Skip navigation

OUR APPROACH

Many firms take on a mission to become more innovative and then struggle with how to measure whether they’ve become successful. However, “freshness indexes,” measuring the percentage of sales from new products, encourage churning out minor line extensions. Patents don’t measure market impact. Development cycle time doesn’t indicate whether companies are getting faster by aiming lower.

Companies facing this reality often come to us seeking to understand:
  • What metrics are effective for measuring my innovation efforts?
  • How do I fit these into my existing performance management system?

How we respond

We believe that a balanced mix of metrics, rather than any single metric, is essential to gain a full view as to whether innovation is occurring broadly, deeply, quickly, and in a replicable manner. These metrics often need to go beyond obvious quantitative financial measures to include datapoints that are more capability-related. The best set of measures varies considerably depending upon the company, its values, its industry, and its aspirations.

To measure the degree to which your organization fosters innovation, you first need to know where you want to head. We approach this kind of engagement by collaborating with management to define objectives, broad targets, and explicit boundaries. Then, we seek to define a manageable number of metrics that chart progress and motivate performance within this unique context. A typical engagement might include helping a client to:

  • Lay out a broad range of potential metrics to determine exactly what sort of behavior the measure would encourage.
  • Map these metrics, and their implications, to the company’s goals, boundaries and unique circumstances. For example, a young firm pursuing share in a fragmented industry may define progress in a very different way than an established firm seeking to rekindle growth in a stagnant field.
  • Winnow down the metrics to a manageable number, so that they capture key behaviors, avoid duplication, and provide a mental model that managers can easily reference when making decisions.

When firms ask people to do things that are uncomfortable and unfamiliar — as is often the case with disruptive innovation — metrics are an essential management tool. Companies that fail with innovation tend to gauge progress based on their previously proven paths to success. Firms that succeed with innovation learn to appraise things differently, balancing a host of imperatives into an actionable set of measurements and incentives.