How to Measure Innovation Ecosytem KPIs
Claiming status as the #1 digital health, bioscience, technology, finance or education cluster is new eco-devo blood sport. Should funding be the only KPI?
Innovation districts are the new clusters, and urban planners and stakeholders ask 5 questions during an audit:
1) Where are your region’s highest concentrations of innovation assets?
2) Is the district leveraging and aligning its distinctive advantages to grow and strengthen firms’ innovation capacity?
3) Does the district have an inclusive, diverse, and opportunity-rich environment?
4) Does the district have physical and social assets that attract a diversity of firms and people, increase interactions, and accelerate innovation outcomes?
5) Does the district have the leadership necessary to succeed?
There are two key principles to ecosystem value co-creation: 1) in order to encourage the active participation of ecosystem actors in the value co-creation process, efforts must be made to ensure a clear vision and a shared value base on which the ecosystem activities can be built and 2) facilitation is needed to support the ecosystem actors to make new connections and to share their knowledge and resources in concrete ways. Most importantly, the more diversity there is among the ecosystem actors, the greater the support for innovativeness within the value co-creation process.
Like bioclusters of yesterday, regional governments and elements of the ecosystem are knee deep in accelerators, investment funds, innovation districts and endless Meetups. But, how would you know a top tier digital health ecosystem when you see one? In other words, how do the outcomes of of clusters and innovation networks create economic impact? What should the key performance indicators? How do they align with your vision, mission and goals the value proposition to key beneficiaries, stakeholders or customer segments?
Impact and KPIs can be specific or broad. They can measure narrowly focused value,for example for the customer or entrepreneur, or more general like regional or US global competitiveness.
A recent analysis generated a list of more than 300 potential indicators. The authors sought to focus on a few key indicators that matter so they selected the subset most relevant in assessing the impact of programs on job quality/worker prosperity and business dynamics. In both cases, they considered whether a measure might also address greater economic inclusivity. They also separated program indicators with a direct link to economic development activities from those that represent broad economic outcomes. The presumption is that modest sized state or local economic development initiatives are more likely to influence specific business activities among a targeted group of firms than to “move the needle” on an entire economy. While economic development organizations focus much of their performance monitoring on tracking program outcome indicators, monitoring broad economic indicators can guide policy makers in determining which program activities are most relevant to current policy priorities
Here are some themes:
Connect metrics to program activity. Develop and document the logic model for each economic development program to articulate explicitly how inputs (investment or activity) are expected to translate into outcomes.
Consider adopting performance indicators that address job quality and business dynamics, where appropriate, such as:
- wage levels, benefits provided, occupations, and/or skill development and career pathways;
- business churn metrics in addition to year-over-year summary trends;
- indicators related to innovation, productivity, or global business activity among assisted businesses.
Report program-related outcomes as distinct from broader economic benchmark indicators.
Evaluate data source options, including the feasibility, quality, and availability of data when selecting indicators.
Determine which indicators can be used to understand economic inclusivity within the state’s overall economic development portfolio.
- capture relevant information about program impacts related to racial, ethnic or gender diversity and distress of the places where investments are made
- report data internally even if not required for external reporting
Create a communication plan to drive productive use (and accurate dissemination) of economic development program outcome data.
1. Is there a focus on creating digital health solutions in the ecosystem?
2. Do the members of the ecosystem have experience supporting large-scale initiatives?
3. Is the ecosystem partnered with healthcare providers?
4. Is the ecosystem partnered with corporations, academic and government researchers?
5. Is the ecosystem partnered with investors?
6. Is the ecosystem partnered with governmental and regulatory bodies?
7. Does support for the development and scaling of innovation exist within the ecosystem?
8. Does a virtual and physical support structure exist for the entrepreneurs within the ecosystem?
9. How accessible is information within the ecosystem?
10. What evidence exists to support the efficacy of the ecosystem in driving innovation?
I’d suggest several other domains in the scoring system:
Education and manpower development: Are you meeting the needs of the community?
Technology transfer metrics: Patents, revenues, spinouts
Economic development metrics: Taxes, new venture creation, employment numbers
Patient value metrics: How and how much have the products helped patients?
Firm and entrepreneur metrics: How much wealth has been created?
Contribution to US global competitiveness and international trade: Are we winning against our global competitors?
Value proposition: Are there multiple value propositions for each user segment or just one ?
Business model: Is it VAST?
Information flow: How easy is it for people and information to connect
Open innovation quotient: How open open is the network?
Quality of newcos: What is the likelihood that the companies in the cluster will generated substantial user defined value and be able to scale?
Survival rate: The estimated 5 year surival rate for new businesses is 50%. Is your cluster record better?
It is not enough to use vanity metrics to be #1. Fundamentally, the yardsticks need to go beyond process and structure and take a world view. The measurements need to be transparent determinants of value. Finally, we need ecosystem KPIs that measure impact, not just output. In most instances, that can only be defined by the patient end users.
Only then can you stand in the winner’s circle.
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