The enterprise is innovating!
The Chief Innovation Officers have been hired, the dedicated innovation spaces have been constructed and accelerator programs with innovative start-ups are established.
All fantastic news.
But the question now facing these new constructs is ‘what do you actually do?’ or perhaps more correctly, ‘how do you measure what you do?’
Innovation by its very nature is harder to track and measure than traditional business metrics. It’s easy to put a tangible figure on ‘how much did we sell?’ or ‘how much did we save?’ and compare those figures to previous quarters, years, etc. But innovation is a longer burn. It’s understood and broadly accepted that not every project will come to fruition. Those that do materialize, however, have the potential to shift the needle and change the way a business operates.
It must be measured!
Despite these challenges, it vital in a large corporate environment, that you show results, show progress. Fortunately, I’ve come across an article from the bastion of management thinking The Harvard Business Review that addresses this very topic.
The article was written by Scott Kirsner and details the findings from his publication Innovation Leader. Scott surveys 198 senior innovation executives to develop an understanding of how they operate.
Here are the top 5 innovation metrics those executives are tracking.
- Revenue generated by new products
- Number of projects in the innovation pipeline
- Stage-gate specific metrics, i.e. projects moving from one stage to the next
- P&L impact or other financial impact
- Number of ideas generated
Scott goes on to discuss that finding the perfect innovation metric is ‘elusive’ and suggests that organizations look to divide innovation metrics into two categories “activity metrics, which show that you’re busy stoking the boilers of innovation” and “impact metrics that show the ship is actually going somewhere.”
Scott also dives in asserts where he thinks innovation metrics have gone wrong, but that’s a topic I’m going to tackle from a procurement standpoint later this week.
But while you wait, how do you track the progress of your innovation efforts?