There\u2019s an elephant in the room when it comes to \u201cinnovation.\u201d And it\u2019s an ironic elephant given that we\u2019re all so hooked on data analytics, a\/b testing, and getting metrics for anything and everything. Yet we all throw around terms like creativity, breakthroughs, and disruptive innovation. Companies eat up this stuff\u2013they\u2019re fully on board. Innovation is going to shape the future. Sure\u2013if we track and shape\u00a0it.<\/em><\/p>\n \u201cSome might argue that innovation is impossible to quantify. They\u2019re wrong.\u201d<\/strong><\/em><\/p>\n According to\u00a0McKinsey<\/a>, more than 70% of corporate leaders tout innovation as a top three business priority, but only 22% set innovation performance metrics.<\/p>\n The gap is problematic. Why aren\u2019t more companies measuring innovation? Because innovation is nebulous. Definitions differ. Expectations vary.<\/p>\n If you believe in the age old adage \u201cgarbage in, garbage out\u201d then the scope of the problem becomes painfully poignant. Nothing in, nothing out. If you don\u2019t measure innovation, are you still getting it? Not in any systematic way you\u2019re not.<\/p>\n Some might argue that the very act of measuring anything \u201ccreative\u201d stifles it out of the gate, or that innovation is just plain impossible to quantify. (They\u2019re wrong.) More importantly, do you really want to leave the future up to creative chance? It\u2019s not exactly a viable strategy.<\/p>\n Measuring innovation is a combination of art and science, which is precisely why it\u2019s tough to do. If you go too far\u2013like 3M did when they applied the rigorous\u00a0Six Sigma<\/a>\u00a0model to its creative process\u2013you might actually get less of what you really want.<\/p>\n The most innovative organizations carefully consider what goes\u00a0into<\/em>\u00a0the innovation process, but also consider what should come\u00a0out<\/em>\u00a0of it. They focus on different types of measurements, and include both the quant side of the business (hard numbers) and the qualitative side (say, leadership behavior).<\/p>\n Most companies zero in on bottom line basics\u2013top line revenue and overall profitability\u2013when it comes to gauging success. Many also focus on their\u00a0net promoter score<\/a>. These high-altitude metrics are indeed important, but they have limited value when it comes to measuring\u2013and driving\u2013innovation. Why? They\u2019re numbers. They don\u2019t take in what people want. And they don\u2019t inspire action around specific goals.<\/p>\n Yum! Brands, owner of fast food chains KFC, Pizza Hut, and Taco Bell, wanted to innovate its offerings in foreign markets\u2013to increase its overall proportion of international revenue. Their goal\u2013to radically increase international profits\u2013required a fundamentally different approach. Yes, they had to create new products that would result in revenue (numbers), but they couldn\u2019t get a big enough jolt by simply tweaking the supply chain or through standard (McKinsey-style) efficiency measures. In a market where finger lickin\u2019 fried chicken was about as foreign as apple pie, the company had little choice but to explore unfamiliar customer needs, test out new products, and build new business models.<\/p>\n And so the company looked at what Chinese customers would want, rather than what KFC was already good at. They introduced Youtiao, a traditional \u201cstreet food\u201d snack and other localized dishes at its Chinese KFC locations. Rice bowls are also now a staple on Chinese KFC menus. Thanks to Yum\u2019s realization that there was money in innovating around the Chinese palate, Yum\u2019s corporate profits from international sales skyrocketed from 20% to 70%.<\/p>\n In short, you need to disrupt the business-as-usual mindset. From a quantitative perspective, here\u2019s what you can innovate\u00a0around<\/em>.<\/p>\n Innovation-savvy organizations frame their end game around such\u00a0goals<\/em>\u00a0as those above. The value of the innovation is measurably tied to the output\u2013not to some dreamy notion of \u201ccreativity.\u201d You still have to come up with new ideas, but at least you have goals and a way to measure them. And you\u00a0should<\/em>\u00a0measure them.<\/p>\n Just because you want a specific result, it doesn\u2019t mean you\u2019ll get it. Measuring innovation also involves setting specific goals around ways of\u00a0fueling<\/em>\u00a0innovation\u2013things you do internally to help you hit your targets.