For most companies, Innovation is a managerial priority. Competitive advantage is being more and more dependent on organization’s management of the innovation process. This implies that corporations that are not able to manage and profit from innovation's processes, are destined to extinct.
Doing innovation in itself is not sufficient because the real difficulties in the innovation processes lie in quantifying, evaluating and benchmarking innovation competence and practices. Being capable to measure the complex processes that influence the organization’s innovation capability is the key to optimally manage and boost innovation.
Organisations normally analyze their innovation performance through quantitative performance indicators. Innovation is often measured as profit results coming from sales from new products, as process such as numbers of new patents, as input like the number of ideas generated or as innovation portfolio by looking at the factors such as the percentage of investments in the breakthrough project.
Most of the companies reported that their efforts in measure innovation outcomes often failed in generate desired results. This could happen because a company uses quantitative measures neglecting the use of qualitative ones, or because companies tend to consider the short period instead of the long one.
A recent research from MIT Sloan Management Review pointed out the three common traps in the innovation measurements:
DO NOT OVERESTIMATE OR UNDERESTIMATE WHAT MEASUREMENT CAN DO FOR THE ORGANIZATION
In the measurement process, the first question to pose is “what we need to take over control?”. Identifying the right question is usually more difficult than find the right answer. Executives need to understand the innovation challenge to face, try to measure outcomes and evaluate in which extent the measurement practices facilitate or hinder the organization's effort to achieve innovation’s goals. Understand what and how organizations need to measure is, thus, a fundamental step to boost innovation. Companies that do practically no measurement at all, underestimate what measurement can do. When management is skeptical about innovation measurement, follow-up and management of innovation become inherently difficult. The entire organization carries out at various level innovation tasks without draw new solution or practices because innovation is considered as a mere process instead of a philosophy.
From the other side, when a company adopts an excessively detailed measurement of every aspect of innovation processes, discourages radical innovation with the result to fall in an information overflow that does not allow focusing on real useful outcomes related to the innovation’s aims.
- MEASURE THE WHOLE, NOT ONLY THE PARTS
One of the aspect that no facilitate workflow is the attention pointed on parts and functions, instead of the whole process of innovation. In many companies are frequently running similar projects in parallel from different areas. This means that executives do not have a holistic overview of innovation inputs, activities, and outputs. The innovation culture needs to be disseminated among all organization, per functions and areas. This increase not all efficiency in outcomes, but overall financial investments. Is necessary for managers have a framework where is clarified who is entitled to start and manage a new innovation project, what is the team with cross-competencies deputed to develop the project, and who has the overall responsibility for the portfolio of the project. A scheme of this type, with the necessary flexibility degree, help companies to act harmonically respect innovation goals to achieve.
- OVERLOOKING THE POLITICAL ASPECT OF INNOVATION MEASURES
A holistic vision of the organization imposes to consider all groups that work at various levels. Each area is an integral part of the innovation processes, so managers who want to create or revise innovation measurement practices need to mediate among the different business’s function. This implies understanding the political implications of making changes. Often happens that functions are not in communications, or they are in contrast about the innovation input and outcome. Although discussion can get slower innovation flow in the short term, is fundamental stimulate a dialogue among functions, particularly if members of the organization remain unsure about what to focus on. Collaboration, innovation goals shared and communication make an organization able to manage innovation practices efficiently.