With the organization innovation journey, it’s challenging to determine all the relevant metrics associated with quantifying – value creation, realizing strategic business advantage, driving change (versus being a victim of change), risk, etc. And when you factor in the uncertainties with new initiatives – within the enterprise as well as markets, the changing nature of work and business, the impact of digital platforms across industries, increasing User expectations, the need for organizations to be more agile and opportunistic, etc. – ” Innovating for Impact ” is frequently elusive ! Regardless, it’s essential. And because of this, innovation metrics have added importance.
While there is tangible value (ie: real and significant ROI, additional business opportunities, increased corporate relevance and revenue, gains in enterprise valuation, etc.) from successful innovation – there are also many other forms of value creation that typically are not obvious at the outset of an innovation initiative or are more subtle, or take time to become apparent. These benefits include the delivery of new products or services derived from unexpected synergies with current business capabilities, the successful and timely execution on a new vision, leveraging internal and Partner resources to fast track increasing stickiness with Customers, having more ways to attract new Customers, greater market share, growing current markets, successfully entering new markets, etc.
Fundamentally, innovation is about growth and positioning the organization to improve business outcomes from – the development and delivery of new capabilities, benefiting from ” more mystery = more margin “, greater confidence in the organization to control their destiny, the ability to define the future of the business and the industry, and create significant stakeholder wealth in the process.
As a result, having an appreciation of all the metrics is crucial for the prudent investment of resources, time, and money into new initiatives – to increase the rewards from innovation.
Think about ” Innovation Metrics ” similar to ” Innovation Horizons ” for projects (ie: H1 = Short Term , H2 = Medium Term, H3 = Longer Term). Or, phrased another way – ” Hard ” , ” Fluid ” , ” Air ” Innovation Metrics.
Hard Metrics – Specific corporate objectives or project goals, items, processes, etc. that can counted. For example – additional revenue, market share, new products / services launched, more opportunities, market growth, make / entry into a new market, number of ideas / efficiency of the culling process / results from innovation initiatives, change in the business model, increase in brand value / corporate valuation, etc.
Fluid Metrics – While a little challenging to capture, they are important to assist in understanding how much an innovation program has generated different types and amount of value. In any Innovation Project a portfolio of market-tested concepts is generated that has short-term, mid-term, and longer-term impact. Many organizations perform business cases on the whole portfolio and create a total valuation on the value created in the process. Then, a unit of measurement needs to look at the cultural influence of working on innovation. Further, how much is it worth to your organization to be quick to market with new products / services, being very responsive with product / service extensions, providing a greater User experience, delivering more personalized services, having deeper collaboration and leveraging expertise, making good on new opportunities, benefiting from cross-functional training, having key market insights ? These elements of value are more fluid and critical to the healthy growth of an organization. Lastly, there is a need to measure the value created by innovation work creating new strategic growth areas for the company and its influence on the organizational strategy.
Air Metrics – These are more difficult to capture since they include performance and knowledge gained metrics from the quantity and quality of boot camps, hack-a-thons, workshops, projects, partner initiatives, etc. – that were completed and lessons learned from the experience. This metric also puts a value on feedback from customers, partners, and consumers who participated in the innovation process. As a result, you come to appreciate the cultural impact of innovation within the organization, the ability for the enterprise to become more entrepreneurial, realizing the benefits of people becoming more collaborative and embracing change, the focus on achieving goals with greater flexibility and openness, etc. – to better position the organization for success going forward.
With the need for organizations to ” Innovate for Impact ” to improve business outcomes, please contact CAIL about metrics and strategies to expand your options to monetize value creation and to better manage the risks associated with change.
April 16, 2018 – CAIL – Innovation Industry Commentary firstname.lastname@example.org 800-668-5769