Innovation Metrics

June 25, 2012

Measuring InnovationRarely do companies measure innovation. Part of this is the discrepancy on what innovation means and what qualifies for innovation within their organization. When innovation is being measured often it is the economic metrics that are valued: sales and profit from new products, or cost savings.

There are many more metrics for innovation that can be used. Winning at Innovation The A-to-F Model authors,  Fernando Trias de Bes and Philip Kotler, highlight 25 metrics classified into 4 groups: economic metrics, intensity, effectiveness, and culture. There are many more along with combinations of metrics. At the end of the day, like anything you measure in business you are more likely to achieve the things you measure. How many and which innovation metrics you measure is based on where your company wants to go and the industry.  For example, at some telecommunications companies patents are a big part of the business so measuring the number of patents may make sense.

The first thing to do in order to measure innovation is identify what your organization considers as innovation – new products, new processes, patents, new business models.

Culture is an area that isn’t talked about as much in terms of innovation metrics. Trias de Bes and Kotler specified the following metrics for culture:

  • % of employees that produce ideas,
  •  % of employees that assess ideas,
  • Rate of ideas per employee per year,
  • % of time spent on innovation,
  • Number of department that innovate on an ongoing basis, and
  • Propensity for risk taking

Implementation of metrics is one of the keys in being successful at innovating and successful with maintaining innovation metrics.  For example, I like idea production being measured however collaborating and building on top of ideas is also important, if not even more important. Innovation is a social endeavor and if you are measuring only the idea producer there has to be a way to incorporate enhancements to ideas as a measure or part of the produce ideas metric.

The last thing an organization wants to do is create an environment of unhealthy competition amongst employees. Organizations will want employees collaborating in a free form format whenever possible for the most creative solutions.

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