You know that project portfolios focused on the best opportunities accelerate innovation. So how do you build consensus around the term “best”? George Day’s article provides excellent logic to help you drive a consensual view of risk analysis.
“The risk analysis matrix employs a unique scoring system and calibration of risk. It helps estimate the probability of success or failure for each project based on how big a stretch it is for the firm.”
We know that “best” is a function of something. The two main vectors identified by Day include the intended market (x axis) and the product or technology (y axis). Charts below show that the ranges are similar. Both axis range from “Same” to “New” to the company. Since each question to be asked (below) yields five points, the x-axis extends 30 points with six questions and the y-axis extends 35 points with seven questions.
We modified Day’s original questions that somewhat biased toward product development. While product development represents one type of project, we have expanded the rhetoric to embrace various project types. Modify the questions further and adapt them to your own situation.
The Risk Analysis Matrix
A project’s position on the matrix is determined by its score on a range of factors, such as how closely the behavior of intended customers will match existing customers (internal or external). Consider how relevant the company’s brand or reputation may affect the intended market and how applicable its technology capabilities are to develop and provide life-cycle services.