Life was easier in the old days. Innovation was largely equated with research and development, and return on investment (ROI) was tracked by tangible numbers such as patents and new products and services taken to market. In this globally fragmented era of open innovation and virtual collaboration, measuring innovation performance is far more challenging. Just who owns what at which stage? What constitutes success? Ideas can emanate from everyone and everywhere, progress through formal and informal channels, and produce commercial results or be quietly shelved. Booz and Company’s latest global innovation survey puts it bluntly: spending more on R&D doesn’t guarantee results. So what do you spend on, and how do you measure the ROI? According to Booz, the most crucial success factors are strategic alignment and a culture that supports innovation. “The results suggest that the ways R&D managers and corporate decision-makers think about their new products and services – and how they feel about intangibles such as risk, creativity, openness and collaboration – are critical,” the researchers say. Organisations typically measure innovation performance using an array of input, process and output-related metrics such as revenue growth and customer satisfaction. How, then, to measure passion, risk appetite, creativity and collaboration? “Most intangible assets are real but invisible,” says leadership and change researcher, Robert Thomas. “The most important…is the ability to collaborate.” The quest to measure intangibles has seen the emergence of social network analysis to track changing patterns of interaction, and experimentation with new ways to measure ROI in the capabilities such as idea generation and collaboration. As the metrics debate continues, the Booz researchers advise companies struggling to convert R&D into commercial success to focus on emulating innovation leaders by “ensuring the company’s culture not only supports innovation, but actually accelerates execution”.
Published October 27, 2011 by jgandfriends