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Innovation Performance

Managing Innovation Performance – Like any other core discipline, Innovation Management requires a governance structure that monitors the effectiveness of your innovation process or framework. The performance of the innovation process and the issues raised should drive and inform the next planning process and review of strategy.

The final P of Integrated Innovation – “Performance” drives everything. The critical success factor for integrating and introducing innovation is how you monitor, measure and reward positive activity. ‘People will respond to whatever is being measured’ – and therein lies some serious problems for business today. If you are not careful what you measure or how you measure it then problems will occur.

Too often today, managers are fixated upon P&L reports, which may impress shareholders but are backward looking and record past activities. For those involved in innovation this is like driving a car looking in the rear view mirror. Whilst keeping an eye on current financials is important, future success depends on getting your innovation plans right, implementing them effectively and monitor progress correctly.

Focus. Good innovation managers know what’s important and what is not and they focus upon KPIs that have the greatest impact on what they are trying to achieve. At all times they should understand where they are now, what future bottlenecks there are coming up and how to clear them. Using a lessons learned log or database the great innovator companies understand how to improve performance, time and again.

Successfully manage all your innovation activities, namely:


  • Define and agree your Innovation KPIs
  • Set a clear review process cycle
  • Have regular Innovation Review Board meetings to assess performance
  • Agree your Return on Innovation Investment (ROII)
  • Be ruthless in assessing value using our V-SAFE methodology

Key Innovation Performance Indicators

As with other areas of business, it is useful to develop a specific set of KPIs that reflect what you want the innovation process to do for you. These indicators should reflect inputs (such as the number and quality of ideas), process (for example, the effectiveness and efficiency of ideas weeded out or implemented) and outputs (such as return on innovation investment). The Innovation Performance KPIs will differ based upon your organisations’ needs, and the type of innovation approach you are taking, however organisations typically use some of the following:

  1. Impact on bottom line performance. All innovations have to be evaluated in terms of the contribution they make to the bottom line – the financial performance of the business. This is the key difference between innovation and creativity. This measurement may not be easy, as benefits can be hard to quantify and a return on investment may continue over a number of years.
  2. Number and mix of ideas. How many ideas are you looking fr at any one period of time? Suggestion schemes often fail because they generate too many poor quality ideas in a short time period. Often they don’t fit with strategy and there are too many to be implemented and thus the scheme dies quick death.
  3. Fit with Strategy. Check that ideas are still focused on current business imperatives or on future product-market priorities. All too often energy, time and budget is wasted on ideas that are distractions from the current or future core business.
  4. Extent of Innovation. Have you the right number and type of ideas? But are they stretching enough? Re you really pushing the innovation envelope? If not the innovation process may just appear to be more like continuous improvement and not able to give you a step change in performance. On the other hand if your current business goals are quite conservative then may be these incremental innovations might be more appropriate?
  5. Effectiveness and Efficiency of the Innovation Process. How many people and resources does it make to get an idea implemented in your business? How quickly does it take to get an idea from start to finish? How much effort is expended in getting the idea to market? Some organisations refer to a Return on Innovation Investment (ROII), which compares the bottom-line performance impact with the investment in capital expenditure (CapEx) and operational expenditure (OpEx) to make it happen.
  6. Culture of Learning. Are the same ideas coming up year after year? Are the same mistakes being made again and again? If so, your process for capturing lessons learned and making process improvements and communicating innovation failures has broken down and it is inefficient.
  7. Overall Success Rate. A 100% success rate for innovation projects probably means that you are not taking enough chances as a company or you are not really being innovative enough. Expect failures (innovation is based on failures!) and be prepared to deal with them. However, in our experience, a success rate below 50% probably highlights a deficiency in your current process or culture.

Whatever the KPIs you choose to measure remember that they are intrinsically linked to the culture and performance of your organisation. If you measure the worn things then you will get the wrong outcomes. If you set the correct measures of performant then you stand a good chance of creating a good innovation culture.

Integrated Innovation Framework

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