How to Measure Success in Innovation

In the previous Innovation Weekly article, we discussed how to build a culture of innovation. The key component to crafting organizational culture is the people, and those same people are the ones who shape what success means.

Understand the decision makers

A specific metric or key performance indicator (KPI) has more meaning and relevance to one stakeholder than another, especially if they represent different departments or job functions. For example, the number of likes attained by posting a schematic of a new processor chip may be of interest to a colleague interested in design and visual appeal, whereas the electronics engineer may be more interested in throughput and other performance-based statistics.

As with most new projects, starting an innovation project requires an understanding of the stakeholders involved. This includes the design and build teams, as well as the decision makers who will give their stamp of approval to these innovations. By understanding these decision makers' frames of reference, potential use cases for the innovations, biases and other relevant attributes, we begin to realize the spectrum of success metrics that needs to be considered in order for any innovation to be perceived as relevant to multiple decision makers.

Choose relevant metrics

If you seek first to understand who will be determining an innovation to be successful or not, you then have the ability to define the metrics by which that innovation should be measured. This gives you the ability to select innovation assessors that will measure the relevance of an innovation within particular sub-contexts of its intended target ecosystem. The designer, the manufacturer, the implementer, the end-users, the maintainer, etc will all look at a new product or service and scrutinize it with different lenses on. For example, metrics that focus on perceived return on investment, complexity to adopt, and size of the problem an innovation address are more useful to someone investing in or selecting innovation projects than they are to a developer who is head-down doing a build of a component for that new product. That developer, and the relevant management team, would more likely be interested in measuring agile development sprint performance and the number of product backlog items addressed within a particular sprint.

Defining a framework that allows you to craft (or reuse) metrics for each type of stakeholder will ensure that robust testing takes place along the entire new product development cycle. An important consideration is that the various sub-contexts are then all included in a holistic assessment process and none of them get left out intentionally or forgotten. If we don't consider holistic assessment, there is a risk that an innovation may be inaccurately classed as successful, after skipping a few assessment steps, that it may progress to the next stage of development, and that flaws in the functional, legal, ethical, design or engineering aspects are overlooked. Depending on the product being developed and the industry it targets, the ramifications may be disastrous.

Question current methods

What got you to version 1 of your new build may not be sufficient to get to version 2. As you learn about the potential use cases of an innovation, the scope of application, the unexpected impact on the ecosystem it touches, the dangers, pitfalls or flaws you've uncovered, you need to reassess whether a specific innovation methodology is the best to follow going forward, as well as whether the success metrics need to be adjusted for future assessments. If you have already instilled a culture of innovation that accommodates continuous feedback, then receiving signals that indicate the need to change the process and success measures should not be a barrier to improving the productivity of the innovation team.

In Summary...

Measuring success in innovation starts with knowing which stakeholders will be doing the scoring and clarifying which metrics will help those stakeholders determine if the innovation efforts have been fruitful or not. The basis for measuring success should be revisited as you learn from each experiment or new development project, and we should always strive to ensure that the most relevant success metrics are being used for the nature of the innovation and its respective audience. Without this, you run the risk of potentially creating amazing products and services for the wrong reason, or creating mediocre products and services because of antiquated metrics.

In future articles we'll look at the intricacies of specific performance metric systems, including SMART Goals and Objectives and Key Results (OKRs).

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Thank you for reading, and stay tuned for the next article, where we discuss time horizons for innovation strategy - playing the short game versus playing the long game.