Creating Better Innovation Measurement Practices

For most companies, innovation is a top managerial priority. Business executives look at successful innovators such as Apple and Google with envy, wishing their companies could be half as innovative. To boost and benchmark innovation, managers often use quantitative performance indicators, but they struggle with identifying the right metric. Yet, our research suggests that the key managerial challenge is not identifying metrics — there is no shortage of measures to choose from. Nor should the goal be to find the perfect metric, since that quest is often futile. Rather, the crux of effective innovation measurement is to understand the problem that measurement should solve for the organization and, based on that insight, to design and implement a useful and usable innovation measurement framework appropriate to the organization’s needs. The aim of this article is to help managers ask the right questions about how to measure innovation and translate their insights into effective innovation measurement practices. We have developed a practical, step-by-step framework that helps managers identify whether their current innovation measurement practices need to change and, if so, how to go about measuring innovation more effectively.