The best literature on innovation all points to the same thing: innovation is highly uncertain, and therefore the best approach is to experiment and prototype, iterating until you find the right product/market fit, and conduct this iteration with the diligence of the scientific method. The advice is so consistent, yet when we look at innovation metrics, there is rarely any kind of KPI measurements around the details of experimenting and prototyping. Let’s look at why it’s so important, and what a KPI might look like.
A few months ago, The Economist published an excellent piece on how the fashion for making employees collaborate had gone too far. We wrote about the trend too here on the blog, explaining how excessive collaboration harms organizational performance and stifles innovation (hint: overworking employees for only marginal gains).
Consider for a moment the following three statements:
- Innovation results from lucky accidents;
- The more open the innovation process, the less disciplined;
- Innovation can’t be measured.
What do they have in common? If you’re inclined to say: “They’re all truisms!” (= Truths too obvious to mention) I’d pat you on the back and kindly invite you to join us at the next HYPE Innovation Managers Forum in Bonn for two days of enlightening conversations about innovation practice. But luckily, that’s not the case. With you, dear reader, I don’t have to allude to anything. You’ve been following this blog (and others), not to mention implementing innovation strategies for long enough to recognize these common misconceptions about innovation. So in today’s post I’ve compiled some insights to take your existing wisdom further. More specifically, the post is about recent developments in open innovation metrics (yes, they matter!) and is inspired by a study titled Measuring Open Innovation published in Ernst & Young’s Performance Journal in mid-2014.
As I am preparing for my HYPE webinar on the execution of innovation next week, I found some interesting snippets of inspiration that you should check out as well. There are links for you to dig deeper into this. Be inspired – and let me know if you can share some good things on this topic.
As I have been working with HYPE Innovation on a series of sessions in which we looked into the difficult part of executing innovation, I have observed five major insights on this increasingly important topic of how to produce better outcomes from innovation ideas and projects.
1. The front end of innovation is the easy part. If you work with innovation management and execution in a large company and you feel you have difficulties getting enough ideas – even the right ideas – it is because you are not doing your job well enough. Ideas are in abundance inside your organization if you set up the right structures and processes for harnessing the input of employees. If you also go outside of your organization, one of the key challenges will be to manage the overload of input that you will get.
Many organizations are struggling with their metrics and ways to measure the progress and success of their business, and from this writer’s point of view, their innovation, it gets caught up in plenty of unintended consequences, to put it mildly.
Firstly, we are still locked in the old paradigm of thinking this is an industrial economy where we set about measuring inputs to innovation (R&D expenditure, capital investment) and then focused on the intermediate step of throughput and then outputs (publications, patents, end products). We also perceive innovation as an activity within just one company - viewed as linear, with considerations for services more of an after thought (like ‘bolt-ons’). Production systems remain the driving force.
I always show a particular interest in statements claiming to have identified a relevant driver of innovation change, to think through and see if they are as applicable to my own situation. Often they are but the underlying force sometimes needs to be seen differently to incorporate this ‘driver’ into your innovation activities and thinking.
I try to constantly work around nine drivers of innovation change.
I periodically work through each of these and see if anything has changed or the fact I am focusing on this specific driver I can see a different angle or opportunity.
It seems so simple doesn’t it - “bringing final ideas to market”. So easy to say, yet it does seem so very hard to achieve. Everything we should be aiming at is ‘successful execution’, it’s the last, hard five yards of all the work that went into something, which can be finally realized and come to ‘commercial life’.
Here in Europe it is often suggested that “Europe is the cradle of creativity”, perhaps but I think the “United States is the crucible of innovation”, it forges ideas and takes them to market far better. In the US there is this powerful push to make money far more and to realize innovation, as clearly you must focus on the ‘making money part.’
There is a variety of different views on our product failure rates. According to some, the failure rate for new products launched for instance in the grocery sector is 70 to 80 percent in the US. For smaller US food businesses launching new products, the success rate is even lower around 11 percent. These are really high failure rates but is this a myth or reality? How does your organization evaluate product failures? Do you really want to talk about them?
"Not everything that can be counted counts, and not everything that counts can be counted."
- Albert Einstein
In the innovation management ecosystem analytics are often not taken seriously enough. Throughout the last 13 years we have been working with multinational companies it became clear to us that Innovation Managers often neglect the fact that decision makers base their judgment on strong and meaningful indicators.