Everything About Innovation Metrics in 2020
Innovation metrics are important to drive innovation in a successful business. Innovation means coming up with creative ways to do something different. But in order to fully understand if a new approach – for example in continuous improvement or service innovation is actually effective, companies have to measure innovation.
Why should you pay attention to your innovation metrics?
It sounds a bit abstract, but paying attention to your innovation metrics guarantees you a safe path to make your business bigger. You can’t improve products or services if you don’t have enough data to know what works and what doesn’t. That’s exactly what innovation metrics are about.
In this post we would like to go deeper into the innovation metrics of 2020, to offer a wider look at why it is so important to keep up to day with them, and how to measure them. So take notes, and don’t stop thinking about your business while you read for better comprehension.
What Are Innovation Metrics?
We can’t talk about innovation metrics without first describing what ‘innovation’ means. Therefore, we can conceive innovation as a systematic process or practice that often takes advantage of unique opportunities or specific events going on in our society.
The purpose of innovation management is
- to continually perform organizational innovation,
- product development and
- innovation projects on digital transformation
to find better ideas under some criteria that offers a high ROI or that have a strategic fit for the company.
The main idea is to deliver a detailed method that clarifies the uncertainties within a project while offering innovative approaches to a problem, idea or entire project to take advantage of particular events without risks, or at least with identified potential risks.
Implementing an innovation process for measuring innovation
Essentially speaking, the innovation process of an enterprise consists of:
- The evaluation of business trends and new technologies
- Seeking opportunities for idea generation and analyzing the best approach
- Evaluate and prioritize ideas for the company and the customers
- Develop approaches or implementing changes
- Monitor the results
That last part of the innovation process is what we call innovation metrics. The use of one or several metrics adapted to the accurate measurement of innovation in business. Measuring innovation also provides indicators of the competitiveness of a specific product or service, which later provides lots of information about the company as a whole. And as we mentioned a few lines before, measuring innovation is not something you do once, it’s a live process, and the key to having outstanding results is the continuous measurement. But there is also one trickier part: there is no single or perfect metric to choose from, it all depends on what you and your business are searching for.
How Can You Measure Innovation?
If you start our journey through innovation metrics by yourself, you will eventually discover that not all indicators are useful for your project and that many of them end up giving superficial or unspecific results. This occurs because innovation is something very intangible, so every company or business needs to define, in their own terms, what innovation means for their project and what sort of indicators could provide enough data of its effectivity. Professionals have spent the last 20 years perfecting these metrics, but there’s still a lot of work ahead of us if we want to come up with the ultimate innovation metric. But to be honest, we do not need one perfect tool. We need metrics that easily adapt to the many specificities of our projects, not the holy grail of measurements.
Finding metrics for innovation: a marathon, not a speed race
It is better for your company if you see the innovation process as a long term process, this way you can measure success in terms of targeted goals or the process’s completion. Here is where you will notice the importance of defining innovation according to your own goals and your company’s perspective. For example, if innovation for a project is whether a client finds or creates new value out of a product or service, you can measure:
- The perceived performance of the product or service before and after the innovation process
- Future innovation potential
- Effective innovation capacity
- The company’s growth potential due to this innovation
Once we dive into the key performance indicators of innovation, you will notice the importance of calling this a marathon and not a speed race. The more time you take to fully describe what you are measuring, and what’s important about the on-going project, the easier it will be discovering the right KPI; which will lead you to a more comprehensive analysis and therefore, a better comprehension of current statuses or future developments. Generally speaking, there are many leading indicators of innovation right there for you to notice:
- Innovation culture in the company
- Percentage of ideas that transform into larger initiatives
- Quantity of new ideas tried or at least discussed
- Hours of independent research and ideation
- New technology involved
- Revenue driven by the new technological implementation
Just to clarify, and right before going deeper about how to measure innovation, when we talk about technology we mean everything from chatbots, artificial intelligence, virtual and/or extended reality, internet of things, and any other type of disruptive technology that go hand in hand with your company’s definition of innovation.
Key Innovation Metrics
It is also imperative to understand that the key innovation metrics we currently have were born in a traditional industrial environment, providing a limited view of the true potential of many innovative strategies.
Annual R&D budgets, patents filed, percentage of sales, active projects, and recently added product sales percentage are valuable metrics, but they often inhibit strategic innovation. Something you don’t really want to go through since your competition is already fierce enough.
Having too many metrics gives back little value, which can lead to replicating wrong strategies or directing the message to the wrong audience. Basically, we can’t use traditional metrics, we have to redefine innovation every time a new project begins, and we can’t measure everything with the same criteria. So what exactly can we do to measure innovation? The process is actually quite simple:
- Apply new technology
- Align opportunities
After doing this you will come up with objective definitions, resources, and lead indicators based on the two previous steps. Also, when talking about key innovation metrics, we must mention that any of those metrics are static. If you discover valuable information during or after the project has ended that could make your company require new metrics instead of the ones first suggested, then it’s time to start the search. This about learning and trying new ways.
How to Measure Innovation Using Innovation Software
Luckily for many of us, technology has advanced so much in the past years that we have innovation software (LINK) that can help us swim through this ocean of abstract concepts with more facilities. The Innolytics innovation software is designed to help you see <strong>the potential of your own ideas</strong>, and how hidden thoughts in the back of your head can bend to be your next innovative hit. Innovation software also helps you
- to see customer demands as potential ideas to problem-solving,
- to accelerate cross-departmental collaborations,
- to work on your ideas anywhere (even if you don’t have a computer near you),
- to make significant polls, and
- to understand a huge deploy of statistics and reporting functions.
While innovation software may seem like the ultimate tool, and don’t get us wrong, they are truly amazing, they still can’t perform magically. The more polished your ideas are, the more specific you are with the definition part we talked about a few minutes ago, and the more clarified your objectives are, the more accurate and personalized solutions the innovation software will deliver. In other words, innovation software works as a tool to help you organize ideas and see their true potential. Do not expect miracle innovative solutions if the data you are putting in is messy, poor, or random. Among the many advantages of using an innovation software, we can mention:
- Simplification of the administrative innovation process
- Promote social collaboration among the employees of a company or external ones if necessary
- Integrating customers into the development process of an innovative idea
- Establishment and development of innovation networks
- Easier trend analysis
- Assignation of milestones, roadmaps, responsibilities, development of ideas, and more
They may not know it yet, but every company in the world is chasing innovation. To differentiate your business from the competition is critical, even if you don’t have the capacity to sell more than them, or the financial background to expand to other nations. You can totally rely on innovation management and innovation metrics to come up with bright new ideas. But the faster you start investing in innovation culture, the better results you will find, and the easier your innovation journey will be.
Even if you choose an innovation software, which we totally recommend, it is a great idea to keep rethinking about your plans, your ideas, your own concept of innovation. This way, your employees not only have a better view of your idea, but they can also come up with better plans.
- Innovation is about identifying opportunities, but also about developing down to earth ideas, and discussing processes with different teams for a better perspective.
- Another aspect we talked about on this post and that is completely worth mentioning in this chapter is the reality of your metrics.
- Not everything you are going to measure is what you are looking for, and not every metric is good for your analysis. Just like using every single innovation metric you can measure is a mistake.
- Listen to your team, discuss, prioritize, and make decisions based on those outcomes. And if you don’t get the expected results, learn, do it again. Find your unique way to innovate, and keep measuring impacts.
Even though there are many theories, plans, diagrams, and paths, every company is unique. And every metric should obey only their own definition of innovation.