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Truth - Innovation Can Be Measured

Truth - Innovation Can Be Measured

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Published by Max Mckeown

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Published by: Max Mckeown on Feb 07, 2011
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02/07/2011

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Innovation Can Be Measured
Some people argue that innovation is impossible to measure. If innovation isnot measured it can’t be managed. You can’t prove to doubters that what youare doing is worthwhile. You won’t know whether your efforts to innovate areimproving. On the other hand, if you measure the wrong things you will managethe wrong things, reward the wrong behaviour, and screw up innovation efforts.
Measuring innovation deserves some thought. Your measurement efforts need toreflect the process and purpose of your innovation efforts. You want to knowwhat is happening, identify new opportunities, let everyone know how to getinvolved, and share how innovation can help. Many attempts to measure failbecause they are too complicated, too much effort, and too removed from theway that innovation works.
Patents 
are a popular measure of innovation. The logic here is a company willpatent its most important innovations and that increasing the number of patentsis the same as increasing innovation. If only it was that simple! What about theinnovations you can’t patent? Patents are not relevant to services. How do youmeasure the difference in quality or innovation between patents? You combinean old patent with a new business model: Are you or the patent owner mostinnovative?If your industry generates patentable innovations, measure them. Compare yourcompany to your industry and competitors. Group them by type, originatingteam, and likely impact on the business. Track where they are used and how theyhave helped financially and competitively. Evidence shows they are a goodpredictor of future new products. Just remember there is no clear link betweenpatents and financial performance. There’s much more involved.
 Balanced Score Cards
 offer a powerful way of measuring innovation. They followthe idea that measuring anything can only be as good as your understanding of what you are measuring. As your grasp of innovation grows then you are betterable to measure what matters.
 
Describing the way innovation works is a group activity. Managers get involved tolearn and agree together. This process of creating a shared view of innovation isvaluable. It often results in creative new ways of looking the nature of themanagement role in moving from objectives to performance. It challengesassumptions as the group thinks about inputs, processes, outputs, and outcomes.Draw a diagram that shows how you believe that innovation should work in yourcompany. Think about how to measure the performance of the various parts of that innovation flow. Keep the model as simple as possible but no simpler.Compare your model with what is already measured. Some should overlap.Others will be completely new. Your measurements should follow the logical flowof innovation from source to market.Since everything affects innovation, it’s tempting to measure everything. Unlessyou are all knowing, and all seeing, this is a mistake. Too many measurementsconfuse people. They ignore what is overwhelming. Even worse, they may spendvaluable time managing the measurements rather than increasing innovation.Measurements will be a mixture of objective, stuff that is easy to count likenumber of patents, or subjective, stuff is all about opinion like the quality of anidea. It is important not to focus on the objective just because it seemsstraightforward. First, most objective measures require judgement. Second, themost important inputs, processes, and outputs
are
subjective.Every company is different but here are some measures that are always worthcounting: How innovative do people think you are? How innovative do peoplethink your managers are? How easy is it to get from idea to market? How manyinnovations are suggested? Where do ideas come from? How many innovationsare being studied? How balanced is the range of ideas? How many get to market?What revenue and profit comes from new products or services?The innovation model is never finished and the measurement system is neverperfect. Innovation is a balancing act. The measurement system must help peoplebalance their efforts between competing demands for their time. It should beopen for discussion so that it can improve as understanding increases.

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