(Innovation) portfolio management literature is extensive but barely touched upon in the public context. Portfolio management is instrumental in resource allocation and strategic decision-making, directing investments toward strategic priorities. This thesis explores how innovation portfolio management (IPM) is performed at the Dutch Ministry of Defense, and a comparison is made with private and public sector literature available.
Key findings illuminate pronounced disparities between the MoD’s IPM methodologies and those established in the private sector. Notably, the MoD’s IPM framework places subjective risk-reward metrics at the forefront of decision-making, diverging from conventional private sector emphasis on monetary considerations. Furthermore, the MoD’s IPM approach primarily revolves around project-level evaluations, constraining portfolio-level prioritization decision-making. The conspicuous absence of a articulated innovation strategy and the decentralized nature of portfolio oversight serve as additional distinguishing features of the MoD’s IPM practices. Moreover, the MoD’s unique procurement model, which relies extensively on external development, and its innovation strategy, predominantly shaped by market dynamics, set it apart from IPM practices commonly observed in the private sector. Existing public sector literature has provided valuation methodologies across diverse sectors;
however, these contributions have often neglected to provide a comprehensive under standing of how IPM is executed and have been relatively under-referenced. Within the MoD, this thesis reveals that the valuation of IPM, while exhibiting variations among different departments, predominantly relies on multi-criteria analysis (MCA) with a retrospective focus. Notably, subjective measures such as relevance and urgency are employed as yardsticks for assessing project value. This research enhances our understanding of IPM in the public sector and underscores the need to further explore and refine IPM methodologies within public organizations. It highlights the distinctive characteristics of IPM within the MoD and emphasizes the importance of aligning IPM practices with organizational objectives and strategies to optimize resource allocation and decision-making. With the results of this thesis, public entities have guidance on how to organize portfolio management and how prioritization
can be performed.