Many organizations have top-level goals for innovation but struggle to measure progress toward them. How can you assess the current state of your innovation capability? There are three critical areas to consider.
First, you should measure your ability to fill the pipeline by monitoring the number of new ideas being generated. If you have a suggestions scheme you can scrutinize how many submissions you get each month. If you are canvassing ideas from outside your organization (e.g. through social media, competitions or open innovation) monitor the numbers coming in.
Secondly, check the efficiency of your innovation evaluation process by monitoring how many ideas make it through the initial selection and into the next stage as projects.
Thirdly, check how many projects become prototypes and how many prototypes become new products. Of these how many are incremental new products or extensions of existing lines and how many are radical innovations?
Other useful metrics include:
- What is the innovation cycle time i.e. how long does it take for an idea to go from conception to implementation?
- How many people are engaged in innovation activities?
- How much money are we spending on innovation?
- What is the projected value of the projects in the innovation funnel?
- What is the ROI on the new products and services launched this year?
- How does the actual return compare with the original projected return on these projects?
Most companies have innovation targets which can only be measured in hindsight – e.g. what percentage of revenues come from new products. You need to select some of the metrics above to assess your current state of health.
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Paul Sloane writes, speaks and leads workshops on creativity, innovation, and leadership. He is the author of The Innovative Leader and editor of A Guide to Open Innovation and Crowdsourcing, published both published by Kogan-Page. Follow him @PaulSloane