In organizations, innovation teams try to fuel the future of a company by generating innovations that advance the attractiveness of the existing product portfolio. However, it is often hard for innovation / R&D / NPD teams to demonstrate their value to other internal teams with „hard numbers“.
Therefore, which methods / scales / metrics / KPI's do you know to measure innovation success in order to assess the value of an innovation team WITHIN an organization?
Thanks in advance for your ideas and comments!
Timm
I guess NPD and R&D can be fairly well measured since the outcome of their work is tangible - products, services, etc., that are soled and turned to profit. Process innovations are tricky but that can also be decomposed to singular processes and their innovation impact could be calculated.
Product teams in generic pharma would be measured on delivery of the molecules on time in the expected quality. Time is of the most importance as it drives the revenue and profit so timely delivery would remain the most important.
It is a very broad question, a lot depends on the industry and its subsegments - delivery time in originators pharma is not as important as it is in generics and so on.
It is a very pertinent question. There are many approaches and measures. Milan B. Vemić provided a very important contribution highlighting some of them.
I’m currently involved in the IAOIP Innovation Measurement Standard Challenge that intents to crowdsource innovation measures. Our intention is to determine the various ways innovation is measured across industries. I invite you to check this initiative at: https://iaoip.spigit.com/innovationmeasurement/Page/Home
We received 73 innovation measures. We are currently in the Expert Review & Refine Measure phase.
The collection of the innovation measures will be used for the development of the IAOIP measurement certification, and then shared with ISO in an attempt to make them a part of standards included in ISO 50500/TC 279.
The following criteria may be useful:
- the number of creative ideas generated
- the number of creative ideas utilized to develop something usable
- number of innovative initiatives implemented
- cost reduction of the innovative initiatives
- perceived value addition of the users of the innovative initiatives
- the impact of the implemented innovative initiatives on the competitive advantage
- perceived potential of the team members to innovate
Innovation success rate = No of product ideas developed that crossed a fixed sales volume in a given period divided by No of product ideas that were developed by the R&D/new product development team
In organizational management, there will always be key priority goals to be achieved within an agreed time frame. Financial and time resources are set aside to aid in the achievement of these goals. The ability to achieve such goals with less resources (efficiency) and within an agreed time frame (effectiveness) is driven by innovative strategies. To measure innovation therefore, we have to quantify what we have achieved and how vis a vis our set goal.
We have just completed a weekend event for a selection of our alumni involved in social change initiatives, these are young people with small organizations that have developed ways to address social problems in their community. The participants were chosen from the region countries like Kenya, Rwanda, Tanzania, South Sudan and Uganda were represented. Because of the high levels of innovation, these people with limited resources they have had to innovate. This question of how you see, measure, reward these levels of innovation come up. The following come up and it would be good to get some feedback as well.
- Volume of ideas brought out
- Newness of the concept brought out
- How people are finding better way of doing their jobs
- Problem solving when a problem is addressed
- Adaptability to the challenges here
- Social impact of the initiative especially how many people are reached
- Money saved by the initiative
How to measure - host 360 feedback come up, surveys and keeping track.
Within organization science and technology creation, transfer are the key essentials to address before evaluating innovation at institutional level. S&T and KMT are the indicators that could be adapted to some extent.
Innovation is part of existence of an entity. It can be about survival, defense or development direction. Each direction puts a different pressure on the necessity.
So, basically we have 3 types of approaches to a Rapport (as result of Exchange Necessity): Conflict, Cooperation and Competition. If none of those is possible, hybrids occur: Disruption, Irruption and Corruption.
Disruption is about innovation (it generates new intelligence).
Irruption is about alteration (it generates new identity)
Corruption is about subversion (it generates new influence)
So, if innovation is about new intelligence, than we must check it on the Big Picture:
How will it be affected by the Environmental Mediation (accidents, incidents and crisis-both happy/ unhappy sides)
How will this impact the Exchange Necessity (alternative futures)
What will be the overall influence on Entity Result (Outcome, By-products and Scrap)
Be aware that innovation becomes a technology if implemented and its feasibility is about:
Risk-Feedback-Opportunity proportion in a dynamic Environmental Mediation
Cost-Help-Benefit proportion in a dynamic Exchange Necessity
Purpose-Sufficiency-Value in dynamic (own/ other's) Entity Results.
The success/ failure of an innovation is determined by the Situation as product of Environmental Mediation, Rapport as product of Exchange Necessity and Issue as product of Entity's Results.
Wouldn't the metric and measure depend upon the type of innovation? My opinion to your question is that if it (the innovative "thing") works and is adopted, it is successful. Again, it would depend upon the type of innovation in which you are referring.
There are several standard scales that can be looked at;
Firstly, a measure of Radical and Incremental Creativity
Gilson, L.L. & Madjar, N. (2011). Radical and Incremental Creativity: Antecedents and Processes. The Psychology of Aesthetics, Creativity, and the Arts, 5, 21-28.
