Last week I ran a session for GBPA corporate members where we discussed innovation metrics. We reviewed the Boston Consulting Group 2007 research on the subject and the results of my innovation metrics web survey. It was agreed that most organisations find it difficult to measure innovation in any satisfactory way. The most common measurements are backward looking – e.g. % of revenue from products released in the last two years. The BCG report recommends that you select a small number of metrics appropriate for your business and have some for inputs, process and outputs. At the meeting we discussed which were the best metrics to use and here are some of our choices:
Input metrics:
- Number of ideas generated
- Resources allocated to innovation – people and budget
Process Metrics
- Average time from idea approval to implementation
- Number of ideas approved and number implemented
- Stage-gate pass rates
- Value of the innovation pipeline
Output metrics
- Number of new products or services launched
- Revenue from new products or services
- ROI on innovation spend
- Market Perception
- Number of new customers
We also found it useful to draw flow-chart diagrams of the innovation approval and pipeline processes and ask some searching questions about this. Are we getting enough ideas coming in? Is it taking too long for good ideas to be implemented? Are we getting enough innovations out of the process? Are our approval processes too complicated or too difficult?
It was agreed that everyone should have targets or objectives for innovation. In collaborative ventures it is particularly important to agree goals, expectations and metrics for innovation at the outset.
There are no perfect measurements for innovation. All the metrics are limited in value. But that does not mean that you should not use them. By choosing and applying a small number of metrics appropriate for your business you can add innovation to your balanced scorecard and give it the high level attention that it needs if you are to succeed.
Paul Sloane
