Don’t you wish that you could just put your organization’s innovation activities on a weighing scale and measure it in a jiffy? Unfortunately, it’s not that simple. As innovation is non-tangible, measuring it becomes quite tricky. It is a multidimensional phenomenon. So, here we are, aiming to make your job a little easier by suggesting four innovation KPIs that you must track. Find out if they are already in your repository!
4 Innovation KPIs to Measure for Increased Success
1. Volume of Workable Ideas
Ideas are seeds that grow to become innovations. But do all seeds adapt to their environment and transform into lush green trees? No, right? Not all seeds sown are viable — similarly, not all creative ideas make it to product development. A lot of them are rejected in the sorting phase as it is not feasible to work on every single idea. So, record the ratio of the total number of ideas generated to the workable ones that pass to the next stages of the innovation stage-gate model. This data gives you valuable insights into the quality of ideas as well identifies any bottlenecks in the evaluation process.
2. Average Time-to-Market
Once you’ve got the workable ideas selected and move ahead to product development another intensive process begins. It is important to track the time your team/company takes from the initiation of product development to the actual launch of the product into the market. Measuring the time-to-market is very critical. If you take too long to release a product, it might lose its relevancy — which directly affects the profit and therefore the ROI. A study by McKinsey & Company even suggests that if you are just six months late to launch, you could earn 33% less profit for five years!
3. Projected Profit vs. Actual Profit
Speaking of profits — when your team decides to move ahead with an idea, sit down with your company’s finance department to calculate the estimated profit that the product or service can expectedly fetch. Keep in mind this is only a projection, no one can accurately predict the actual numbers. So, once you have the real figures, compare them against your internal estimation. This gives deep insight into your company’s ability to achieve its innovation goals.
4. Product Comparison
Once you launch a new product into the market, track its performance. To properly compare it, take into consideration the revenue of other products that your company has launched recently. Comparing how the product in question is doing against the other products and services you offer is a great way to measure the success of the new product. Moreover, it allows you to paint a picture of your company’s innovation performance as a whole.
Now it’s time to hear from you — do you already use the metrics mentioned here? What other innovation KPIs do you find effective? Get in touch & let us know!