Uncovering the Overall Portfolio Decision-Making Model for Achieving Strategic Alignment
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2020-05-26
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en
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Given today’s competitive and dynamic environment, firms are under pressure to continuously innovate to sustain a competitive advantage and long-term growth (Kester, Griffin, Hultink, & Lauche, 2011; Lerch & Spieth, 2012). It is therefore critical for a firm’s success and survival to engage in the right innovation projects (Cooper, Edgett, & Kleinschmidt, 2001b; Lerch & Spieth, 2012). Furthermore, studies in the past have argued that innovation project portfolios that are aligned with the firm’s strategy can lead to improved firm performance (e.g. Cooper, Edgett, & Kleinschmidt, 2001a; Kester, Hultink, & Griffin 2014; Lin and Lee, 2011). The goal of this research was to uncover multiple relationships within the overall portfolio decision-making model for achieving strategic alignment, thereby creating a better understanding of the overall portfolio decision-making model for achieving strategic alignment. To achieve this goal, this research integrated literature on portfolio decision-making for achieving strategic alignment, literature on methods that help the achievement of strategic alignment and literature on organizational structures involving the centralization and decentralization of decision-making power. A multiple case study was conducted in four firms from different industries to achieve this goal, resulting in 12 interviews and a few internal documents. The analysis of the data collected on the different concepts of this research resulted in uncovering multiple relationships between the portfolio decision-making processes, the methods that help the achievement of strategic alignment, the organizational structure involving the centralization and decentralization of decision-making power and the budget and the elements of portfolio decision-making effectiveness, through which strategic alignment is achieved. This has resulted in two main insights. Firstly, both evidence-based and opinion-based decision-making are needed in portfolio decision-making and contribute to the achievement of strategic alignment, also through the use of top-down roadmaps and financial methods and the budget. Secondly, also both centralization and decentralization are needed in portfolio decision-making and contribute to the achievement of strategic alignment. This means that a proper balance between evidence-based and opinion-based decision-making and centralization and decentralization needs to be realized to achieve strategic alignment. The results of this research help the achievement of this proper balance by illustrating the influence of each concept on the other concepts of this research. The results of this research can therefore be used by all firms that engage in bigger (strategic) innovation projects, but also external actors, to (re)design the portfolio decision-making toward the achievement of strategic alignment and thereby to improved firm performance. However, further research (both qualitative and quantitative) is recommended toward the expansion of the portfolio decision-making model of this reseach, to thereby create a better understanding of the overall portfolio decision-making model for achieving strategic alignment, because it is not possible for one research to uncover all possible relationships within the overall portfolio decision-making model for achieving strategic alignment.
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Faculteit der Managementwetenschappen