There are many schools of thoughts regarding the measurement of innovation activity. Some say that trying to measure innovation actual inhibits creativity, but metrics are essential to managing innovation, and managing innovation is what innovative companies do.
Every organisation will have different metrics to measure innovation performance; there is no “one-size” set of measures that fit all. I have outlined six guide principles to help determine what metrics your company should use in their innovation program.
1. Consider your innovation journey
Your innovation journey determines the types of indicators that you need. At the beginning, you need lag or current indicators, but as things progress, you start to utilise current indicators. To ensure that the journey remains relevant to the organisation, leading indicators will show what activity is required to maintain success.
- Lag indicators. The results are lagged with weeks, months or years and cannot be changed, e.g., rewards and number of patents
- Current indicators. The results happening right now, giving you some possibilities to act and change, thus affecting the future results, e.g., numbers of ideas and ongoing projects
- Lead indicators. The results are predictive for the future. You can make radical change in your approach and thus affect the results
2. Develop KPIs that align with your corporate goals and value drivers
Innovation focus must be linked to an organisation’s mission and goals, this aids engagement and focus at all levels. It is also key that metrics align with the values and culture of a company, as performance is driven by measures.
3. Determine what behavioural response you wish or need to see
Metrics will focus activity on specific areas, so you need to determine what behaviours you need to see from people. By doing this, the metrics chosen will enable people to display the behaviours you are seeking and be rewarded for it.
4. Decide which measures apply to which groups and levels
Once the metrics have been determined, decide if they apply to all employees. Metrics will differ by seniority, but they may also differ by job role, e.g., analyst versus marketeer.
5. Ensure current performance levels are baselined
Before the metrics are launched, establish the current level of performance, thus enabling a baseline to be established to measure the change in performance.
6. Once metrics have been agreed, give regular and consistent feedback on performance
To ensure engagement, feedback on performance against agreed metrics must be provided on a regular and consistent basis. This will ensure that employees recognise that these metrics are “key” performance indicators, and remain focused on achieving them.
My next post will look at how metrics and measurement drive behaviour and how you can use them to increase your innovation success. Until then…
Innovative Thoughts 