<\/p>\n Lots of companies have been calculated about creating\u00a0cultures of innovation<\/a>. They put in place measures that explicitly promote certain behaviors. They shape their environments so people have enough time, resources, and focus\u2013so they can turn the creative process into real value creation. Measuring the inputs helps take the lip service out of it.<\/p>\n Coca-Cola\u2019s Venturing & Emerging Brands (VEB) group has a big charter\u2013to create Coke\u2019s next billion dollar brands. Coke leadership knew that if it wanted to get big outputs, it needed different inputs. That\u2019s why it created VEB. Coke sponsors VEB teams to use unconventional methods that include \u201can amalgamation of science, art and serendipity\u201d to uncover and meet emerging customer needs in the beverage world. Employees within VEB are given money, resources, and time to explore and target big opportunities. And it\u2019s paying off. Brands they\u2019ve acquired and built up include FUZE juice drinks, Illy Issimo ready-to-drink coffee, Honest Tea, and Zico coconut water.<\/p>\n \u201cCreate your own metrics mash-up.\u201d<\/strong><\/em><\/p>\n General Electric takes a different approach. Over the past decade, employees have filed more than 20,000 patents, many of which are paving the way for the company to assume a leadership position in sustainable energy and the \u201cindustrial Internet.\u201d The emphasis on protecting intellectual property runs deep in the company\u2019s culture and started when GE\u2019s founder established GE\u2019s R&D function in the early 1900s. GE has viewed patents as an essential \u201cinput\u201d to innovation, which has paid off. And it may continue to do so with its recent partnership with Quirky\u2013making GE\u2019s patent portfolio available to the Quirky community.<\/p>\n One reason why that innovation metric gap exists is because there\u2019s no set formula for what fuels innovation. What works for one company might be too fuzzy for the next. That said, there are a few things you\u00a0can<\/em>\u00a0measure in order to figure out how innovative your company\u2019s culture is\u2013it\u2019s the first step in figuring out how to reshape that environment and start promoting new behaviors.<\/p>\n Pick a few to create your own metrics mash-up. The optimal mash-up promotes very specific actions and behaviors, not generalized ones.<\/p>\n Also useful: The innovation metrics gap exists for a reason. Finding the right things to measure is a process in itself. And it\u2019s hard. And every company has its own organizational culture, so every company must fine-tune what it measures to reinforce the goals, values, and norms that it finds critical for inspiring innovation (and best practices around innovation).<\/p>\n Without it, you\u2019re rolling the dice. At best your default strategy is little more than \u201csomething in, something out.\u201d That\u2019s not a whole lot better than \u201cgarbage in, garbage out.\u201d Neither is it likely to result in innovation that\u2019s sustainable.<\/p>\n Innovators Alliance is a peer-to-peer networking group of CEOs committed to driving business growth through innovation.\u00a0<\/strong>Join us for an upcoming event to see what it\u2019s all about!<\/strong><\/a><\/p>\n Is your company innovative?\u00a0<\/em><\/strong>Try our NEW Innovation Self-Assessment.<\/em><\/strong><\/a> It takes less than 5 minutes! <\/em><\/strong><\/p>\n Like this? You might also like:<\/strong><\/p>\n Metrics are a combination of art and science. The trick is to inspire action around the goals you set. *Originally published on Co.Design:\u00a0click here to access. There\u2019s an elephant in the room when it comes to \u201cinnovation.\u201d And it\u2019s an ironic elephant given that we\u2019re all so hooked on data analytics, a\/b testing, and getting […]<\/p>\n","protected":false},"author":107,"featured_media":2316,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[13],"tags":[],"class_list":["post-2292","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-guest-blogs"],"acf":[],"yoast_head":"\nGarbage in, garbage out. Nothing in, nothing out.<\/h2>\n
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<\/p>\nArticulate the end game: Define the outputs.<\/h2>\n
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Fuel the innovation engine: Identify the inputs.<\/h2>\n
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<\/p>\nLeadership<\/h3>\n
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Employees<\/h3>\n
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Customers<\/h3>\n
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