Measuring Innovation — The Truth

In a previous post, I have talked about how to measure the innovation process in a company. The main point is that the corporation has to find a way, adapted to its lines of business and cost structure, to try many ideas and fund them incrementally, through a rigorous process of validating business potential at each stage. The fight, in this phase, is with the NIH Syndrome and with the harsh realities of the innovators dilemma that will always starve new ideas of any hint of funding. As I’ve stated before, you will have no innovation to measure whatsoever if you procrastinate in the selection process trying to fund only those ideas that you can somehow miraculously assess beforehand will generate one billion for your bottom line.

As it happens, many companies claim they are doing all the right things, and lately the Harvard Business Review has good articles, almost monthly, about managing innovation. And of course, if you read mission statements and annual reports everybody is doing it…

How do you know if this is true?

One way is to run surveys and ask employees if they believe their company is innovative. By this misguided metric you usually find out more about the culture of the company and the morale of the troops than about the state of internal innovation.

If you really want to know the truth, measure the the percentage of total revenue, by line of business, from new products or services launched in the past three years. A number above 20% is very good — do you know what’s the value of this metric for your company?

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