Observe & Measure for Continuous Improvement
Of the ten imperatives of Robert’s Rules of Innovation, this step is all about continuous improvement. It is necessary to Observe and Measure throughout the Innovation process, or else, how would you recognize successful Innovation? A system of metrics will objectively show your progress and success each step of the way. Plan. Do. Check. Act. It’s essential to follow a course of actions that produce ongoing improvement.
So first, gather initial observations and measurements at the beginning of the NPD process. It’s necessary to establish a baseline or starting point and measurable facts versus subjective assessments.
Secondly, to have an optimal measurements, one should establish leading and lagging indicators – leading to show where you are heading, and lagging to show you rear-view mirror observations.
Examples of leading indicators can be patents filed, ideas created and in the hopper, as well as development time spent. Lagging indicators include patents granted, new products introduced and percentage of new product sales compared to total sales.
Product life cycles are getting shorter and shorter, which means NPD cycles must happen quicker to keep up. For example, personal care products have a life cycle of only 2 or 3 years. That means continuous Innovation is vital. Observe and measure the time spent in each gate, and the time spent to get to the next gate. See if you can make any improvements as far as efficiency.
By following a set of metrics, you’ll be able to evaluate the performance of your New Product Development process and your end result. And it doesn’t stop after the product is launched.
1. What’s Measured, Is Treasured: And that’s just human nature, so be sure to check and recheck performance – monthly. No exceptions, no excuses. What gets measured gets done.
2. What to Look For?: The key performance indicators and metrics include:
- R&D spending as a percentage of sales
- Total patents filed/pending/awarded/rejected
- Total R&D head count
- Current year percentage of sales attributable to new products released in the past year/three years/five years
- Number of new products released
For a recent survey on Innovation Measurements, see: “What do you measure?”
Robert Brands is the founder of InnovationCoach.com, and the author of “Robert’s Rules of Innovation: A 10-Step Program for Corporate Survival”, with Martin Kleinman – published Spring 2010 by Wiley (www.robertsrulesofinnovation.com).