This guide contains a step-by-step process to improve how you measure the innovation performance for your innovation portfolio.
Organizations are under intense pressure to innovate more effectively. That often leads to a focus on new tools or processes—e.g., new ideation software or Lean Startup methods. However, despite those efforts, most organizations’ innovation performance is declining: one study found returns to companies’ innovation spending have actually declined 65% over the past three decades1.
While new tools or processes are an important part of the solution, better measurement of innovation is a pre-requisite for improving innovation productivity. Without good quality measurement of innovation performance you don’t know where you need to improve, or whether the new tools and approaches you implement are working.
Parker Hannifin improved their approach to innovation performance measurement (using a process similar to the one described in this guide) and increased the value of their innovation pipeline by 20% in just two years,2.
The guide will take you through the process of identifying and prioritizing improvements to your innovation performance measurement system.
Central to this process is engaging with the “customers” of information about innovation performance—your colleagues who make decisions like which innovation projects to fund, or who need to know what innovations are in the pipeline for their customers.
The Prepare activities help get you ready to interview your customers by ensuring you’re familiar with the existing metrics, KPIs, and audiences.
In the Discover stage, we set out how to conduct those interviews with your colleagues.
After completing interviews, you’ll be ready to Enhance your measurement system. First, you’ll set priorities for the measurement system. These will then help you identify the metrics you need to add, improve or replace.
Once you’ve identified how you’ll enhance your innovation metrics, we recommend carefully considering how those metrics are communicated—because those metrics only do their job if they’re communicated to the right people, at the right time and in the right format. Detailed guidance on communicating about innovation metrics is contained in separate guide.
1 – Knott, A. M. (2017). How innovation really works. McGraw-Hill Education.
2 – Burns, K. and Beane, B. (2013). Innovation Metrics Selection and Implementation Process.