The key to measuring innovation performance is understanding the difference between doing and managing innovation:
- Doing innovation is about transforming ideas into businesses.
- Managing innovation is about creating clear directions and making investment decisions.
A common complaint I hear is that since each innovation project is unique it's impossible to measure them consistently.
That's only true if you set-up innovation projects with fuzzy objectives. If it's clear what they are working towards, then you have a clear thing to measure.
"But their goal is to generate X revenue, and that won't happen until the third year!"
Good, then work out what would be the leading indicators for that. What would be good measures of a positive market response?
And while you are working on that, make sure to also track how fast are you generating validated learning.
In order to measure how well you manage innovation you need to answer:
- How many ideas are we investing in?
- How are they distributed according to their type and maturity?
- How much are we spending on them?
- How much are we benefiting from them?
- How do they contribute to the overall strategy?
- At what rate are the teams learning?
When deciding on what to measure I suggest going for the simplest you can.
After all, you want to measure these in order to make a better decision, not to wow someone with your intricate dashboard.
For more detailed instructions on creating your innovation metrics I suggest: