In the media

Does measurement kill innovation? Not if you do it right.

By Steven Dry, Mariko O'Neill

Innovation Leader

16 October 2018

Innovation can be likened to having your first child.

This article first appeared in Innovation Leader

Parental instinct kicks in quickly when you bring something new into the world: you see the potential for growth and imagine a future for your creation. Measuring innovation can feel sterile, uninspiring, and judgmental. Like a pediatrician predicting the unfolding of your child’s life at infancy, or rattling off growth stats when asked how your child is doing.

And as a parent, your reaction to this measurement can become quite defensive:

  • How can my child’s destiny be so black and white?
  • How can numbers alone capture the complexity and richness of their story?
  • How can milestones appropriately incentivize me as a caretaker?

The shift towards data-driven decision-making has trickled down to just about every level of the organization, but most companies have failed to accommodate the unique management challenges of innovation. The strategies for success in more established areas of business don’t always apply to emerging enterprises. And metrics—seen by many as the silver bullet for good decision-making—are in many ways killing innovation.

But you can make three subtle changes to your measurement process to catapult your innovation program, helping to nurture and grow projects and generate enthusiasm and leadership buy-in across your organization.

1. Connect Innovation metrics to your company’s strategy

This seems obvious, but sometimes things are hidden in plain sight. Our Innovation Matters research found that, amongst organizations designed to develop new disruptive products and services, over half admitted to “frequently rejecting disruptive ideas, even though they know they have great potential.” Nearly forty percent of organizations committed to growth admitted that they spent as much or more time focused on reducing costs as creating new revenue streams. When metrics are not aligned with mission, they distract from progress.

Executives at the most innovative companies are clear on their purpose and have outlined innovation goals to achieve their strategy.

These leaders have created consistent language and measures to talk about innovation across their organization. Dan Seewald, Senior Director of Worldwide Innovation at Pfizer, recently commented on this topic during an Innovation Leader webinar, he noted that standardized innovation metrics across the company ensures that everyone is aligned and innovation is serving the company.

2. Use storytelling to inspire innovation in your employees

Innovation leaders need to leverage the power of story to communicate and inspire engagement. Dashboards, a favored corporate tool, provide standardized insight. This static snapshot of performance is only based on a few key metrics which doesn’t effectively communicate the entire context or benchmark progress correctly.
The best innovators harness the power of storytelling to connect humans with the data - intention with impact.

Storytellers reflect on and connect their efforts to a larger vision. They drive a culture of change by connecting with their employees’ sense of purpose. We’ve found that 57% of successful innovators are good at telling the story of innovation in their organization, and 81% of innovation companies offer their employees an inspirational sense of purpose. So, tell more stories with your data.

3. Separate project metrics and personal performance metrics

Often, project leads are assessed on the success of their ventures. More successful projects yield better financial and personnel resources, recognition, and compensation. This incentive structure works when project leads have significant control over their project outcomes. However, when leads have less control over the outcomes, personal and corporate goals can become misaligned. When applied to innovation, this traditional performance assessment model can drive colleagues to overstate project performance or avoid risk taking.

Separating project metrics from personal performance metrics allows for a more effective and accurate compass for decision-making.

In “Beyond the Champion,” Gina O’Connor, Andrew Corbett, and Lois Peters acknowledge that innovation projects require alternative incentive structures to account for their risk. For startups, equity stake in the company ensures a significant financial upside to account for assumed risk and to align personal performance with corporate strategy. In corporate settings, we can use performance metrics that reinforce positive innovation behaviors (e.g. speed to validated/invalidated assumptions; cost per test). This ensures that project-based metrics are not experienced as judgmental and can be used to direct decision-making.

These three steps will transform how measurement functions in your projects, making it the lifeblood of your innovation program. Metrics can effectively communicate organizational strategy and the importance of innovation in achieving that strategy. When used correctly, metrics become the shared language of progress toward growth goals. Metrics can inspire individuals and give them purpose in their work, democratizing innovation throughout your company. These benchmarks can accelerate progress towards defined targets, by course-correcting projects and rewarding your employees for risk-taking and innovation behaviors.

You can track a child’s growth in many ways: stats in a baby book, a pencil and a door frame, or milestone photos on Instagram. And, just like any parent, you can choose how you document and showcase the growth of your innovation program.

Steve Dry, Mariko O’Neill and Allison Cook are PA Consulting life sciences experts focused on innovation.

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