Tuesday, December 22, 2020

Innovation Indicator

Performance measurement and management is the means to end. It’s not the measurement that is important; it’s what you do with the data obtained from that measurement.

As the saying goes, “You can only manage what you measure.” Digital Organizations are like organic systems that keep evolving. The performance of the total “system” is independent of the performance of any one of the functions and depends more on how the functions relate to each other, the “space” between functions. In fact, the very goal of running a high performance business is to ensure the business as a whole is superior to the sum of pieces.

 In practice, Performance Management assessment is always subjective, controversial and contentious, this is especially true for innovation management. The more meaningful and important the thing you want to assess, the harder it is to be measured objectively. Select the right set of indicators of improvement, innovation, and investment, and measure them effectively. Logically, you need to know the exact purpose of the metrics and what follow-up action is needed if it does not meet the expectation.

Information management indicator: Information is one of the most intensive pieces of innovation. There are both intrinsic and extrinsic values of information. Information is raw material when you manipulate the raw material in meaningful ways, it gives you business insight to interpret and utilize, then you have established a value. The intrinsic value of information is about turning the most invaluable information and knowledge assets into precious insight to catalyze innovation and accelerate performance. Otherwise, a misguided performance indicator becomes a distraction. Businesses need to understand not only the power and the opportunity information could bring in, but also the potential risks they might get exposed to. The information has to be approved and as up-to-date as practically possible in a system which can be accessed by people who need it. This requires a holistic look at the entire organization and identifies how the information management initiative aligns with the functional and the company objectives, to improve communication, collaboration, and overall organizational maturity.

It is critical to identify the objectives before one embarks on quantifying information management performance. In reality, the static and siloed information/knowledge approach is too slow to adapt to the changes and dealing with exponential information growth. Many organizations manage information ineffectively because they don’t understand what raw material they have to play with, as well as poor measurement-they do not apply worthwhile evaluation to it to reveal its inherent value. If you start from understanding your objectives of information management and then provide an indicator as to whether you are progressing towards achieving that objective, you are more likely to succeed.

Innovation management indicator: Innovation is the process on how to transform novel ideas into business values. There are idea management indicators or index, implementation process management indicator, innovative culture indicator, or individual’s creativity indicator, creative/analytical capacity (ideation/evaluation), etc. In specific, some factors that could be used to measure innovation score within a company could be human and financial resources invested, employees motivation with top management encouragement and support, challenging activities being involved, level of autonomy, number of innovation initiatives being launched, and organizational culture such as vision, mission, structure, networking collaboration with partners, etc. The goal is to show how the pieces of measurement data directly or indirectly affect business productivity, performance, and profitability.

The effective measurements selected should be part of a link to cause-and-effect relationships, ending in financial objectives that ultimately affect the growth and long-term perspective of the organization. There are leading indicators and lagging indicators for innovation management: Are you intending to evaluate the capacity/potential to innovate, or the level of past innovation performance measures? For example, measuring the contributing value of your new products or innovations as either revenue or preferably profit to your overall value, % of new product/service contribution to total value, etc. Failure is part of innovation. Measure failures as well. If the organization allows reasonable failures, not repetitive mistakes, it will be more successful in innovation for the long run. So the additional indicators may include things like: Willingness to accept the risk of failure, regulatory or industry influences level of customer interaction, etc.

Improvement indicator:
Not every improvement effort is innovation, but innovation should always be sort of improvement. The breadth and depth of business management improvement or innovation include process optimization, people development, workflow streamlining, culture innovation, and competency development, etc. in fact, making continuous improvement is a mantra to run a progressive digital organization. There are functional performances and the company performance, the part-processes are themselves determined by the intrinsic nature of the whole, but the whole performance should be more optimal than sum of pieces. Continuous improvement is more likely to be sustained if there is a framework and takes a whole system-based approach.

The goal of performance measurement is to diagnose problems and make continuous improvement. The trick is that performance indicators are very often functional when what is most important is the "end to end" performance of the organization as a whole. If at some intermediate stage, one measures something that is not congruent with the final outcome, Use metrics as pointers to areas requiring further investigation. The “space" between the functions/boxes are actually defined by trade-offs, which are often unrecognized, unexplored, un-articulated, and offer far more potential for improving the performance of the entire organization.

Performance measurement and management is the means to end. It’s not the measurement that is important; it’s what you do with the data obtained from that measurement. Historically, performance measurement systems for most businesses have been financing driven. Incomplete assessment of measurement variables would mislead the management making ineffective decisions or focus on short-term business results only. Innovation management is no exception. Irrelevant measurement indicators will waste time, add the other layer of management complexity, and decrease the business effectiveness. The objective is to recognize what needs to be done, to assess how well things are being done, to align and realign priorities to what needs to be done and to invest in improvements in a mindful way.


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