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SelasTürkiye -Mckinsey Survey Assessing Innovation Metrics

SelasTürkiye -Mckinsey Survey Assessing Innovation Metrics

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Published by Ziya Nisanoglu
SelasTürkiye -Mckinsey Survey Assessing Innovation Metrics
SelasTürkiye -Mckinsey Survey Assessing Innovation Metrics

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Published by: Ziya Nisanoglu on Sep 21, 2010
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09/29/2010

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Assessing innovation metrics
Oct 2008
McKinsey Quarterly
survey on innovation metrics
McKinsey Global Survey Results
 J  e a n a n ç  oi   s M a  t  i  n
A recent McKinsey Global Survey shows that companies are satisfed, overall, withtheir use o metrics to assess innovation portolios—though many fndings suggest that they shouldn’t be. The companies that get the highest returns rom innovation do usemetrics well; these organizations tend to assess innovation more comprehensively than theothers.
Even in the current economic turmoil, innovation remains a high strategic priority ormost companies, and many see it as a strong contributor to growth. Yet many alsostruggle to measure the perormance o their innovation portolios. In a recent McKinseyGlobal Survey,
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we asked senior executives which types o innovations their com-panies pursue, which ones they measure and with what metrics, what goals they havein using metrics, and how satised they are with the metrics they choose.Companies reporting the highest contribution to growth rom their innovation projectstend to be more interested in pursuing and measuring their innovations as a portolioand thereore use metrics across the whole innovation process. In the end, they are moresatised than others with the ability o such metrics to help their organizations doeverything rom aligning individual perormance incentives to improving innovationperormance to communicating with investors.
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Conducted in October 2008, the survey had 1,075 respondents, all C-level or other senior executives, representing a ull rangeo regions and industries.
 
 Assessing innovation metrics
McKinsey Global Survey Results:
 
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Assessing innovation metrics
Oct 2008
McKinsey Quarterly
survey on innovation metrics
McKinsey Global Survey Results
Sixteen percent o the respondents say that their companies don’t use any metrics toassess innovations. Among those that do, most are satised overall, though the ndingssuggest they aren’t eectively using these metrics as well as they could. Most notably,companies are much likelier to rely on metrics or outputs than or inputs, so they aren’tassessing the whole process o innovation. Forty-ve percent don’t track the relation-ship between spending on innovation and shareholder value. Further, although manycompanies are satised with their use o innovation metrics in general, ar ewer aresatised with specic uses, such as aligning individual perormance incentives.
 What gets measured and why
Innovation is a high strategic priority or most companies (Exhibit 1). However, thissurvey shows slightly ewer senior executives either selecting it as the top priorityor placing it among the top three than those who responded to a similar question
 
lastyear:
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65 percent now, compared with 70 percent in 2007. This drop may refectthe act that the latest survey was in the eld ater the credit crunch and stock marketturmoil had begun to reorder many companies’ priorities.
Exhibit 1
A strategic priority
% of respondents,
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n = 1,075
TotalBy region
How important is innovation in products, services, processes, orbusiness models on your organization’s strategic agenda?
 
Respondents who answered “don’t know” are not shown.
The top priority142912169Among the top 3priorities5143495452Among the top 10priorities3024332535Not a priority54563
Asia-PacificEuropeNorth AmericaDevelopingmarkets
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In September 2007, a McKinsey Global Survey asked, “Over the next three to ve years, how important will innovation asa major driver o growth be on your leadership team’s agenda?” See “How companies approach innovation: A McKinseyGlobal Survey,” mckinseyquarterly.com, October 2007.
 
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Assessing innovation metrics
Oct 2008
McKinsey Quarterly
survey on innovation metrics
McKinsey Global Survey Results
The kinds o innovation companies take up are diverse. Yet no matter what orm o innovation they pursue, ar ewer companies measure it than pursue it (Exhibit 2).Respondents say that their companies use about eight metrics, on average, to assessinnovations. They cite three main reasons or doing so: to provide strategic direc-tion or innovation activities, to guide the allocation o resources to innovation projects,and to diagnose and improve overall innovation perormance.
Even at companies that actively pursue innovation, 16 percent of executives say their companies don’t formally assess innovations at all 
Exhibit 2
A lack of measurement
% of respondents, n = 1,075
What types of innovationsdoes your organization pursue?
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Respondents who answered “other” are not shown.
Respondents who answered “other,” “none,” or “don’t know” are not shown.
What types of innovationsdoes your organizationformally assess?
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Product innovation7154Process innovation6237Service innovation6537Business modelinnovation512817252823
Percentagepointdifference

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