What are the best innovation metrics for driving business growth?

I start with looking at the innovation angle either incremental or disruptive. If we are on the incremental innovation path, you might consider revenue gains or contribution margin increase or higher efficiency. If you look at the disruptive innovation, you might want to look at potential and think more like a VC and apply the same measures.

An example of a KPI I have used in the past which genuinely drove a culture of new product development and innovation was “ %age of revenue from new products” where “new products” was defined as something introduced in the last twelve months. By setting ambitious %age growth targets this encouraged not only new PD but also sales and marketing activity in this area

Innovation metrics serve as both the roadmap and the measuring stick for an organization's progress in the dynamic world of innovation. They fuel a culture of creativity, guide resource allocation, and facilitate competitive benchmarking. These metrics also become a compelling tool for showcasing commitment to innovation to potential partners and investors.

Innovation without measurement is just creativity. Metrics provide: - Accountability - Visibility - Strategic Alignment But that doesn't mean every metric is a good one. A good metric should be: - Clear - Relevant - Actionable Then ask yourself these 3 questions. - What do we want to achieve? - What metrics align with those goals? - How do we put those metrics into action?

Innovation usually comes in hand with resolving a pain-point(s); in turn this can be used as a metric in itself. Has the pain-point(s) been resolved? Have you pivoted? What was the added effectiveness of the pivot? What resources have been gained/lost?

We see innovation, and in a broader sense pace of learning as the backbone for a continuous efficient execution of the vision and strategy of an organisation. This first thing we help our clients do is clearly identify which areas of the business are innovating at a desirable pace, and which are not learning fast enough. Innovation metrics should be selected based on the specific objectives, i.e. increase the pace of learning where it is too slow, as well as sustain the pace in successful areas. Where performance metrics give a snapshot of an organisation's economic health, innovation metrics show how that performance will sustain and grow over time.

Innovation can be internal or external. For external innovation companies should choose the number of successful POC’s per year. A successful POC is a pilot with a startup that turned into a full PO. What we found is that highly innovative companies have set 2-10 POC’s per year, but mostly the follow up PO’s are not necessarily counted.

I use is Innovation Pipeline Strength (IPS). I count the number of ideas generated within a specific time frame (e.g., monthly or quarterly) and then monitor the progression of these ideas through different stages of our innovation process. To measure the strength, I'll assign values to each stage based on its closeness to market launch. For instance, an idea might be worth 1 point, a tested prototype 5 points, and a market-ready product 10 points. The final step is to add up the total points for all ideas in each stage of the pipeline.

The ultimate innovation metric is the number / quality / impact of new product and services being generated by an organization. Generating these new products in a timely and efficient way is another set of KPIs. Finally, culture metrics are also important.

Listening and observing are your greatest starter tools to help support your IDEO Design Thinking approach to understand the effective usage of innovation matrices. Ultimately it is your global impact that relays your success and need to innovate; similar to the efficiency vs effectiveness scenarios.

Innovation metrics should also account for competitive analysis to ensure your offerings stand out. Analyze customer retention rates and the ability to capture new markets. Encourage a culture of experimentation and track the number of ideas generated and tested. Balance short-term gains with long-term innovation goals to achieve sustained business growth.

The use of these metrics should not be static. Organizations must foster a culture of continuous improvement, where innovation metrics are regularly reviewed and updated to reflect the evolving market landscape and the organization's growing understanding of its customer base.