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Innovation Metrics

The Innovation Process and How to Measure It

Innovation MetricsBy Langdon Morris

Like everything that businesses do which involves the investment of capital and time, innovation has to be measured. But unlike many other forms of measurement in business, measuring innovation presents problems for the process that is to be measured. We might call this ‘innovation uncertainty principle:’ many ways that we might want to measure innovation can significantly impede the innovation process itself. This is because innovation involves a venture into the unknown, and if we try to pin these unknowns down too fast we may make them harder to recognize and realize.

For example, we have to look at the very concept of ‘return.’ ‘Return on Investment’ is a standard and accepted measuring tool that managers have relied on for decades. But it’s now an accepted joke in the research and development community that the term ‘ROI’ really stands for ‘restraint on innovation,’ because ROI-based assessments tend to embrace short term thinking, and to exclude the development of long term, breakthrough, and discontinuous ideas and projects. Using ROI to measure innovation thus endangers the very thing you want to measure, and makes less likely the end goal of the process, which is better innovation.

This presents difficult problems for R&D managers. At a recent meeting at HP Labs, a manager commented that they could not even look at any project that did not have the potential to be at least a $50 million business. The problem, of course, is how you can know. What do you include in your research plan, and what do you put aside? Did the researcher who’s work led to the creation of HP’s multi-billion dollar inkjet printing business know what he was getting into when he became curious about the burned coffee he noticed on the bottom of a coffee pot? Could he have said his idea about superheated ink would be worth $50 dollars, much less $50 million? Unless he was inspired by a fit of hubris, probably not. So if someone had asked him for the ROI on his research work, he could either guess, lie, or say he didn’t have any idea.

Yet innovation has to be measured, surely, or else it cannot be managed. So what to do? Exploring some of the best options is the purpose of this White Paper.

Table of Contents

  • Introduction
  • Innovation Methodology
  • The Innovation Funnel
    • Stage -1: Strategic Thinking
    • Stage 0: Portfolios & Metrics
    • Stage 1: Research
    • Stage 2: Insight
    • Stage 3: Ideas
    • Stage 4: Targeting
    • Stage 5: Innovation Development
    • Stage 6: Market Development
    • Stage 7: Sales
    • Inputs, Process & Output
  • Conclusion
  • References

• • •

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{ 6 comments… read them below or add one }

Dag Hinrichs May 6, 2010 at 3:30 am

Looking forward to looking at this whitepaper.




Dick Webster August 24, 2010 at 12:51 pm

Thank you for sharing your white paper on innovation metrics.
Your work is a useful “tour” of important elements to consider and act on.


Sudevan August 24, 2010 at 10:24 pm

A well structured article. For the past couple of weeks I have been working on a way to measure the innovation process and your article comes in handy with valuable inputs. Thanks.


Jose Arrojo August 24, 2010 at 11:45 pm

Dear Langdon, long time ago since our LX to USA …
We still enjoy with your lessons and concepts, big true the “restraint on innovation” concept.
Looking forward reading your book
Kind regards


Wenzel Heldens August 29, 2010 at 4:19 pm

“Yet innovation has to be measured, surely, or else it cannot be managed”

My questoin:

As it (the innovation process) cannot be managed, why would you measure it?


mkaufman August 29, 2010 at 6:53 pm

Thank you for your comment. This white paper builds upon ideas that were laid out in our book Permanent Innovation – which is available for download. We feel the innovation process is something that can be designed and managed and which can consistently produce results.


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