I’m going to be frank. If you came to find a few golden egg metrics in bold, 30pt font that takes all the thinking out of your analytics strategy, this is not the place for you. There is not a cookie-cutter solution to measuring innovation, but we can certainly help you figure it out.
Creating the Framework
Innovation can take the form of many things, but when it comes to measurement, it’s all about alignment. While there are millions of ways to look at data and likely thousands of different (and fragmented) metrics to measure innovation within your organization, the question soon becomes why do I measure rather than how do I measure.
“The crux of innovation measurement is to understand the project that measurement should solve for the organization and, based on that insight, to design and implement a useful and usable innovation measurement framework appropriate to the organization’s needs.”
Before moving forward with identifying specific metrics, start by defining the goals of measurement. Connecting with leadership early on to determine goals will make uncovering KPIs even quicker.
Common Innovation Metrics
In the realm of innovation measurement, metrics are split between two major categories: input and output. Input metrics measure the activities initiated to generate innovation and are great for getting a high-level view of the activities achieved.
Output metrics measure the impact - the return on that innovation. While output metrics are the most satisfying to measure (and present to leadership), they don’t offer the “why” that input metrics provide. For a more comprehensive view on the state of innovation at an organization, you’ll need both.
- # of workshops run
- # of projects started
- # of ideas generated
- # of employees dedicated to innovation
- $ spent on discovery
- # of products launched
- # of leads generated
- $ revenue from new products
- $ profit from new products
- % market share
Regardless of which metrics are chosen, it’s recommended that companies review and revise measurement practices regularly. For additional ideas on metrics, check out our resources section at the bottom of this page.
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Innovation Cycle Times
Innovation is rarely quick. Be wary of too-short measurement intervals when crafting your strategy. When it comes to innovation, our ideas of normal data collection cycles are thrown out the window.
“No matter what innovation measures a company decides to track, two or three years of data collection may not be enough to determine the real impact.”
Do we measure the success of Ford’s automobiles against horse sales in the 20th century or as a percentage of human transportation in the 21st?
Speaking of time, uncovering the right innovation metrics takes a lot of it. We recommend reading up on the following sources for even more in-depth information, examples, and recommendations on measuring innovation.
- Creating Better Innovation Management Practices, MIT Sloan Management Review
- What Big Companies Get Wrong About Innovation Metrics, Harvard Business Review
- Taking the Measure of Innovation, McKinsey Quarterly
- The Definitive Guide to Innovation Management KPIs, Viima