If I had a dollar for every time someone asked me for advice around how to measure innovation effectively, I could probably buy myself a chocolate fountain. Yum. Unfortunately, I haven’t seen one arrive at my doorstep yet. Something I have seen a lot of however, is organisations who focus their innovation metrics solely on inputs, or solely on outputs (if of course, they’re measuring it at all).
Typically, those who are responsible for the management of an innovation program will focus their measurement efforts on inputs such as seed funding, time spent on innovation projects, the number of ideas captured from employees, etc. Whereas those at a senior leadership level will often focus their measurement efforts on outputs such as revenue, profit, EBIT generated from incremental innovations, customer data, productivity increases or expense decreases.
If we’re lucky, we’ll see an organisation that tries to mash the two together to try and measure what’s really happening with innovation – but this isn’t optimal either. There are a number of other environmental and process factors that need to be measured, because if these change, outputs change, which means your measurement of innovation needs to change.
The good news is, the folks at the Harvard Business Press have put a lot of the ground work out there for us already. Scott D. Anthony’s ‘The Innovator’s Guide to Growth’ dives deeper into these environment and process metrics. I’ve included a couple of really important ones to get you started:
- Speed – how quickly are innovation projects going from mission to market?
- Breadth – how diverse are the people involved in the process?
- Types of innovation – how well balanced are your innovation efforts? That is, are all of your innovations incremental? Or are there some breakthrough and disruptive innovations as well?
- Conversion rates – what proportion of new ideas progress through each stage of the process?
- Culture – what does your culture for innovation really look like? What is the organisations appetite for risk? Do employees have a sense of autonomy in their role?
- Capability – how skilled are employees in the end-to-end innovation process?
- Roles – is innovation formally incorporated into employees day jobs? Are there individual KPI’s for innovation?
- Talk the talk – how frequently do senior leaders talk about innovation?
By measuring these controlling factors, you will be able to ascertain whether innovation impacts have been achieved through a direct focus on innovation, as opposed to other external environmental factors. This also means you can track how changes to any of these process and environmental factors impact your outputs (woohoo!).
If you’d like to find out more about how to measure the things that matter for innovation, or would like to donate to my chocolate fountain fund, I’d love to hear from you. You can find me at [email protected]inventium.com.au or on Twitter @fasttrackjudy.