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Thinking About Innovation Metrics

Paul Sloan considers innovation metrics on his BQF blog.  This question comes up quite frequently as companies need to be able to justify their investments in innovation and R&D.   As Paul notes, the Boston Consulting Group recommends in a related report that companies should select a small number of metrics appropriate to the business.

Here are some thoughts I have had on the subject of metrics.  Tell me what you think.

Process metrics – these are raw performance measures of ideation and conceptual solution process
– Number of concepts identified (measures quantity of work output)
– Quality of concepts (subjective measure of quality of work output)
– Percent of concepts from outside of domain of expertise (“out of the box” measure)
– Resources to complete project (an efficiency measure)
– Percent concepts to survive first filter (a more objective quality measure)

Project impact – these are measures of how the innovation effort impacts the effectiveness of your product development process and accelerates market entry
– Cycle time to product delivery (are you impacting time to market)
– Prototype cycle reduction (are you achieving a direct cost reduction benefit)
– Process milestone attainment (are you impacting your NPDI process efficiency)

Value building – does innovation result in revenue or market share growth
– % revenue from new products (an old but useful way of looking at innovation impact)
– Individual project ROI (a more direct way of assessing impact on a per project basis)
– Successful launch rate (a key metric to show improvement in effectiveness of go-no-go decision process)
– Patents (an important measure of efficiency, particular as compared to peer organizations on a patents per revenue dollars basis)
– Revenue & market share growth (are you driving the top line)

JT