These days, we hear everyone talking about innovation. Innovation teams are set up and ideation workshops scheduled. Projects are started; some succeed and some don’t. Everything is in place to come up with the next big thing. Everything that is, except the metrics.
What surprises me the most after having worked with a lot of innovation teams and businesses over the past decade is how few companies actually measure their innovation efforts. If you don’t measure, you won’t know what factors contribute to an innovation project’s success and you won’t be able to make data driven decisions to help future projects succeed.
Therefore, if you are truly serious about your innovation efforts, setting the right objectives and performance indicators is key.
No universal model for innovation metrics
There is however no universal model for innovation metrics. And there will probably never be one because every company is different in terms of culture, industry, organizations structure and goals. So how do you actually go about measuring innovation?
When it comes to innovation, a lot of things revolve around time. And often, being quick is more important than being accurate when starting up a new project. That’s why lead times become an interesting innovation metric to look at, and something that should be measured within every project.
Measure the ‘through-put time’
When I say time, I don’t mean just the time from a project’s start to finish, but rather looking at the time between each step within the innovation process, the through-put time. It can be the time it takes to go from idea to prototype, from prototype to testing with your target audience, or the time it takes to change the prototype based on the audience feedback.
Each team should be aware that lead time is a key metric when evaluating innovation efforts, and one that should be used when comparing old, ongoing and new projects. If this is clearly communicated, each team will be able to better focus, prioritize and benchmark.
7 tips on how to identify relevant innovation metrics for your business:
1. Look at what projects have been the most successful in the past, and identify what they have in common. Let the innovation teams know what key success-factors you’ve had in the past so that they can use the same strategy for future projects.
2. Look at the lead time for each step within a project. Identify how quick your organization is at getting response on a prototype that’s being tested on the market and also how long time it takes to rework that prototype based on the feedback and then test it again. Getting a good flow in that loop is the goal. To be able to get qualitative feedback on a prototype quickly, and then rework it. Measure the time for this process, learn from it, and find ways to improve it.
3. Compare financial results and put them in relation to specific innovation metrics. Compare how much money is put into R&D, innovation and development in terms of resources, and then compare that to the return of investment. What do you get?
4. Look at metrics based on results over a specific time period. How many innovation processes were started, how much time and resources were spent, and how many new projects or services were launched during the time?
5. Focus on the quality of ideas instead of the quantity of ideas. How many ideas do we come up with during a specific time period? And how many of them are actually good ideas? Out of all the ideas, how many have we continued to develop and later launched on the market?
6. Look at how quick you are at identifying which ideas to take to the next stage, and also how good you are at identifying and ending projects that will not work out.
7. Measure internal response time. All teams and individuals at a company should be able to submit ideas for future innovations and improvement. How quick are you at responding to them, and deciding whether to bring the idea forward within the innovation team or not?
Remember, don’t forget to identify the key innovation metrics for your business and start using them today. And if you need help, feel free to contact me at email@example.com.
// Jan Sandqvist, Innovation Consultant at Googol