Metrics for innovation: guidelines for developing a customized suite of innovation metrics

Abstract

PurposeDuring the past year, the authors have built a framework for a suite of metrics that senior managers can customize to track and promote innovation success in their companies.Design/methodology/approachSenior executives can use the suite of metrics to assess their company's innovativeness over time and hence combat the insidious strategy decay that often afflicts a company's business.FindingsThe framework combines three views on innovation – resource, capability, and leadership – providing the perspective to develop a suite of metrics for assessing and developing a company's capacity for innovation.Research limitations/implicationsThe optimal selection of metrics and the optimal value or “sweet spot” of any particular metric will vary from company to company.Practical implicationsAs more firms develop strategic innovation metrics and a database that validates their relevance, top managers will learn to assess and guide a company's innovation capability more effectively.Originality/valueThis is the first strategic guideline for building a customizable system of innovation metrics.

The uncertainty of innovation: a systematic review of the literature

“…Koen et al (2010), for example, have pointed out that traditional tools used to manage risk are fundamentally flawed in innovation projects because the unknowns associated with innovation, by their very nature, are unpredictable. Similarly Muller and Välikangas (2005) have stressed that there is lack of requisite metrics to make informed decisions in innovation projects. According to them, innovation management is "somewhat of a black art".…”

“…The literature reveals that there are managerial uncertainties associated with changing the members of an R&D project team, required resources and competencies, managing relationships with the rest of the organization and co-operation with partners (e.g. Souder & Moenaert 1992;Osborne 1996;Leifer et al 2001;Muller & Välikangas 2005;Freel 2005;Hall & Martin 2005;Mitleton-Kelly 2006;Koen et al 2010). Koen et al (2010), for example, have pointed out that traditional tools used to manage risk are fundamentally flawed in innovation projects because the unknowns associated with innovation, by their very nature, are unpredictable.…”

“…A great uncertainty exists concerning future market conditions (e.g. Foster 2010) and includes "the disruptive effects of emerging technologies, empowered customers, new market entrants, shorter product life cycles, geopolitical instability, and market globalization" (Muller & Välikangas 2005). …”

Measuring Innovation Capability – Assessing Collaborative Performance in Product-Service System Innovation

“…It is therefore necessary to examine the decision process itself and not just the outcome." Muller et al [9] also use the same three categories: input, output and processes, and further suggests that metrics are tailored in three viewsCapability, Resources and Leadership. Olsson et al [3] highlight the importance and need of every organization to figure out what is important to measure in view of their specific circumstances.…”

The Impact of Strategic Alliances and Internal Knowledge Sources on the Manufacturing Firms Innovation and on Their Financial Performance: A Comparison Between Brazil and Europe

“…It is measured in several forms in the innovation literature, but there is no unanimity regarding a specific measurement. Some authors measure innovation performance as the revenues obtained by the firm from new products or services (CASSIMAN; VEUGELERS, 2006;LOVE et al, 2014;MULLER;VÄLIKANGAS;MERLYN, 2005). Others consider the number of patents or patent citation (AHUJA, 2000;DECAROLIS;DEEDS, 1999;HAGEDOORN;DUYSTERS, 2002;KARIM;KAUL, 2013) or the number of innovations generated, whether they were patented or not (TSAI; GOSHAL, 1998).…”