Metrics are one of the most important elements of an innovation program’s success – determining everything from a program’s future direction – to whether a program even gets funded the following year. Yet metrics are probably the least understood, and most misused activity in a corporate program agenda. Understanding what to measure, and how to benchmark your performance is paramount to achieving both recognition and validation at the senior executive level – so how do you get it done? I thought I’d paste in a step by step guide over the next few weeks to let you know!
Understanding the Innovation function
1. Start with Strategy – Key to understanding the metrics used to measure your innovation program is understanding what the real goal of that program is. Your whole program should be focused at trying to help the company achieve its strategic objectives (if it’s not – make sure it’s realigned to do so or you risk having a marginalized program that will be cut at the first opportunity!) – so it makes sense to start your journey into metrics by getting a better understanding of what it is exactly that the organization is trying to achieve – where does it want to go? What are the barriers stopping the company from achieving it? Where are the key competitive forces? These and other questions will lead you into a better understanding of how best to target the activities of your innovation efforts to best benefit the organization as a whole.
Don’t be fooled into believing that the answer will always be via the creation and development of the company’s product set either. Sometimes it could be a need to dramatically improve process efficiency that will drive a company forward. For other companies it could be a need to develop innovative business models to drive profitability in the forthcoming years – and yet others might be driven by a need to get out of a commoditized marketplace and develop an entirely new value proposition and new client base altogether (see my earlier White paper on Innovation Dimensions for more on the different dimensions an innovation program can and should be attacking). Even within the same industry – different players will typically be driven by different environmental and competitive factors that will lead the decision to pursue a particular business strategy. This strategy should then lead both the direction of your program and the metrics you use to measure the program’s effectiveness. In the same way that companies do not typically simply copy another’s business strategy blindly, neither should you simply copy their innovation metrics and benchmarks – as what’s appropriate for one company in a certain situation could be disastrous when applied to another. With metrics, the wrong metrics will give you misleading information on your ability to help meet the company goals
I’ll be adding more in weeks to come!