Better measurement for innovation
Enhance innovation with better measurement
Innovation is fundamentally different from other business functions. Measuring it requires a system designed specifically for that context. Improve the system, unlock value from your innovation / R&D investments.
A comprehensive measurement system includes metrics, benchmarks for comparison, communication practices, and the tools to support all of the above. It should be as innovative as the technologies, products, and services you’re creating. It’s working well when it enables confident decision-making at the project, portfolio, process, and organizational levels.
Why measuring innovation matters
- Organizations are under intense pressure to innovate more effectively (e.g., from intense competition, due to the rapid emergence of transformative technologies).
- Despite that pressure, most organizations’ innovation performance is actually getting worse. A recent study found returns to companies’ innovation spending have declined 65% over the past three decades (read more here).
- Good measurement practices are essential to reversing this trend—provided those practices are tailored to the innovation context. When you’re trying to improve, there’s a tendency to focus instead on new tools or processes—maybe new ideation software or implementing Lean Startup feel more exciting. But without good measurement you don’t really know where you need to improve, or whether those new tools and approaches are actually working.
It's never too early for metrics.
Even when executive sponsors give new innovation initiatives freedom from the formal accountability they’d normally place on more typical business operations, measurement is still important. Questions about “return on investment” will inevitably arise—the best innovation leaders are ahead of those questions, defining how they want their leadership to evaluate their success.
- Best practice measurement of innovation is different from measurement of traditional business operations. It must account for (and drive) the rapid, iterative cycles of learning that are critical to successful innovation projects. It must also recognize the ambiguity of front-end projects and the uncertainty of all innovation activities.
- A good innovation performance measurement system keeps the innovation function connected to the rest of the organization. Communicating innovation-specific metrics increases everyone’s understanding of the innovation context. It can reorient innovation decision-making as a shared learning process, rather than an advocacy-based process that puts innovation teams “on the other side of the table.”
How we help improve your innovation measurement practices
Good innovation performance measurement requires careful design of a system to ensure it efficiently achieves its intended functions. Innovation measurement systems are often highly metric-driven; that is, they’re ad hoc collections of metrics including:
- Metrics that have always been recorded—and no-one knows why.
- Metrics the organization’s innovation management software collects—but may not actually be useful.
- Metrics someone decided to adopt, based on a survey of common industry practices—but which may not be appropriate to the organization.
Commodore’s approach to innovation performance measurement starts with recognition that it requires a system. The design of that system starts with identifying its core functions and understanding your organization’s culture. The answers to those question define the other aspects of the system: the metrics you need, the norms you benchmark against, how you communicate, and the tools you need.
Our standard approach to designing and refining measurement systems is shown in the diagram. Sometimes our clients need more targeted assistance. In those cases, we also:
- Audit existing measurement systems, dashboards, and metrics
- Benchmark innovation performance against peers and competitors
- Support better alignment and communication with leadership and other internal stakeholders, via coaching and educational workshops
- Provide targeted troubleshooting for particular types of portfolios and projects, e.g., exploratory, Horizon 3.
How are we different?
- We emphasize communication. We design innovation measurement systems for the express purpose of engendering understanding, conviction, and commitment among diverse stakeholders.
- We specialize in complex contexts. We’re no strangers to complex or emerging fields of research. We have tackled innovation and measurement related to climate change, healthy aging, post-disaster redevelopment, and sanitation in low- and middle- income countries.
- We provide an external perspective. We provide an independent, objective viewpoint—free from any internal biases.
- We’re experts. We have a combined 30 years of experience in strategy and innovation management consulting. We focus exclusively on innovation measurement.
- We’re quick. Free from the day-to- day “distractions” of running an innovation team or initiative, we can deliver recommendations in just 6 weeks.