In previous articles we identified 4 types of open innovation practices incumbents can engage in and we looked at how two of the four can be measured. Specifically how can free and paid pilots be measured, how can acquisitions (M&A) be measured and how venturing (corporate venture capital investments) can be measured.
Now let’s turn our attention to the fourth type of open innovation activity: joint ventures.
Following the logic of the funnel consisting of 3 phases (Demand, Live and Outcome), acquisitions can be measured as follows:
Measuring the Demand phase for Joint Ventures:
For this type of collaboration and this phase of the collaboration funnel, it is advisable for the company to track the following performance indicators:
- Number of requests received for joint ventures per unit of time.
- Number of requests sent for joint ventures per unit of time.
- Average cost of attracting one joint venture proposal per unit of time (this might include the travel budget of the startup collaboration team or certain event sponsorships).
Note that for added granularity, a company might consider tracking this per joint venture type, such as new product development, market research, technology research etc.
Measuring the Live phase for Joint Ventures:
For this type of collaboration and this phase of the collaboration funnel, it is advisable for the company to track
the following performance indicators:
- Number of projects initiated per unit of time.
- Percentage of projects initiated from total received and sent per unit of time.
- If applicable (e.g. product development), progress of specific indicators similar to the ones for the internal teams we have discussed in the previous chapter.
- Invested capital per unit of time.
- Average invested capital per unit of time.
- Invested resources per unit of time (e.g. time investments).
- Average invested resources per unit of time.
- Progress in accordance with a pre-agreed roadmap of the joint venture.
- Progress towards pre-defined goals.
Measuring the Outcome phase for Corporate Venture Capital:
For this type of collaboration and this phase of the collaboration funnel, it is advisable for the company to track the following result indicator:
- Average cost of completing one joint venture, including both the Demand phase cost and the Live phase cost, per unit of time.
- Collaboration specific outcomes which will most likely vary from joint venture to joint venture but they should be mutually agreed upon at the beginning of each demo (e.g. new revenue from products co-developed, dollars spent per insight obtained in the case of technology research etc.).
- Average time to outcome.
