If you're wondering how to manage innovation and how to measure it, take some cues from research inspired based on Canada's poor innovation performance.
According to the 2015 Conference Board Report How Canada Performs, Canada gets a “C” grade and ranks ninth out of sixteen peer countries on innovation performance.
I have the honour of chairing the Conference Board of Canada’s Council of Innovation and Commercialization. Made up of members from across the economy—small, medium enterprises, multinational enterprises, academe, non-profits and governments—the Council is focused on understanding Canada’s innovation ecosystem and the challenges organizations face in innovation and commercialization. We meet about three times a year and through a series of presentations from experts, along with facilitated dialogue, we work to look behind the numbers and understand how we might bring about positive change in how our own organizations leverage innovation and how Canada performs.
At our meeting, held in October 2017 in Montreal, we dug into the challenges businesses have with leading innovation and demonstrating value through these efforts. We delved into the latest research findings from the Conference Board’s Centre for Business Innovation (CBI) and heard from a variety of speakers who are working to shed light on how to better demonstrate innovation performance.
While the issues surrounding Canada’s innovation performance are complex, our latest meeting left me with two key insights:
- Organizations need to better address the challenges they’re facing around managing innovation.
- Our generally accepted approaches to measuring innovation performance need innovating themselves.
Challenge 1: How to Manage Innovation?
After five years of in-depth and comprehensive research studies, the Centre for Business Innovation determined that Canada needs more organizations to make innovation management a real practice in their business.
Fifty percent of the organizations they surveyed do not manage innovation and as a result, their performance suffers. Just as organizations expect sound fiscal management or solid human resources practices at every level of the organization, the same should be expected of innovation management.
But what exactly does it mean to manage innovation?
According to Gartner, an IT research and consultancy company, innovation management is a business discipline that aims to drive a sustainable innovation process or culture within an organization. Oftentimes, these innovation management initiatives utilize a disruptive method of change to transform business.
Innovation management requires that an organization approach innovation comprehensively, as a multi-dimensional affair in its market. It means investing the effort to:
- Know yourself and your company
- Know your market and your competition
- Determine the right things to do
- Figure out how to do these things the right way
- Understand the need for experimentation and the management of taking risks and failing
- Continuously focus on learning and improving.
CBI also found that an organization’s culture is very much a part of innovation management. Culture is a product of leadership, with a shared vision, mission and values around innovation. A culture of innovation works to create the right environmental conditions for innovation to thrive. It includes a process, action and metrics to enable innovation.
“Innovation culture is one in which traditional top-down structure is replaced with a culture of collaboration, where risk and failure are embraced rather than avoided, where employees are given the opportunity to learn, contribute and grow beyond their job descriptions, and where everyone, from the CEO to the most junior staffer, is an active contributor to the company’s success.”
Challenge 2: How to Measure Innovation?
What gets measured, gets done.
Our council was brave in its choice to examine the difficult issue of measuring innovation performance. It’s one thing to measure innovation but it’s quite another to get results. And, if you’re not measuring the right things, you won’t see the results.
CBI’s research found that most organizations use metrics around customer satisfaction with new products, return on innovation investment, new product revenue impact, product performance improvement and value of customer. While these are all helpful measures, we need to think more broadly about innovation measures. It’s not enough to simply measure things that contribute to product innovation. Instead, CBI found the following measures to have a higher performance effect on innovation:
- executive intensity involvement
- market understanding (meaning percentage of products an organization still has in the market after a number of years)
- addressable customer innovation
- number of research and development projects
- innovation risk management (meaning the percentage of innovation project with risk management plans – because as we know, innovation is risky business).
So, if you want to make sure your innovation program gets real results, measure your executive team on their intensity of involvement. It’s the single biggest contributor to innovation success.
Second, don’t measure single factors. Instead, create pairs or triplets of measures to give you better insight into performance effect. For example, measure customer satisfaction alongside new product revenue. Executive accountability measured alongside market value of innovation in pipeline and market understanding is an excellent triplet that shows extraordinarily high performance impact in a number of organizations.
Finally, measures need to make sense to your organization’s context and outcomes. Don’t measure for the sake of measuring. Measure to show progress towards the outcomes you’re driving.
Need help with innovation management and measurement?
BridgePoint Effect provides firm and departmental level support to leaders through a variety of customizable offerings. Some of the ways we’ve helped leaders in the past include:
- Our Innovation Strategy offering is delivered over 1 - 2 days and designed so you leave with the thinking to frame up a strategy for innovation management and measurement in your organization.
- Training and coaching for leaders: Our Creativity & Innovation Trainings can be customized to meet the needs of leaders.
- Our Organizational Growth Indicator service provides a leading edge online diagnostic tool to help your leadership team capture and examine the present state of your organization’s ability to innovate and drive results, so you have clarity and agreement on where to focus next steps.