Math is the Muscle for Innovation
Summary:
- It’s critical to measure innovation performance
- It is recommended that you develop ROI metrics, Organizational capability metrics, and leadership metrics for innovation
- Start by choosing just three metrics while you build your skills in measuring innovation
Innovation drives value and without math, theris no innovation.
Now, I have a confession to make. I flunked high school math. I didn’t see the connection, the application, or the relevance. It wasn’t until I entered the business world where I made the link between math and measuring success. It makes a lot of sense, but I know this is a realization many have not made.
Measuring Innovation Success
Take a look at these concerning statistics identified by McKinsey:
“Over 70% of corporate leaders say that
innovation is one of their top business
priorities, but only 22% of them set
innovation-performance metrics.”
You can see there is a gap between what leaders are trying to do and what they are measuring. So, how do you know if your innovation efforts are getting the results you need? Not only results but where you should focus your time, your investment, and the future of your business. What is that magic number that indicates your effort was a success?
There’s no way around it, you need to measure and analyze the data. It’s critical, and it’s the only way to move forward with confidence and drive profitable growth.
Choose the Metrics that Matter Most.
It might not be obvious what those key metrics are, and they may not be easy to find. You don’t need to be a math whiz to do this, but you do need to take the time, have meaningful discussions, and work to identify which metrics matter most to the success of your business. Here are some of the most important metrics to consider:
Identify and Quantify Leading and Lagging Indicators
Leading indicators are key activities that can predict results. Consider activities like the number of employees trained in innovation; how many idea generation and problem-solving sessions, learning cycles and experiments take place; prototype, and market research tests; and how many projects are in the pipeline.
Once you have identified your leading indicators, start focusing on outcomes that show the results of your activities. Measure lagging indicators like project ROI, the percentage of revenue from new products and services, increases in efficiency, and costs avoided. These lagging results will allow you to assess the effectiveness of your leading efforts.d
Create a Metrics Dashboard, with a Focus on the Three Measurement Buckets
To help select and organize your metrics, it’s best to align them with the three key areas that affect the success of your business. This will help simplify and provide a clear picture for all involved. And by fulfilling these buckets, it can greatly contribute to creating a culture of innovation.
- Return on investment metrics
ROI metrics address two measures: resource investments and financial returns. The fiscal discipline helps justify and recognize the value of strategic initiatives, programs and the overall investment in innovation.
- Organizational capability metrics
These metrics focus on the infrastructure and process of innovation. Capability measures provide focus for initiatives geared toward building repeatable, sustainable approaches.
- Leadership metrics
Leadership metrics address the behaviours that senior managers and leaders must exhibit to support a culture of innovation within the organization, including the support of specific growth initiatives.
Wrapping Up – Where do you Start?
Just begin! Choose three metrics and start measuring. You’ll quickly find that you learn as you go and where no financial data is available, measure the activity.
Use project metrics to build initial pipeline reporting and put it on a dashboard. Make the numbers visible monthly. This will drive interest and investment in effort by aligning team and individual success to the metrics and strategic direction. Because at the end of the day, where there is no math, there is no way to measure success, and there is no innovation.
Want to learn more about our proven process for innovation and how to implement it within your organization? Download our free guide “Innovate with Confidence” to get all the details.
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