How to measure innovation (part two)
In part two of these blog posts, we will provide some recommended innovation metrics to use a guide, plus we will explain the best methods for implementing them effectively.
In part one of this post, we introduced the recurrent problem of how to measure innovation output. We touched on the necessity of having appropriate metrics in place, the various challenges involved and the importance of setting objectives. In part two we will be sharing some recommended innovation metrics to use as a guide and how to go about implementing these metrics.
There are a myriad of potential metrics that could be deployed to track your innovation output, some more complex than others. As we mentioned in part one, there is no right or wrong answer. Here it is about choosing the most appropriate measures for your own business objectives and goals. Below we have included a selection of suggested metrics for measuring innovation output; this is by no means an exhaustive list, merely a starting point to build upon:
- Number of new ideas proposed
- Proportion of ideas selected for implementation
- Number of unsuccessful projects
- Speed to market
- Revenue generated from new ideas
- Percentage of sales from new products
- Customer satisfaction with new products
- Lessons learnt
“The true measure of innovation success cannot only be seen through a financial lens. Leading companies define measurements that go well beyond the traditional ROI. Examples include: proportion of revenue from new products and service; increased customer satisfaction associated with new offerings; as well as process measures such as quantity and quality of ideas in the pipeline and time to market.” – ‘Breakthrough innovation and growth’, PwC
We have found that one of the most popular of these metrics is to measure the generation and sales of new products or offerings. The time period that defines a ‘new’ product is up to you. Inevitably there will still be ambiguities with this approach of measuring, but as long as you are consistent then it should provide clear and tangible results. Just remember that it is crucial to measure what is important, not what is easy to measure.
Implementing innovation metrics
You have set your objectives and established your metrics but you cannot stop there. The next challenge is to implement these metrics and it is much the same as integrating innovation management software into your organisation. Announcing the metrics to your executives will not be enough. The process requires careful planning, tracking and development on an ongoing basis in order to ensure their success.
The first step will involve deciding exactly how these metrics will be tracked and accurately recorded. Devise thorough but straightforward processes to ensure consistency and execution. It will help to engineer an internal marketing strategy to onboard all employees in the implementation of the innovation metrics, allowing total visibility across the organisation.
As with any new business initiative, the implementation process will require key stakeholders to champion the process. Without these ambassadors, regular reporting and tracking will likely fall by the wayside and all the time and energy invested in establishing the metrics will be wasted. By onboarding all employees and promoting key stakeholders, it will help ensure that the process of measuring innovation stays on track.
A timeline for measuring innovation
- Establish key innovation objectives and goals
- Choose the most appropriate metrics in line with these objectives
- Plan and devise processes for recording these metrics
- Allocate key stakeholders and ambassadors to champion the implementation
- Push out an internal marketing strategy to raise awareness of new processes
- Continue to track and monitor progress of the innovation metrics
- Refine and adapt the metrics where necessary
- Issue rewards and recognition according to results
- Consider all of the available metrics and take time to choose the most appropriate ones that are in line with your innovation objectives and goals.
- Ensure you have a range of metrics, rather than just one or two, as too few indicators can give a limited or misleading view of progress and results.
- Appoint ambassadors and key stakeholders to champion the implementation and ensure that all employees are onboarded and have visibility over the processes.