There is a clear correlation between the ability to measure innovation and the success of innovation.
However, the true measure of the success of innovation cannot be evaluated just from a financial perspective. Unfortunately, many managers use this to kill their innovation initiatives.
The top and bottom lines of a company´s performance are important metrics of success but they are the collective result of many interacting factors and the effect of any one single innovation is hard to isolate. Performance indicators like customer attrition and retention and length of product development cycles can be valuable, but they are often hard to connect to the euro metrics that matter and are hard to aggregate into a summary metric of broad concepts like innovation and organizational excellence.

Instead of discounted cashflow, capital value and Stage-Gate model, we rely on Discovery-Driven planning and use a manageable set of indices based on

  • Innovation-specific figures,
  • finance and market performance-oriented figures,
  • customer-oriented figures,
  • process-oriented figures, and
  • employee-oriented figures.

Discovery-Driven planning assumes minimum prerequisites regarding revenue, profit and cash flow, derives a check list of requirements from this and formulates exclusion criteria and assumptions, which can be easily verified (reverse income statement). This method emphasizes factors about which management needs to be informed and educated: the assumptions of the initiative, which represent the greatest uncertainty factors.

Also the rate of intangible investment (computerized information, innovative property, economic competencies) is a credible metric for growth and innovation. Finally innovation and organizational excellence are the result of decisions made within companies with respect to their business model.

Christiane-Mayer-2016

Ms. Christiane Mayer

Morgenröte 8a, Germany-68305 Mannheim
Tel.: +49 621 7481 742, Fax: +49 621 7481 741

E-Mail: christiane.mayer@strimgroup.org