We can sense innovation.
If asked to name an innovative company, most of us will rapidly list several. Identifying an innovative company is easy. The criteria we use are likely related to what we see the companies producing and the way they function.
But finding out how they sustain innovation is more difficult. Then determining how we can ensure continuous innovation in our own company is even harder. This has been explored in numerous studies, with no shortage of recommendations. But in practice, there is no one-size-fits-all answer.
Most of the commonly used innovation metrics are selected because they are readily measured. Unfortunately, this method is wrought with pitfalls because the measures don’t correspond to actual innovation results, can be misleading in isolation, and offer little insight into the actual state of innovation or areas needing improvement.
It is also important to consider that simply knowing we are innovative is not enough. Effective measures should direct attention to those areas needing improvement and tell us the impact if changes are made.
Measuring innovation is most effective when tailored for an individual company and its innovation goals. For example, is the company seeking to create a new market, improve an existing offering or become the top market leader? Effective innovation will look different in each case. So begin with a company’s strategy. Measures chosen should point to areas that need improvement or where current assumptions are incorrect. The intent should be to track any change as a result of actions taken and then use findings to enhance innovation culture, tools, resources and support systems.
Innovation starts with a strong foundation, including:
- A clear strategy.
- Talented, diverse people.
- Dedicated funding.
- Support programs.
These elements are like the potential energy of the company just waiting to be transformed into kinetic energy. They could result in patents, papers, products, services, low employee turnover and other desirable outcomes. However, friction in the system can limit the amount of potential energy that is ultimately realized.
Think of innovation as a spring, which is intentionally designed for repeated force. It requires compression and then draws on its design attributes to release kinetic energy.
The spring is the design of our innovation system. The compression is our innovative action. The release is the result.
The spring analogy illustrates the three categories for meaningful measures of innovation:
Just like a spring’s design, the way a company’s innovation enablers are constructed determines its capacity for potential innovation. Useful measures include the right people, exposure to innovation stimuli, tools, and training and committed funding.
As the spring compresses — as employees access resources — potential energy builds. Useful measures include awareness, engagement and utilization.
The release of the spring, its expression of kinetic energy, results in evidence of innovative activity. Useful measures include collateral, speed to learning and portfolio movement.
These three measure categories can be assessed individually to reveal strengths and weaknesses. For example, one might see that their company has low transformation but high capacity. This would indicate there is room to increase innovation by focusing on more engagement and utilization of current programs.
Or maybe there are many programs, but transformation is low because they aren’t the right programs for employees’ needs. Similarly, low capacity with high evidence indicates innovative capability despite internal high barriers. Thus, measuring these segments separately directs us to specific areas of improvement.
Start by getting a sense of barriers to innovation. In every company, there are hypotheses and assumptions about strengths and barriers to innovation, proven or not. Measurement will establish the truth of those hypotheses and will reveal other issues.
Measures should be selected to not only test our hypotheses but also give us information about the full framework of capacity-transformation-evidence. Put them into practice to establish a baseline and adjust from there. It is unlikely those chosen initially will be ideal. Plan for trial and error to arrive at an effective set of measures for your situation.
One should also determine a time frame to revisit measures to ensure they are still useful and insightful. Note that measuring and increasing the effectiveness of innovation is not a passive or static process. It must be actively managed and continually adapted as the organization grows and changes.
Every measure drives employee behavior, and there can be unintended consequences. It is important to anticipate responses to ensure measures activate strategic goals and do not lead to less-desirable actions.
For example, if an organization is solely measured on its patent generation, it might forgo less-promising, riskier ideas and only generate technical work in areas likely to become an invention. Incremental and risky innovations would be avoided, and the company could miss potential valuable contributions.
A company with low patent filings would show as lacking innovation capability, when in reality, numerous business reasons, unrelated to innovation, drive the decision to move forward with a patent filing. However, we do not need to avoid these measures altogether. They can be very useful when included in a portfolio of measures.
In general, when selecting measures, there is a need to watch for the development of reactionary behaviors. All measures drive behavior, even how work is performed.
The leading or lagging nature of measures is another factor to consider based on what one is seeking to understand. Many measures, such as the number of technical publications produced, reflect activity from a wide time frame. If we have recently made changes to our innovation enablers, we won’t see the results reflected in that measure.
There is no single answer for how to ensure your company is innovative and stays that way. You can, however, spot areas that need attention by selecting and monitoring indicators using the capacity-transformation-evidence framework. And that will empower your company to spring into innovation.