I’m a little tired of the lack of original thinking that goes into measuring innovation. Most trot out the same old chestnuts, including ‘return on investment’ as always, as near or at the top.
Leaders want to hear this, the sad truth is getting a ‘decent ROI’ for innovation constructed (note constructed) is really hard. If the innovation is new to the world, how can it have a clear financial return on investment until much later, much becomes an ‘educated’ guess?
We need to appreciate new innovation balance sheet thinking
Why a balance sheet thinking? There are hard and soft measures to measuring or judging our innovation. It goes way outside financial numbers. Would we have seen the emergence of Facebook, Apple Watches, Uber etc etc if those that were determining success from their investments had actually insisted on guaranteeing the ROI before launch or within short time frames, that many of our established organizations insist upon? No it was the belief and ‘seeing’ the potential that encouraged those investing to make the initial investment and then continue on ‘future’ returns.
I often think of the parable of “The Elephant and the Blind Men” when I get into discussions about measuring innovation. What are truths, what are the fallacies? The parable implies that one’s often subjective experience can be true on your need, but not necessarily the other persons view of their understanding of value.
You get, as the end result, a failure to account for other ‘beliefs’ or capture the real value and miss providing broader motivations to encourage the innovation elephant along.
Establishing the right metrics that motivate and yield the result you are looking for is sometimes a tough challenge. You should always start with the bigger picture, organizational needs and then design the metrics and cascade these throughout the organization.
Over the weekend I was enjoying my cappuccino and suddenly it started to taste bitter, not from the actual coffee but from what I was settling down to read.
I enjoy a lot of what Steve Denning writes and his series in nine parts on “Why Amazon Can’t Make a Kindle in the USA” (start here http://onforb.es/oK1Cxh ) has really hit home on the seriousness we are facing in Western countries over innovation capabilities.
He mentions the “decades of outsourcing manufacturing have left U.S. industry without the means to invent the next generation of high-tech products that are key to rebuilding its economy”, as noted by Gary Pisano and Willy Shih in a classic article, “Restoring American Competitiveness” (Harvard Business Review, July-August 2009).