Most of us have encountered a version of the saying, “You can’t improve what you don’t measure,” and it makes intuitive sense. Time itself creates points of comparison, whether you choose to evaluate them or not.
Going forward on hunches, or feelings that a project is performing, is certainly possible, but it’s not wise. With innovation, measuring success isn’t as straightforward as it is with other types of projects, but it can be done, and innovators who create an innovation management strategy set themselves up for further innovations and improvement without wasting time on tactics that don’t deliver.
Ideally, You Should Measure Gains in Four Key Dimensions
Value from innovation can manifest in many ways. Projecting ways innovation causes improvement is essential to any innovation management strategy. Four key dimensions that are often affected by innovation, and that should be baselined and measured at a later date are:
- Shareholder value in terms of returns, company value, price-to-earnings ratios, and other related measures
- Customer and market value in terms of customer loyalty, brand equity, and market share
- Value chain improvements from stronger partnerships, networks, and positioning
- Workplace value in the form of employee retention, engagement, and motivation
Measure the Number of Ideas in Three Ways
One of the chief products of innovation is the idea. If an innovation push doesn’t yield ideas, it can’t do much good. First, you need to know how many ideas were submitted during a specified time period. Second, you need to know how many of those ideas were forwarded for further consideration. Finally, you need to know how many ideas were actually funded and carried out. Beyond that, of course, you will want to measure the effects of carrying out those ideas in financial and human contexts.
Dollars Saved or Earned
Look at financial gains from multiple angles. Maybe an innovation brought in more revenue, or maybe it caused measurable cost savings for your organization. Perhaps an idea saved time due to efficiency or productivity gains. These are all hard numbers, and together they can give an important evaluation of how well an innovation has done what was expected of it. Naturally, not all innovation measures can be reduced to dollars and cents, but with those that can be, pinning down those numbers can be highly informative.
Measure Participation Levels and Engagement
Innovation doesn’t happen without human input, and measuring human input is important to your innovation management strategy. In a company-wide innovation push, what percentage of the workforce participates at the beginning? How many continue participating, and how many are still engaged in the innovation project at its conclusion?
Employee retention is also an appropriate measure that can be useful to an innovation management strategy. Generally, companies that encourage employees to share and develop new ideas keep their employees longer than those who quash employee innovations and ideas.
Measuring the success of an innovation management strategy is harder than measuring the success of a new product introduction or of a marketing campaign. But it must be done for innovation to become ingrained and to become part of the organizational culture. Measure innovation success from multiple angles, in qualitative and quantitative ways, and keep those performance indicators updated. When people see precisely how innovation drives improvement, they are likelier to embrace it and continue innovating. If you’re ready to manage innovation better, we invite you to get our Innovation Starter Kit today.