Monday, 1 March 2010

Nurturing innovation and the measures that drive it

Cocreative founder Jacqui Hogan specialises in helping businesses be more creative and innovative. She is passionate about innovation and doesn’t pull her punches. With her trademark sunny smile she will tell you that:

“If you always do what you always did, you will always get what you always got.”

So I asked Jacqui why innovation is so important in business.

“The business world is constantly changing, so if you are not innovating you are losing out to competitors who are. It’s as simple as that. Unless innovation is part of your business you will still be going to meetings on horses while your competitors are polishing their fleet of fuel efficient hybrid cars.”

Jacqui works with small and medium sized businesses on the full cycle of innovation – from idea generation to implementation and risk analysis. But innovation is by definition a creative process. I asked Jacqui whether it can, or should, be measured.

“Measuring innovation poses some challenges, as it is a highly uncertain process. Businesses define innovation differently; it can be anything from incremental improvements to big step change developments.

But unless you measure it in some way, you have no feedback on what is happening. Innovation is important to all businesses, so there needs to be some sort of framework that includes targets, so you can make sure there is always something coming through the innovation pipeline.

There are three basic ways to measure innovation:
  1. Input – the time and resources that go into the process. KPIs might include % of time or % of turnover spent on innovation.
  2. Output – what you get from what you spend. KPIs include number of patents or ideas generated.
  3. Effectiveness – this is how successful you have been. Performance indicators might be number of new products brought to market, or % revenue from new products.

Not all new ideas are successful, but that doesn’t mean you should stop innovating. Also, there can sometimes be a significant time lag between having the idea and implementing something. And even then, it might have changed considerably from the original idea. So measuring effectiveness can be difficult.

As with all performance measurements, you need to use measures as just one tool, not the whole toolkit. Measuring the number of ideas generated might make you feel you are being innovative, but unless ideas are progressed they are worthless. So you need measures at each stage.

I also think you need to be very clear about what you want to achieve through innovation, and measure your performance accordingly. Different businesses, and different executives, can have very different ideas.”

Given the challenges with measuring innovation I asked Jacqui what her advice would be to businesses who want to be more innovative.

“Don’t expect people to do it in their spare time. That just sends the message that it’s not important. Build some sort of innovation measure into the appraisal process; that helps everyone focus. You can’t expect everyone to be creative and innovative, and in fact that’s not necessary. Many different talents are needed to turn ideas into something that can be marketed.

But most of all I would advise companies to make sure innovation is included in their performance measurements because otherwise it won’t happen consistently. And that’s important if you want to stay competitive.”

Jacqui Hogan is the innovative energy behind cocreative, a consultancy that helps businesses be more successful with innovation and creativity.

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