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Measuring Innovation Performance

The Nuts & Bolts of Innovation

In the innovation community, some are proponents of input metrics, which support the resources that are on hand already to enable innovation. These are internal measurements. For example, the investment or budget put into the project, the talent or workforce, the collaboration between other departments, training and research can all be seen as input metrics. These metrics could be seen as generally easier to measure although they may not entirely reflect the outcome of the innovation initiative.

But, the input metrics can “help you to determine how much effort and commitment you are dedicating to innovation, as well as identify potential gaps and improvement opportunities,” notes LinkedIn in its article, “What are the best metrics to measure innovation performance?” LinkedIn further points out that you might consider the innovation budget or spending as a percentage of revenue or profit, the number of employees involved in innovation projects or programs, the number of ideas generated, submitted or screened, the number of partnerships, alliances or networks formed for innovation purposes, or the number of hours or days allocated for innovation activities or learning.

Meanwhile, output metrics are the result of innovation efforts to develop new products, services, processes and business models. These could be considered more difficult to measure, as they indicate the actual influence or value of an innovation initiative. But these output metrics can help assess the delivery of the innovation and if it has met customer or stakeholder goals. LinkedIn details that examples of output metrics include revenue or profit generated by offerings, market share or penetration of segments, customer satisfaction or loyalty rates, patents or awards received for innovation, and the number of problems solved or opportunities created by innovation.

Lastly, outcome metrics involve the long-term benefits and a more strategic assessment of the innovation, and any growth, competitiveness, sustainability, or social impact of the product or service. These factors ultimately can reflect the purpose, mission and vision of the organization, as well as the brand’s innovation story. Some might measure growth rate or potential of the organization or industry, competitive advantage or differentiation in the market, environmental, social, or governance performance or impact, innovation culture or mindset among employees or stakeholders, and innovation reputation or influence in the community or domain, according to LinkedIn.

Certainly, using a combination of input, output and outcome metric can provide a robust evaluation of the innovation program. It’s a continual process that consists of constant measurement and evaluation, so that the team can assess and adapt their strategies when necessary. This in turn can help in determining success and failure of the innovation in question.

The Role of Insights

More measurement and metrics in innovation also coincides with a growing emphasis on insights. All Things Innovation looked at the role of insights in innovation in “The Value of Insights for Innovation.” Integrating insights into innovation is always a challenge but rewards the innovation team with a better understanding of their product or service and ultimately the needs of the end consumer. Often, innovations are a response to a competitor’s project or a major trend in the marketplace. But another motivation for the product must not be overlooked: Creating something of value for the consumer.

All Things Innovation also looked at insights in the context of innovation in, “Make Insights Critical to the Innovation Process.” A growing trend in innovation is to break down silos and work more collaboratively, across teams and departments. This applies to both innovation and its close proximity to such organizational groups as marketing, IT, finance and supply chain. As such, increasingly insights is tasked with supporting the product development and innovation team, giving the innovators robust and meaningful research that can help them understand consumer sentiment.

Encouraging Innovation

Metrics tied to strategic innovation goals can provide several benefits to organizations looking to foster innovation as a core part of their strategy. Here are some of the key advantages, as noted by ChatGPT:

  1. Alignment with Organizational Objectives: Metrics tied to strategic innovation goals ensure that innovation efforts are in alignment with the organization’s overall strategic objectives. This alignment helps prioritize innovation initiatives that are most relevant to the organization’s mission and vision.
  2. Measurable Progress: Having specific metrics allows organizations to measure their progress toward innovation goals. This provides clarity on whether the organization is making meaningful advancements in its innovation efforts or if adjustments are needed.
  3. Accountability: Metrics create accountability within the organization. When teams or individuals are responsible for achieving specific innovation targets, they are more likely to take ownership of their roles in driving innovation.
  4. Resource Allocation: Metrics help in allocating resources more effectively. Organizations can identify which innovation projects are delivering results and allocate resources accordingly, optimizing their innovation investments.
  5. Data-Driven Decision-Making: Metrics provide data-driven insights into the effectiveness of different innovation initiatives. This information helps leaders make informed decisions about where to invest resources and which strategies to prioritize.
  6. Risk Management: By tracking innovation metrics, organizations can identify and mitigate risks early in the process. This can help avoid costly mistakes and improve the likelihood of successful innovations.
  7. Continuous Improvement: Metrics encourage a culture of continuous improvement. Teams and individuals are motivated to find ways to improve their innovation processes and outcomes to meet or exceed their targets.
  8. Competitive Advantage: Innovation metrics can help organizations benchmark their innovation performance against competitors. This insight can be used to identify areas where the organization can gain a competitive advantage.
  9. Employee Engagement: Clear innovation metrics can engage employees by providing them with a sense of purpose and achievement. Knowing that their work contributes to strategic innovation goals can boost morale and motivation.
  10. Stakeholder Confidence: Investors, customers, and partners often have an interest in an organization’s innovation capabilities. Demonstrating progress through metrics can instill confidence in stakeholders and enhance the organization’s reputation.
  11. Resource Prioritization: When organizations track innovation metrics, they can better prioritize which projects and initiatives deserve more resources. This ensures that resources are allocated to efforts with the highest potential for impact.
  12. Innovation Culture Reinforcement: Metrics can reinforce an organization’s commitment to an innovation culture. When innovation is linked to measurable outcomes, it becomes an integral part of the organization’s DNA.

By The Numbers

It’s important to choose the right metrics that align with your organization’s innovation strategy and goals. These metrics should be specific, measurable, achievable, relevant, and time-bound (SMART) to ensure they are effective in driving innovation and guiding decision-making. Additionally, organizations should regularly review and adjust their innovation metrics as needed to remain responsive to changing circumstances and evolving strategic priorities.

Innovation is not easy to measure. It needs time and a clear set of goals. Every organization’s KPI’s might be different depending on their needs. Nevertheless, as Skipso notes in its “How to Measure Innovation” blog, “When you define your clear set of objectives, and define the simple and effective variables that will help you evaluate those objectives, you can then utilize numbers to help you drive creativity and innovation.”

Video courtesy of Viima


  • Matt Kramer

    Matthew Kramer is the Digital Editor for All Things Insights & All Things Innovation. He has over 20 years of experience working in publishing and media companies, on a variety of business-to-business publications, websites and trade shows.


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