Innovation Measures Up

Innovation: a word that is loosely thrown around these days. Creatives want to do it.  Business wants a piece of it.  But how effective is the push to innovate when there are no real measures of its rewards?  The Boston Consulting Group has attempted to answer this question with its report Measuring Innovation 2008: Squandered Opportunities, a survey of innovation and its effects, and the dire consequences of the businesses that fail to use it. In their words:

Companies undermeasure, measure the wrong things, or, in some cases, don’t measure at all, because they are under the mistaken impression that innovation is somehow different from other business processes and can’t or shouldn’t be measured. The potential cost of this error - in terms of poorly allocated resources, squandered opportunities, and bad decision making generally - is substantial.

Innovation does feed growth and give companies a competitive edge, but according to BGC: “Even at the best companies, up to a third of all innovation initiatives are draining valuable resources.” The global management consulting firm believes companies need to implement a “innovation-to-cash process” (ITC) to assure successful innovation.  BGC highlights the four major measures of the ITC process:

1. Start Up Costs - pre-launch investment
2. Speed - time to market
3. Scale - time to volume
4. Support Costs - including post-launch investment

Make innovation a central concern to your top people by typing a substantial part of their compensation to it. Don’t pretend that people will make innovations, by definition a long-term pursuit, a priority when virtually all of their pay os tied to meeting either next quarter’s numbers or some vague and far-off target they can barely influence.