Measuring innovation has long been perceived as the pinnacle of innovation management. However in most organization today, innovation measurements are only take sporadically (if at all) and with little thought put into them.
Moreover when a company wants to start measuring innovation it is most likely to make some mistakes. Mistakes rooted in myths about measuring innovation which now I will try to debug:
1. R&D expenditure is a good indicator for innovation
We already covered this in The Corporate Startup and the literature on the topic is really overwhelming:
However there are still companies out there thinking that R&D is synonyms with innovation, hence the current state of corporate innovation.
2. Innovation can’t be measured as it’s only creativity and one can’t measure creativity
From Scott Anthony in his book, The Little Black Book of Innovation: “Innovation is a process that combines discovering an opportunity, blueprinting an idea to seize that opportunity, and implementing that idea to achieve results. Remember — no impact, no innovation.”
3. Only final outcome/output measurements (financial) will tell you if an idea was successful
Nothing could be further from the truth. There are many signals along the life of an idea which can tell if the idea is heading in the right direction or not before you even release it.
4. Measuring innovation means just measuring the number of ideas in the company. (measuring just the parts as opposed to the whole)
Without ideas upstream one can’t expect any returns downstream. So make sure you measure more than just the upstream to understand if you have issues in your ecosystem.
5. All innovation measurements work successfully in any organization
An NGO is different from a bank and a governmental agency is different from an pharma company. They all have different needs for innovation … and different definitions. What more should we say?
6. All innovation measurements work successfully for any type of innovation.
Greg Sattel wrote a great book on the topic. You can find a summary here and learn about the 4 types of innovation he identified. Therefore difference innovation types have different accounting peculiarities.
7. Measuring innovation is only needed to relieve executives and stakeholders anxiety
If you are interested in innovation accounting just to justify the existence of your innovation lab in front of an executive committee, you are already doing something wrong there 😉
Measuring innovation is needed to change behavior and reinforce a culture of continuous improvement.
8. By tying innovation measurements to incentives more and/or better outcomes from innovation are to be expected.
Let this settle in: experience case workers in a government agency, were working on easier case and leaving the difficult ones to the inexperienced staff because they were measured on cases closed.
There are many myths surrounding innovation measurements. This list was just based on the experience we had interfacing with corporate managers that were trying to measure innovation in their own companies. In other case we simply saw managers using these myths to shy away from even trying to measure innovation. Regardless of the situation, the companies were incapable of further developing their innovation practices as they had no measurments to support the effort with data/evidence.