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Measuring Innovation "Perfection can only be accomplished by using old knowledge in new ways." Robert Sutton 1. Until recently, measures of an organization's innovative capability were centred on product tracking Ð a poor indicator of strategic capability. 2. People-related measures have not been developed uniformly. Most have been developed by external consultancies or academics and few have been adapted internally by employing organizations. 3. The cultural indicators that have been developed suggest there is a gap between an organization's expression of intent and the processes and behaviours adopted by line managers on the ground. 4. Intellectual property protection has led some organizations Ð most notably Nortel Ð to link innovation measurement to the number of patents developed by key technical and professional staff. The development of intellectual property is an emerging HR issue for many organizations. Warren Bennis's observation about leadership in the 1960s Ð "you can't pin it down but you know it when you see it" Ð could easily have been said about innovation during the last decade. It was the classic 'intangible': Everyone rated it as important, but nobody knew how to measure it. The early indicators of innovation were almost all centred on new product launches and were therefore the territory of the marketing, not the HR, function. The Marketing Leadership Council recently found that 78 per cent of the respondents they regularly survey tracked new product development pre-launch and 90 per cent post-launch. Product development tracking is a poor indicator of strategic innovative capability. It is confined to indicators of how innovation inspires new products and brands, finds new customer segments for existing products or finds new ways of selling, servicing or using the brand. It does not extend to how innovation determines broader strategy or fuels effective business reconstruction or growth. It is also results-oriented and rarely examines the root cultural contributors to innovation or Ð equally important Ð the root cultural inhibitors. Yet tapping the root causes of innovation is now seen by academics, consultants and practitioners alike as the single most important foundation for effective change management. The new management philosophies of 'strategic readiness' and 'business resilience' are underpinned by the need for continuous, properly measured innovation that is not confined to the work of the R&D department. "Strategic resilience is not about responding to a one-time crisis," comments Gary Hamel, the business academic who invented the concept. "It's not about rebounding from a setback. It's about continuously anticipating and adjusting to deep, secular trends that can permanently impair the earning power of a core business. It's about having the capacity to change before the change becomes desperately obvious." 1 In other words, you need constant innovation Ð embedded in the culture Ð to stay alive. The problem is not that there is a lack of HR-oriented research into the causes and inhibitors of innovation: It is that it has failed to come up with reliable measures that link an organization's innovative capability with its competitive goals. There is no one universally-accepted definition of innovation. As a consequence, academics and practitioners have tended to cherry-pick the aspects of innovation that most appeal to them Ð leadership, strategy determination, creative inspiration in individuals, creative team-working Ð with the result that intellectual thinking on the subject is fragmented. A few examples of the most recent work on the subject include: If you are a subscriber, click here to read the full briefing. Click here to find out how to subscribe. |
