Sunday, August 25, 2019

It Takes Innovation to Measure Innovation Performance

Innovation is neither a serendipity nor a pre-described management practice.

Innovation is about making differentiation. Forward-looking companies will spend more resources on innovation investment and take a scientific approach to decode innovation serendipity. Innovation as a management process needs to be measured for making continuous improvement in order to reap the fruit for gaining long term advantage. Innovation measurement is challenging, it takes innovation to measure innovation performance.

Measurements provide necessary feedback: You can only manage what you measure, there is no exception for innovation management. Organizations usually look for KPIs measuring business value generated by innovation effort. Innovation measurements provide necessary feedback which helps the business keep improving the innovation process or drive early success to create a positive spiral. Thus, metrics management is a critical component of innovation management. It’s important to select a right set of KPIs by deciding which are seen as critical to make the trackable progress. The fewer, the better, but they have to be credible and relevant in the eyes of the stakeholders. Because metrics are part of transparent visual management allowing the business pulling resources and assets together for orchestrating an innovation symphony and delivering better business results. More specifically, innovation performance of the company depends on the quality and quantity of ideas entering the “innovation pipeline,” how well it can convert them into desired output, propositions, or process improvement, etc, with measurable business benefit.

What gets measured, gets managed: Choose the right metrics by deciding which are seen as critical to making progress in order to deliver better innovation performance. The innovation measurement should be oriented to justify innovation that the organization needs. The innovation management selects KPIs by deciding which are seen as critical to make the true progress. Unfortunately, most innovation indicators are flawed and present limitations. The well-selected measurements help to clarify some critical issues such as the revenue generated by innovations launched in a certain time frame; what’s the tangible value have innovative products/services/processes/business models brought to customers, or the causes of some innovation failures, etc. Metrics are not the end-all solutions to management, but simply another set of tools, data, and information sets to help the business make continuous improvement.

Set guidelines for developing customized innovation metrics: Do not measure innovation only based on lagging indicators such as short-term financial metrics only. The goal of innovation measurement is to keep track of innovation management effectiveness, not just about the quantitative data which sometimes can mislead the management with a short-term perspective. Select the right leading KPIs by deciding which are seen as critical to deliver either direct or indirect business results such as improving revenue growth, nurturing a culture of innovation, or building strong innovation competency. Just measure those business results objectively and effectively. Also, innovation metrics can help you get some objective perspectives on what you are trying to manage, but they need to be crafted and interpreted well.

Innovation is neither a serendipity nor a pre-described management practice. It involves experimentation, trial, error, systematic analysis, applying structured methods or tools, reviews, and performance measurement, etc. Without a positive culture of innovation, measuring of innovation is nothing! It takes innovation to measure innovation performance. So keep the measures simple and understandable.


Post a Comment