Innovation can be a critical contributor to a company’s growth and profit objectives. However most organisations are disappointed with the speed and/or quality of their approach to innovation. This service enables our clients to transform their organisation’s capability to introduce winning new products and manufacturing processes rapidly and efficiently.
Why is it that so many fail to get the maximum benefits from innovation? In our experience, identifying the best way to manage innovation is only the start. The real difficulty lies in gaining understanding and commitment from the organisation and getting the solution embedded within it. Our approach addresses this – combining two strands:
- Enabling – providing structures, processes and skills needed to support the effective exploitation of innovation
- Doing – providing real concepts matched to business needs which are taken through development into real products.
Innovation performance assessment
Innovation can happen - can be made to happen - anywhere in the organisation. It is probably most visible when it is applied to creating new products, new services, and new ways of producing your products and services. This is an area where measuring the delivered output is notoriously difficult. There are two reasons for this.
First, the output is delayed because of the steps between the initial concept and its realisation. Companies’ financial cycles are normally measured over a year, the outputs of innovation may not be paying back commercially for two, three or more years. It can be quite rare to get a real measurable output in the time frame when the cost is incurred.
Second, the output is diluted by the contribution that many other parts of the organisation need to make, before the original concept is realised. How much of the credit for an eventual success can be fairly attributed to the original innovation, and how much to all the rest of the work of its realisation? The fact is, you would not have had your new product (etc) without everyone’s contribution - they were all essential!
It is so much easier to measure the output of a factory or a sales force. Many companies have given up on measuring innovation performance, or never seriously tried. To improve innovation performance, companies need to establish a range of measures covering inputs, throughputs and outputs. And not too many input measures, which would deflect attention from the really important metrics.
Metrics for innovation and R&D performance
Measurement of commercially achieved money value from technology development and innovation is usually both retrospective and dilute.
Retrospective – because the value usually appears only as products earning money in the marketplace several years after the R&D investment is made and written off
Dilute – because success in the market is achieved by many others than just the developers (manufacturing, marketing, sales, …)
This makes it hard or impossible to really state the value delivered by R&D, product development, etc. Very many attempts have been made to find acceptable surrogates, and it’s clear that managers will have to live with imperfect guides.
Within these constraints, PA has a comprehensive set of metrics for input, throughput and output, and a separate set to distinguish between the innovative and incremental components of the development investment.
For more information telephone +44 1763 267492 or email innovation@paconsulting.com
