Measuring Innovation Input

I spend a lot of time talking to clients about how my company manages  the innovation process, and the discussion invariably gets to the point where I’m asked about ways to determine the “best” innovations beforehand, so we know if we want to invest money to bring the idea and/or prototype to life, to production, to customers, you name it.

First, experience shows that no one knows for sure. Corporate history is littered with failed big-bet experiments — New Coke, Newton, and so on. If we would know for sure, it would not be an innovation — we create value by trying, experimenting, failing. The only way that I know is to support many innovators and their innovations, and use a portfolio approach to incrementally determine the amount of funding to move each to its next step.

But, one may argue, how do you measure this? We don’t want to throw money away on “bad” ideas…

What you have to do is measure the “pipeline”, for example how many innovations  you have in the works, how many people work on them, calculate percentages for innovator population, for dollars spent on new things compared to the whole budget. In a nutshell, what you have to measure is that you do spend money on innovation, and not be too concerned at this stage with the output — if there is no innovation in the pipeline, there is no benefit to measure, for sure…

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