By Scott Amyx.
These days, almost every organization claims they are innovating. But innovation means different things to different companies. For some, it’s the dated 2000s mantra to build everything in-house. For others, it’s a potpourri of corporate innovation labs, accelerators, corporate VCs, M&As and strategic partnerships. Others are choosing to outright outsource innovation altogether to big agencies, offshore development shops or venture studios. In this wild west of innovation, how do you know if your innovation is really working? Most projects quietly fade into the background, and the few that make it out produce dismal business results.
According to a BCG study, 73% of respondents believed that measuring innovation is important. After all, successfully commercializing a new product or service requires an effective innovation process to vet the best ideas, properly allocate resources and measure outcomes. Yet only 43% of businesses measure innovation. Even more disappointing, of those that do measure, 59% indicated that their metrics for innovation were ineffective.
Measuring innovation is so critical that major consultancies like BCG and McKinsey have developed their own set of metrics.
In a recent study, the researchers conducted a thorough literature review on innovation indicators. They identified 82 indicators used in evaluating innovation. Of those, 26 indicators were identified in the early stages of the innovation process: 16 in the definition phase and 10 in the concept phase. This is useful, as the early stages have the greatest risk and asymmetric information. The study does provide the caveat that more research is needed to identify additional early-stage innovation indicators.
In order to produce a successful breakthrough product or service, organizations need a high-quality innovation process. It’s important to note that the innovation process, especially in the early stages, often does not have concrete values. Hence, there are more qualitative indicators than quantitative indicators.
Here are three early-stage indicators to consider in your innovation process.
1. Percentage Of Workforce Trained In Innovation
Your culture has a lot to do with innovation. Does your culture foster innovation? What percentage of your leaders are trained in creativity innovation and innovative methods and tools? Note that the study didn’t state IT professionals trained in software development or project management. It’s easy to carelessly throw around terms like Agile and design-thinking and declare that your teams are fully knowledgeable about innovation.
Do your employees know how to systematically and continuously generate profound innovations in scale? Do your managers understand the complexity of finding the optimal blend and levels of input, output and process constraints for maximum innovation? Does your innovation team understand why it’s dangerous to start with standard business requirements gathering? Does your team know how to facilitate discussions, not for consensus but for divergent thinking?
2. Dedicated Talent Resource To Innovation
Can you become a concert pianist by taking a lesson or two? Similarly, innovation is a skill that’s mastered over time. The amount of time managers spend on innovation compared to their regular job is a key indicator of success. Many businesses partially allocate resources. Employees have to split their time between their regular day job and multiple projects, resulting in part-timers doing part-time innovation. Innovation requires dedicated resources doing innovation on a full-time basis over an extended period of time to sharpen their skills and experience. If successfully structured and supported, they build competence and knowledge over time, which in turn increases their ability to turn know-how into implementation to realize business objectives.
3. Level Of Commitment To R&D
In some organizations, innovation is treated as skunkworks – but without dedicated resource allocation or the adequate budget and time needed to discover, experiment, fail and repeat until radical innovation is realized.
If your organization is relying on traditional project management and product development KPIs and OKRs (objectives and key results), your performance measurement for innovation may not be effective. Consider incorporating some or all of these early-stage indicators to increase the quality of your innovation process.
By Scott Amyx
Managing Partner at Amyx Ventures, TEDx, Top Global Innovation Keynote Speaker, Forbes, Singularity U. Smart City Accelerator, SXSW.