7-point Likert-type scale 1 = (strongly disagree) to 7 = (strongly agree).
1. When you think of the ideas you came up with while working on this project, to what extent would you characterize them as…..
--Extensions built on what was currently done/what is currently done by the organization
--Adaptations to existing processes/products used at the company
--Refinements of how things are currently done/what is currently done at the company
--Incremental improvements upon existing processes/products
2. When you think of the ideas you came up with while working on this project, to what extent would you characterize them as…..
--Departures from what is currently done/offered at the company
--Discoveries of completely new processes/products than what the company currently does
--Fundamental changes to how things are currently done/what is currently offered at the organization.
--Radical inventions beyond existing processes/products.
Article Radical and Incremental Creativity: Antecedents and Processes
Secondly, a measure of Innovative Output (rated by employee or by a supervisor).
De Jong, Jeroen PJ, and Deane N. Den Hartog. "Innovative work behavior: Measurement and validation." EIM Business and Policy Research (2008): 1-27.
INNOVATIVE OUTPUT (employee rated)
In your job, how often do you… …
1. make suggestions to improve current products or services? …
2. produce ideas to improve work practices? …
3. acquire new knowledge? …
4. actively contribute to the development of new products or services? …
5. acquire new groups of customers? …
6. optimize the organisation of work?
INNOVATIVE OUTPUT (supervisor rated)
On the job, how often does the employee … …
1. make suggestions to improve current products or services? …
2. produce ideas to improve work practices? …
3. acquire new knowledge? …
4. actively contribute to the development of new products or services? …
5. acquire new groups of customers? …
6. optimize the organisation of work?
Article Innovative Work Behaviour: Measurement and Validation
I used to work for a US company based in the state of Massachusetts. The company had filed many patents. But that company does not exist today.
All patents represent the forerunners of innovation or can be converted into innovative products and services. Sometimes the patents are far ahead of their time and may never be successful. While working for a company, I proposed the development of robotic vacuum-cleaners and robotic chefs. But I was not allowed to pursue my ideas. An American company based in, yes Massachusetts, brought the first robotic vacuum- cleaner to the market several years later, in 2002, more than 10 years later after my proposal. So, you can decide for yourself.
Thus, while patents filed and accepted can be a measure, products produced and sold are what matters as they create revenues. Revenues are important, as revenues keep engineers and others in employment and thus adding value to a company. In other words, innovations must create revenues. And revenues are good indicators of innovation success.
The first area to address when developing a metrics program for innovation is defining what innovation means to the enterprise. Wikipedia uses the following definition of innovation:
Innovation can be defined simply as a "new idea, device or method". However, innovation is often also viewed as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs.
To measure innovation by this definition you’d need to be able to measure solutions that enable the organization to improve solutions for new or existing needs. This could be done with any type of technology, some of it not innovative at all, but rather applied in an innovative way. Not a bad approach and one that should be considered and included in your innovation metrics.
it is about how to find the problems in your organisation and come up with ideas to solve the problem that should impact to resources usage efficiency and/or increase the value of the output.
Mr Wagner,
In response to your question many people have responded to your question posed two months ago. I am visiting your question a month after I responded -- not that my response is anything significant or noteworthy. But, I see no response from you... I would have thought you would respond.
This is a forum for exchanging ideas, a forum for sharing thoughts, a forum for disclosing one's views, a forum for revealing experiences and I think it is vital that those who pose questions do participate actively... that is what is expected in an academic community, or at least in the community I am familiar with...
1. Input measurement: how do the company measure ideas. It can be a number/ person/ product , process or procedure.
2. Idea evaluation : is there a Tool ( standard for all ideas) to check feasibility? How many pass the test?
3. Idea priority/ Capability / versatility : when is the Utility envisioned? Is an immediate Necessity, alternative or backup? A good idea for exit, for example cannot be used anytime.
4. Innovation is a backdoor when you cannot Compete ( on existing means) and you cannot Cooperate. So, you choose to go for disruption. How much industry, market or product dislocated ( if external disruption occurred), how much influence was produced ( for contact disruptions, measurable in feedback/ help / sufficiency) how much you saved or gained( in terms of risks/ opportunity, Cost/ benefit , purpose/ value, if the Innovation was for internal use).
Such tool is a necessity only in large systems.
Further to my previous comment of a month ago, a recent report suggests that IBM (one of the most innovative and successful computer or IT companies), had successfully obtained more than 1900 patents in 2018.
The financial results show that the company had a revenue of $21.8 billion for the quarter but this was 3% less than the previous quarter. So patents do NOT always result in revenues. Amazon with fewer patents ( -- it could thus be argued fewer innovations) generates more revenue ($160,504 million) than IBM ($57,830 million) for 2018. Thus patents should lead to innovations but innovations on their own do not necessarily contribute to revenues.
You may possibly consider this concern from angles of R&D impact and R&D investment.
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