Formation of a portfolio of innovative projects, Stages of formation...

Forming a portfolio of innovative projects

On the basis of a comprehensive evaluation of each of the innovative projects under consideration, their final selection in the innovative program formed by the enterprise is carried out. The process of forming the program of innovative projects of the enterprise is based on a number of important principles, among them the following can be singled out.

1. This principle allows you to take into account in the process of forming an innovative program the entire system of objectives of the enterprise strategy, as well as the nature of the tasks of innovation that arise under the influence of changes in external and internal factors of its implementation. The principle of multi-criteria selection of projects in the innovation program is based on ranking the goals and objectives of innovation activity in terms of their importance, highlighting the main target as the main criterion for selecting projects and using individual targets as a system of appropriate restrictions in the selection process.

2. Differentiation of selection criteria by types of innovative projects (independent, interconnected and mutually exclusive).

3. Accounting for objective limitations of the company's innovation activity. When forming an innovation activity program, the main objective constraints that need to be taken into account are: the envisaged volumes of investment activity in accordance with the innovation strategy; availability of necessary resources, specialists, promising developments and the possibility of their involvement from outside; the main state regulatory requirements for the implementation of innovative activities.

4. Providing communication of the innovation program with the production, financial and investment programs of the enterprise.

5. Ensuring the balance of the innovation program on the most important parameters. The internal balance of the innovative program of the enterprise, as well as investment, is ensured, first of all, by an effective correlation of such important parameters as profitability, risk and liquidity. In the process of ensuring the balance of the innovation program for the parameters in question, reserves should be found to reduce the level of risk and increase liquidity at a given level of its profitability.

Taking into account the considered basic principles, the formation of the program of innovative activity of the enterprise is carried out on several basic stages.

Stages of formation of an innovative enterprise program

1. The selection of the main criterion for the selection of projects in the innovative program of the enterprise. Such criteria include the indicators of investment activity NPV, PI, IRR, and the indicators of innovation.

2. Differentiation of quantitative values ​​of the main selection criterion by types of projects to justify screening innovation decisions. In order to select projects according to the selected main criterion, it must have a certain quantitative value. In the practice of innovative management, this quantitative value of the main criterion indicator of selection is differentiated usually according to the objectives of implementing innovative projects, as well as the nature of the projects themselves. In particular, the differentiation of the quantitative values ​​of the main selection criterion is made by independent, interconnected and mutually exclusive innovative projects.

3. Constructing a system of restrictions on the selection of projects in an innovative program according to the selected main criterion. The constraint system, which is established during the selection of projects in the enterprise's innovative program being developed, usually includes basic and auxiliary normative indicators.

The following are usually set as the main limiting normative indicators:

• one of the alternative indicators of the project's effectiveness (for example, with the main criterion indicator - the net present value, the limiting internal rate of return or the maximum discounted payback period of the project can be chosen to limit performance indicators);

• the maximum permissible level of overall project risk.

The following may be used as auxiliary limiting normative indicators:

• level of readiness of the innovation project for implementation;

• Level of feasibility of the project (but economic, technical, technological, economic and other parameters)

• Innovative level of the project (its conformity to the latest achievements of technological progress);

• the possibility of risk diversification due to the sectoral or regional focus of the project;

• the possibility of postponing the implementation of an innovative project without significant damage to the implementation of strategic objectives of the enterprise development.

4. The ranking of the innovation projects under consideration by the main criterion and the constraint system.

Project

Investments

NPV

PI

E

30

90

3.00

From

50

120

2.40

F

80

170

2.13

A

150

300

2.00

In

100

190

1.90

Total

160

380

2.34

5. Formation of an innovative program in the conditions of operating parameters limitations. In practice, a situation often occurs where the priority of the enterprise's innovation activity at certain stages of its strategic development is the need to quickly reach the set production and sales volumes (with the strategy of accelerated growth, the strategy of accelerated sector or regional diversification of operating activities etc.). In this case, the innovation activity program is formed according to the criterion for selecting projects on the basis of the productivity index of the invested capital (for this purpose, the ranking of investment projects is carried out according to the indicator of the volume of production or sales of products per unit of invested capital).

Project

Investments

NPV

PI

The volume of innovative products

E

30

90

3.00

120

From

50

120

2.40

150

F

80

170

2.13

70

A

150

300

2.00

150

In

100

190

1.90

60

Total

160

380

2.34

420

To solve this problem, a special model for optimizing the program of innovative projects of the enterprise is developed for a given production program (a given volume of growth in production or sales of products). The initial conditions for constructing such a model are:

• The innovation projects under consideration are independent, i.e. exclude each other;

• by the time of the formation of the innovation program, the necessary growth in the production (sale) of products has already been determined in accordance with the strategic objectives of the enterprise development;

• In the process of preliminary consideration of innovative projects of the enterprise, they were ranked according to the volume of production (sale) of products per unit of invested capital.

6. The formation of an investment program under conditions of weighted average cost of investment resources. Such a situation arises if the implementation of innovative projects involves the use of borrowed capital, the volume and cost of attracting which increase with the expansion volumes of activity. The initial conditions for constructing a model for solving this problem are:

• The innovation projects under consideration are independent, i.e. do not exclude each other;

• when forming the program of innovation activity, the indicators of the marginal cost of resources are clearly defined with an increase in the volume of additional capital raising;

• In the process of consideration of innovative projects of the enterprise, they were pre-ranked according to the internal rate of return ( IRR ), which for this purpose is selected as the main criterial indicator of their selection in the investment program.

7. The formation of an innovative program in the conditions of limitations of the total volume of investment resources. Such a situation arises if the opportunities for the formation of own investment resources at an enterprise are limited, and the volume of borrowing of capital beyond certain limits can negatively affect the state of its financial stability and solvency. The initial conditions for constructing a model that solves this problem are the same as in the previous case. They are supplemented only by the total volume of possible investment by the enterprise of investment resources for the implementation of projects included in its innovative program.

8. Evaluation of the formed innovative program in terms of profitability, risk and liquidity. The aggregate evaluation of the formed program of innovative activity of the enterprise on these indicators allows to evaluate the effectiveness of all work on its formation.

The level of profitability of an innovation program is determined on the basis of the total net present value or net profit for all innovative projects included in it (calculated in a single dimension of time).

The level of risk of the investment program is determined by calculating the coefficient of variation for it (by the expected level of variability in the indicators of net cash flow or net investment income).

The liquidity level of the investment activity program is determined on the basis of the weighted average investment ratio for individual projects (weighted by the amount of necessary investment resources for them).

The final formation of the innovative program of the enterprise is carried out taking into account all its three parameters based on the priorities determined by the enterprise. In management, this process is characterized as the justification of "preferential investment decisions". This term is understood as the final selection of the projects most preferable for the enterprise in its investment program, ensuring the implementation of its innovative enterprise strategy.

thematic pictures

Also We Can Offer!

Other services that we offer

If you don’t see the necessary subject, paper type, or topic in our list of available services and examples, don’t worry! We have a number of other academic disciplines to suit the needs of anyone who visits this website looking for help.

How to ...

We made your life easier with putting together a big number of articles and guidelines on how to plan and write different types of assignments (Essay, Research Paper, Dissertation etc)