BCG did a survey on the way companies measure their innovation initiatives.
Their key findings:
- Only 32 percent of executives are satisfied with their company’s innovation-measurement practices. And that percentage has been falling.
- While most executives—73 percent of respondents—believe that innovation should be tracked as rigorously as other business operations, only 46 percent said that their company actually does so.
- The majority of companies continue to rely on a handful of metrics to measure the full scope of their innovation activities. Fifty-two percent of respondents said their company uses five or fewer metrics. But that number is starting to rise.
- A surprisingly small number of companies—27 percent of respondents—attempt to drive innovation by linking employee incentives to innovation metrics. But that number, too, is edging up.
- The most widely tracked components of innovation are overall company profitability (79 percent of respondents said their company measures it), overall customer satisfaction (75 percent), and incremental revenue from innovation (73 percent).
- The metrics that employees pay the most attention to—the ones that have the greatest impact on their behavior and attitudes toward the company’s innovation efforts—are incremental revenue from innovation and overall customer satisfaction.
- Companies consider themselves most effective at measuring innovation outputs (such as revenue growth, shareholder returns, and brand impact). They consider themselves far less successful at tracking innovation inputs (for example, dedicated resources, such as people and funds invested) and the quality of their innovation processes.
An interesting line in the report says: “companies measure the wrong things—or fail to measure the right ones.”
To me this report doesn’t prove as much that measuring is the problem. Most companies just don’t know how to be innovative. This BCG report also takes a perspective from the management paradigm that just a few people in the company have a clue.
When I look at companies that are consistently innovative, I see companies that know how to utilize the collective wisdom of their employee base, and get these employees to collaborate and build upon each others knowledge, experience, and skills.
And yes, these companies measure what is going on and how successful their process is, but you need to have a running engine in order to measure its performance.
