Forget what you’ve heard about comparing apples to oranges. It’s often helpful to put your organization’s diverse projects alongside each other and compare them. This is the point of maintaining a portfolio: to treat initiatives like investments and to weigh them against each other, balancing and maximizing the relative worth of these projects through disciplined decision-making and resource allocation.

Portfolios are objective, decisive tools that ensure a safer path to value. Since a portfolio depends on quantitative data and logic, it is an effective way of evaluating priorities in your organization. It will help you determine which projects are worth pursuing and which ones you should throw out.

Thinking in terms of portfolio management can help you achieve any of the following outcomes:

  • Putting the best ideas on a clear and fast track to success
  • Making sure the ideas with the most promise get the most resources
  • Aligning new products and services with strategy
  • Reducing risk in experimentation with new projects

First, determine the desired goals of your portfolio. These might include reducing failure rates, diversifying types of innovation, launching higher-impact initiatives, or leveraging innovation across business units and locations. Once you’ve agreed on a set of targets, you need to come up with tangible criteria for reward and risk measures so that you can concretely measure the potential success of an initiative.

Most people get too attached early on to ideas that simply won’t pan out. It’s harder to stop projects than it is to start new ones. Portfolio management is a quick way to see which ideas you need to abandon and which ones you need to support. Ask yourself these two questions: Does it maximize our value? Are we progressing? The answers to these questions will help you understand whether or not the given project is aligned with the goals of your organization.

For all the fast, reliable results of portfolio management, there are some downsides. A portfolio sometimes creates too few projects, depends on biased criteria, and encourages short-sighted thinking. Keep in mind these pitfalls as you make portfolio management work for you. Overcome this bias and be careful not to over-rely on the portfolio.

Think of the portfolio as a funnel: you launch many ideas at the beginning but, as you measure and compare their current and future values, you hold on to just a few. In the end, only the fittest will survive.