Never Give Up on Measuring Innovation
You have to find a way to efficiently measure your innovation management results – to avoid getting mired in numbers, percentages and endless reports that have nothing relevant to show you. Too much is at stake.
‘What gets measured gets done.’ – Attributed to Peter S. Drucker
In the last decade, the practice of innovation has grown in both potential and intensity – leaving the secluded islands and frosted glass towers of research and development (R&D) departments, reaching all corners of organisations, even going beyond traditional frontiers. As a result, the measuring process has turned into a jigsaw puzzle, with too many variables, easily overwhelming any skilled manager.
So, where can you start? How can you gather all the benefits and make the improvements needed to progress? How can you prove an innovation programme’s success, or even that it’s successful at all? The paper ‘Measuring Innovation – A Framework for Getting It Done’ can help you bring the pieces together.
We dig deeper to understand the evolution of innovation in the corporate world, discovering the rationale behind what companies are doing and measuring today. From there, we move on to identify top best practices and guide you along ways to frame your goals and establish your own metric set.
Three main topics are considered:
1. The clash that changed innovation management
We first take a brief but insightful look as far back as the 50s, to track the evolution of innovation and its main indicators. What was then generally considered an innovation? How did we gauge its results?
We next evoke the clash that marked the last decade of the twentieth century: on the one side, innovation was seen as R&D, science and technology (S&T) and the creation of comparative advantages; on the other side, consultancy firms such as Strategos and its founder, management guru Gary Hamel, advocated that the process should become more inclusive and multifaceted, engaging larger numbers of people to address key business challenges.
2. What are we trying to measure, anyway?
The conceptual evolution brings us to a change in practices. It brings us to what innovation really means today, as well as to the impacts it has on the measuring process itself.
Take this European company’s example: something as unpretentious as changing toilet paper’s colour to black transformed Renova. ‘Why not?’ was the slogan this paper consumption goods company used in 2005 when launching the new product. From Intel’s research labs through to Uber disruptive (are they?) strengths, we try to make out the shapes innovation is taking and a common trait all these cases share.
We also glance at how the concept has gained new adjectives and additional layers of meanings throughout the entire value chain. In other words, how innovation has turned into a set of complex, collective dynamics, as organisations discover the value hidden in their own ecosystems: their employees, customers and stakeholders’ expertise and experience. With the ‘human factor’ becoming a key driver, companies have readapted metrics, as we will see in the paper.
3. Escaping the analysis-paralysis
Based on experiences with our clients from across several countries and industries, we have thoroughly worked at Exago to identify the chief indicators you should contemplate at each phase of the process: from the investment phase, through to performance and development, and, finally, output and evaluation.
These indicators consider three dimensions we believe are fundamental:
- Human capital and organisational culture – the ‘people factor’ as the cornerstone of any innovation programme
- Financial and accounting plans – a stronger focus on growth and sustainability
- Resources – acquisition and development, namely, tangible and intangible aspects, such as assets and knowledge
This paper lays out both a framework and the steps we believe can help you define your own metric set, allowing you to adopt different metrics – or different combinations of metrics – according to the goals you set.
Bottom line is that you don’t have to start from scratch and you can’t freeze up in any phase. Innovation is a process of trial and error, by its very nature.
At the end of the day, measuring innovation comes down to accountability to leadership and shareholders, as well as your own teams. It comes down to your organisation’s survival. I hope this article motivates you to get it done, at last.
Don’t forget to download the ‘Measuring Innovation – A Framework for Getting It Done’ paper.
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Pedro do Carmo Costa leads Exago’s business development efforts. In a career centred on the art and science of innovation, he’s worked to help large companies build an internal capacity for innovation, to ensure they grow and evolve successfully. Pedro previously worked at Strategos with innovation thought leaders such as Gary Hamel and Peter Skarzynski.
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