Innovation Metrics - Which Ones Are Best To Use?

Paul Sloane recently posted on his BQF blog an article detailing the outcomes of a recent Global Business Partnership Alliance meeting where members reflected on which innovation metrics have been found to be most useful by members.

Some of the key points raised by the group were that:

• Many of the common innovation metrics such as "% of revenue from products released in the last two years" are "lag" indicators after the event, and "lead" indicators are needed

• It is useful to draw flow-chart diagrams of the innovation approval and pipeline processes and ask some searching questions about this - and relate metrics to the stages
  

The group suggested the following metrics may be particularly useful:

Input metrics:

• Number of ideas generated
• Resources allocated to innovation - people and budget

Process metrics:

• Average time from idea approval to implementation
• Number of ideas approved and number implemented
• Stage-gate pass rates
• Value of the innovation pipeline

Output metrics:

• Number of new products or services launched
• Revenue from new products or services
• ROI on innovation spend
• Market Perception
• Number of new customers

Innovation Metrics

The Freakonomics Blog recently posted an interesting article on measuring innovation.

A panel of Ashish Arora, John Seely Brown, Seth Godin, Bill Hildebolt, Daphne Kwon, and Mark Turrell were consulted for their insights. Insights from the panel included:

• Develop process metrics as well as outcome metrics - but treat them carefully over time, as the frame of reference for innovation is constantly evolving
• Maintain an appropriate portfolio of incremental innovation, architectural innovation and disruptive innovation
• Measure additional profit in relation to the investment on innovation
• Measure the number and value of patents held
• Take enough risk and push enough boundaries, measured by the rate of failure, whether failures are "along the right path", and the source (e.g. organisational levels, divisions, etc) of the failures within the organisation
• Strictly define what counts as an innovation, and measure on an ongoing basis expected benefits, realized benefits, and an appropriate set of process and stakeholder engagement metrics.
  

Top Swedish Innovators Using Innovation Metrics and Idea Management Systems

Swedish innovation consultancy Idélaboratoriet has posted a recent article on leading Swedish Innovators in their newsletter.

The study, conducted by the Royal Institute of Technology (KTH) and Cap Gemini., addressed innovation in leading Swedish companies such as Ericsson and Ikea and identified three key trends: the top ten ranked Swedish innovators

1. continuously made benchmarking studies concerning innovation
2. developed innovation metrics for their own situation
3. had an Idea Management software base to stand on

Thank you to EndlessInnovation for pointing me towards this study.