing, manufacturing, legal, HR, leadership, and regulatory. This ensures that everyone is aligned and working towards common goals, reducing misunderstandings and increasing efficiency and effectiveness.

3. Boost Employee Morale. When resources are allocated effectively, employees see that their ideas and projects are valued and advancing. This recognition and support leads to higher job satisfaction, increased motivation, and commitment to the company's success.

4. Advance Your Career. Leading the effort to improve resource allocation can significantly boost your career. Demonstrating your ability to manage resources wisely and drive innovation positions you as a key leader within your organization, opening up opportunities for promotion.

Ready to Improve Your Allocation Strategy?

For those serious about enhancing resource allocation, consider these common perspectives I’ve heard from industry leaders, and the necessary counterpoints:

“We have a strategy for how we allocate resources.” BUT … If your company is rich in ideas, you likely still have more ideas than resources. A strategy alone may not be enough to prioritize effectively.

“We use mostly qualitative information to allocate our resources.” BUT … Final decisions about dollars, people, and time are inherently quantitative. Balancing qualitative insights with quantitative data leads to more informed and effective resource allocation.

“Assigning numbers is a guessing game. No thank you.” BUT … Forecasting is a science that improves over time. By leveraging advanced forecasting methods, you refine your numbers and make data-guided decisions that enhance your competitive edge.