Measure and Evaluate Innovation Successes

For innovation strategies to be effective there is a need for a mechanism (i.e. a ‘new ideas assessment system’) to identify and record the generation of ideas and suggestions. In order to fully evaluate the impact of an innovation it is necessary to undertake a qualitative assessment of the impact and assign a quantifiable value to it. Innovations should be assessed in terms of such things as savings or enhancement in cost, cycle-time, quality, and customer satisfaction.

As with all measurement systems, one designed to manage the innovation process must be firmly tied-in and aligned to culture, mission, and strategy. These factors all vary dependent upon the individual organisation of course, but some basic generic measures can be used to illustrate how, in theory, the process can be driven.

Measuring the positive impact on the business determines whether an innovation has been a success or failure. The way in which this is defined will depend on the nature of the innovation and on the organisation’s goals and objectives. Such measures should consider the benefits of the innovation as well as the cost of development and implementation.

The value of suggestions/feedback or, implemented ideas/suggestions, to the organisation may not be easy to measure and at times it may be necessary to make a subjective assessment of the value of improvements. It should also be recognised that it is not always easy to collect data regarding the generation and implementation of new ideas and it is often difficult to define what constitutes a discrete idea.

Innovation is often required to create the measurement process itself, and finding the right measures themselves may take time and experimentation. Often a framework to help guide the design of such systems can be an enormous help. Kaye and Anderson found that organisations in their study that were more successful at integrating continuous improvement activities were those that used a recognised framework to assess and improve their current quality status. These models included the European Business Excellence Model and the Baldrige Award Framework.

Whatever measures are used, their objective must be to monitor and hence increase the proportion of innovations that have a positive impact on the business, reducing the amount of effort that is wasted on failed innovations and improving the effectiveness and efficiency of the innovation and technology development processes. This is particularly important for organisations that undertake large amounts of technology development and innovation. However it is important that in collecting such data and in improving the effectiveness of innovation, members of the organisation are not discouraged from making suggestions. It is vital that idea generation is encouraged and it is often necessary to take risks in introducing innovations in order to maximise the advantage of novel ideas.

The following provide some ideas on how success of innovation initiatives can be assessed:

• Business Impacts e.g. % of innovations that make a positive impact on the business

• Idea/innovation source e.g. categorising the original source of the ideas being generated. This measure could include categorisation by individual vs team, employees vs customers (or other stakeholders), and organisational department (e.g. Product development, Human Resources, Accounts etc).

• Employee perceptions e.g. the % of staff in an organisation that perceive management as encouraging employee innovation. Such a measure provides data to assist in the development of an effective management approach relating to the fostering of employee participation and a culture of innovation. A survey design based upon the `Likert` scale is the commonest and most reliable method to collect this data, and can make the survey easy to understand and use by all levels of the workforce.

• Employee feedback mechanisms e.g. the number of mechanisms deployed for gathering employee ideas for innovation. This measure can provide an indication of the degree of establishment of a culture of learning and innovation, and more specifically, the thoroughness of the company’s information and knowledge gathering system, and also an indication of the level at which the organisation involves employees in its innovation activities.

• Value of rewards for employee suggestions e.g. the value of a reward given in return for suggestions (all suggestions or only those used). This measure can be useful in benchmarking other organisations` innovation creation processes. It is also important to know these values and to review them regularly in order to fine tune the effectiveness of the innovation creation process.

• Idea generation rate e.g. the number of ideas or suggestions for improvement received monthly or, the total no. of ideas per year. Measurement of the number of ideas or suggestions should encourage increased volume of ideas and suggestions. However, ‘idea generation rate’ only measures the number of new ideas generated monthly (or over a given period), it does not say anything about the ease of implementation. The use of a ‘new ideas assessment system’ can act as an evaluation process (or filtering gate) whereby all new ideas generated would be weighed and assessed within the context of a company's resources and capabilities. Ideas passing through this system can then be assigned a category relating more closely to company value and, when viewed in tandem with ‘number of ideas implemented’ and measurement of Return On Investment (ROI) for ideas or suggestions implemented, a measurement family can be created and used to drive generation of the most effective kind of innovations right through to value adding outcomes in the process/product/service/improvement system.

• Lead time to respond. This is the time from receipt of a suggestion or piece of feedback to the time action is taken. Ensuring potential innovations are being addressed in a timely manner is important to the person(s) from whom the idea(s) originated, the efficiency of the innovation management process, and to the ability of the organisation to be agile.

• New technology introduction time e.g. measures of the length of time taken to proceed from initial concept/identification of a technology need, development, and prototyping through to actual launch. The objective of this measure is to capture information on the rate (how fast) a company is introducing new technologies.

• Dedicated research time e.g the % employees formally devoting time regularly to researching new ideas, or the % of time spent formally by employees to research new ideas. Such a measure can indicate how far leadership is prepared to go to create a culture of innovation. It can also be a useful benchmarking measure when assessing the innovation intensity of an organisation.

• Improvement team formation e.g. the no. of improvement teams formed per period. This provides a measure of the organisation’s ability to generate and implement process improvements.

• Idea conversion rate e.g the no. of ideas or suggestions implemented in a given period or, the % of ideas or suggestions that are implemented or acted upon or, the average value of ideas or suggestions implemented or, the average lead time to respond to ideas or suggestions. This evaluates the rate at which new ideas are assessed and implemented successfully through improvement initiatives or directly at the point of operations.

• Innovation Intensity e.g. the no of new products introduced over a given period divided by no. of employees. This measure provides an input to the assessment of the effectiveness/performance of the innovation management process.

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