How do we measure and assess innovation?

The question has incredible relevance in a world where incremental innovations are becoming a common but dangerous bet. The era of single solution approaches to innovation has made businesses less resilient and futureproof. We can see effects of this in companies that cut too deeply in their innovation efforts. Companies that invested in the wrong technology or failed to invest in promising ideas that would pay off down the line are facing uncertain futures. When the unexpected happens, the damage done is exposed. The company in question is now less able to afford the necessary luxury of experimentation.

In contrast, companies with an innovation culture that consistently produce successes is also continually producing failures. They fail fast, they fail cheap, and they fail smart. They learn, quickly.

This is why metrics matter: the quality of your learning is only as good as the quality of your measurements. Deciding what, how and when to measure is the most important decision you’ll make.

Measurements will provide a framework to learn. It’s how we test our hypotheses, challenge our assumptions and prove value. If these measurements are based on faulty assumptions or miss key drivers, you can end up in a lot of trouble and your innovation efforts might come to an unfortunate end.

Bad metrics can literally kill your company.

We see this happen all the time.

So, what do we measure? What kind of frameworks make sense?

Three Levels of Metrics

It’s easy to get lost in the metrics because there is no end the number of things you can measure. Only the right combination of metrics will move you closer to your goal and help you improve performance in the areas that matter most for your innovation efforts. Until you answer some critical questions about what you expect from your investment in innovation it is hard to know which metrics matter most.

At Innovation360 we have developed a framework for assessing and measuring innovation. The framework is based on the past 100 years of research about innovation management. Over the past ten years we have assessed 1000+ organizations in 62 countries which makes our database the largest in the world. This allows us to perform big data analysis, gap analysis between aspiration and ability, apply AI algorithms to identify patterns and codify how and what to measure in order to succeed.

We’ve broken down the questions to ask and the resulting metrics into three levels:

Strategic Metrics – These relate to the overall direction of the company and the composition of its culture. Should be assessed every 6 – 12 months.
Tactical Metrics – As you move from strategy into exploration, the following metrics relate to the governance of your innovation portfolio. Progress and updates should be recorded every 1 – 3 months.
Operational Metrics –These metrics track each phase in the innovation process to reassure progress in desired direction and at desired speed. Progress should be updated every week until wide-scale adoption is assured.

Leaders must be both self-aware and candid about the organization’s existing capabilities. Innovations have the best chance at succeeding when you select the best ideas that match your strengths, strategy, culture, leadership and market.

The high-level questions an organization needs to answer are:

Q: Why does the organization want to innovate? What is the goal and purpose?
Q: What type of innovation does the organization aspire to develop?
Q: How do the organization plan to reach their aspiration for innovation?

Text description: Overview of The InnoSurvey framework and it’s key components
Source: “How to Assess and Measure Business Innovation”, Magnus Penker, Innovation360, 2016,

Strategic Questions and Metrics

Example of strategic questions to ask:

Q: Are our innovation teams motivated enough to deliver on our strategic initiatives?
Q: Do we have buy-in and support from senior leaders who will champion the project?
Q: Does it make sense to prioritize growth in market share or should the company be maximizing profitability?
Q: Do we excel at discovering unarticulated customer needs, at demonstrating the value of new technologies, or at taking the lead on developing trends?

Example of corresponding strategic metrics:

Capability mapping – The wheel of innovation visualizes 66 innovation capabilities aggregated in 16 lenses. Depending on the organization’s aspiration the capabilities needed varies. Hence what should be tracked also varies with the aspiration.

Text description: In this example, the InnoSurvey database showcases that the Bank and Financial Sector (global viewpoint) is lagging compared to the top 25% innovators in the US and China when it comes to innovation capabilities Source: “The Wheel Of Innovation”, Magnus Penker, Innovation360, 2008 (Patent US D813,884S)

Culture mapping – A 4-quadrant culture map with “Independence to Interdependence” on the X axis and “Flexibility to Stability” on the Y axis. This plots how well your working teams collaborate with each other and how they respond to changes. The changes both with respect to internal structures and market constraints.

Text description: In this example, the InnoSurvey database showcases that the Bank and Financial Sector (global viewpoint) does not have the culture to support innovation in horizon 2 and horizon 3, benchmark is the top 25% innovators in the US and China
Source: Adopted from “The Leader’s Guide to Corporate Culture” by Boris Groysberg, Jeremiah Lee, Jesse Price, Spencer Stuart, Harvard Business Review, 2018

Innovation Persona Maps – A bar chart of an organization’s profile regarding 10 internal personas necessary to drive innovation in different horizons.

Text Description: Overview of the Innovation personas in 10 faces of Innovation
Source: “10 faces of Innovation”, Tom Kelly, IDEO, 2005

Tactical Questions and Metrics

Example of tactical questions to ask:

Q: Are we systematically working through projects that are designed to meet our strategic initiatives in short, mid and long term?
Q: Have we defined the most accurate metrics to record critical changes, deviations, and results?
Q: Which red flags will suggest that the hypothesis tested by the project needs to be refined or changed?

Example of corresponding tactical metrics:

Level of risk in the portfolio – A single innovation will not be enough to ensure continued success for the company. Leading innovators spread the risk by generating ideas for incremental changes in the short term, radical concepts in the mid-term, and high-risk/high-return possibilities for the future.

Time to first revenue – The more radical and the more original the idea, the less likely it is to provide any reliable basis for ROI metrics. Instead, companies measure and update TTR (time-to-revenue) as a critical indicator of growth.

Number of new revenue streams – Ideation doesn’t end with the choice of projects to test. A single idea can generate multiple revenue streams through rethinking expansion to different customer types, different pricing models, bundling options and partner sponsorships.

Operational Questions and Metrics

Example of operational questions to ask:

Q: Do we utilize our organization and resources in an optimal way to deliver on our strategic initiatives?
Q: What kinds of communications will motivate the execution team and front line to take responsibility for project success?
Q: What channels have been set up to assure that critical customer feedback will reach the project team?

Example of corresponding operational metrics:

Number of hypotheses tested – The path from Ideation to Selection to Development to Commercialization is not exclusively a straight line. Hypothesis testing and iterative improvement can send the project back to earlier stages at any point to assure a tighter market fit.

Customer engagement rating – Many companies find that an independent Innovation Task Force is better able collect and evaluate metrics like customer engagement objectively, without typical problems like confirmation bias or HIPPO (the highest paid person’s opinion).

Iteration cycle length – The secret to rapid learning, as mentioned above, is failing faster, cheaper, and smarter. To get there, leading innovators look for ways to shorten the iteration cycle and the time between new project launches.

In summary

There are, of course, endless variations of how you might customize your metrics framework. Which way you chose should depend on your aspiration, and how well your abilities maps to it.

You can’t be a follower to reach success, but you can find your own path to setting goals, balancing spending, and measuring results. It starts once your organization is clear about where its strengths are.

This is a guest post by Sofie Lindblom, Managing Director & Founder at ideation360 and Chief Evangelist at Innovation360

If you want to dive into innovation metrics, join Sofie’s workshop at Innov8rs Paris (10-12 April 2019), and discover your own individual innovation profile by test driving our InnoSurvey™ platform. You’ll receive a free 40-page report with personal recommendations, data visualizations, and a clear picture of where you are, where you can go and the steps to take to get there.