Innovation Metrics to Consider

metrics-of-innovation

Picture credit: Harvard Business Review

Dave Skok of Matrix Partners is a wonderful writer about entrepreneurialism, venture capital, and a real champion of the culture of intelligent risk taking as the blogmeister of “For Entrepreneurs“. His take on the use of metrics is as follows:

Great companies are almost always run by great management teams. And great management teams know that the only way to improve a process is to start by measuring it. Good metrics should also be actionable, and drive successful behavior. In this post I hope to help show how to figure out which metrics matter the most, and how to design them in such a way as to drive behavior that will lead to the results that you want.

sales-funnel

Picture Credit: For Entrepreneurs web site

Start with the revenue generation model being employed (above). As a former intelligence officer, I was trained that the proper approach to determining how a terrorist attack occurred was to “walk the cat back.”  (Hat tip to “The Word Deterctive”) Dave Skok argues that a good management team will look at the key goals of profitability, good cash flow and growth and determine how each of these goals varied from target in a given, relevant measurement period (such as a quarter, or better, a fiscal year – to eliminate seasonality).

Stage in Sales Funnel No of Prospects Conversion Rate
Campaigns to drive traffic Eyeballs seeing the campaign Conversion % to Visitors
Visitors Site Visitors Conversion % to Trials
Trials No of Trials Conversion % to Closed Deals
Overall Sales Process
(start to finish)
No of Visitors Conversion % to Closed Deals

Paul4Innovating (WordPress) has a nice list of innovation metrics to consider that go far beyond the traditional “return on investment” or ROI.

Informal mechanisms (the contributors to the left side of our innovation balance sheet)

Those that are leading to improving the softer aspects of innovation (our left side of the innovation balance sheet) that would contribute to its build and health.

• Uncovering good and emerging practices in innovation
• The value of good leadership & distinct culture creating the linkages
• Targets and partner identification for relating and collaborating
• Skill of working together effectively – team building, encouraging diversity
• Integrating external parties to leverage through networks and relationships.
• Framing ambitions and plans of strategic targets and relating those to individuals
• Engaging the outer peripheries to capture insights and needs to drive engagement
• Exchanging expertise and seeking synergy in exchanges
• Story telling/ narratives, those relating and explaining, sharing and extending
• More bottom up engagement in formulation – sharing and informing
• Seeking individual insights, encouraging an open learning environment
• Developing the agility to quickly react to changes, effective and decisive intent
• Work on speed, external orientation and improvisation,flexible and adaptive
• To promote “doing more with the same”, less rework.
• The CEO acts as the central source of encouragement and determination

Encourage informally at all levels in exchange

The formal mechanisms (the contributors to the right side of the innovation balance sheet)

Those that contribute to the make-up of the harder aspects of innovation or our right side of the innovation balance sheet that build this part, beyond ‘just’ financial.

• Ingraining innovation as a corporate function
• Determining how you lead and manage this, how you develop this out in its parts
• Identify the constraints , articulating the resolutions, recognizing the boundaries
• Optimizing the process and structures, constantly reviewing to improve
• Determining the allocation of funds to offer the balance needed to achieve the goals
• Innovation portfolio management designed
• Type of openness to innovation flows to encourage and drive outcomes
• Embedding technology and capacity for rapid experimentation, and discovery
• Rapid ideas, discard failing ones & triple investment on good ideas
• Distance from Customer – determining the importance and setting about the connecting
• Ingrain as a corporate functionality the need to always be conscious of greater
• Determining how you lead and manage through governance and design.
• Identify the constraints and boundaries, pushing and probing
• Optimizing the process and structures on an ongoing basis
• Determining the allocation of funds into the different framing activities
• Innovation portfolio management, striving for value, impact and return
• Type of openness to innovation flows and external engagements needed
• Embedding technology and capacity for rapid results and early wins
• Rapid ideas, discard failing ones & triple investment on good ideas, experiment and explore
• Involvement from both Customer and other stakeholders within your innovation process

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