Is your Innovation Blossoming?
Seeing as innovation is an essential element for an organization to survive and succeed, most organizations spend a considerable amount of time, money and effort on making sure that they are innovative. Organizations would not go through all of this trouble without expecting a return, so there has to be a way to measure the outcomes of your innovation efforts to establish whether what you’re doing is working or if you should try something else. Luckily, measuring your success rate with innovation can be done in several different ways and can give you the full picture on how well your innovation efforts are impacting your business.
Quantitative measurements: power in numbers
Numbers are a straightforward and emphasized way to demonstrate the effect of innovation on a company. Publicly listed companies are often heavily influenced by innovation; for proof, just look at the spike in Apple’s stock prices when a new innovation is announced. There is a lot of speculation around stock prices which is why listed companies are so eager to be innovative or be perceived as innovative. Other quantitative measures include return on investment and profits; however, there is a key performance indicator developed by the Balance Scorecard Institute that provides a measure for a successful innovation effect which isn’t so heavily based on the financial end game as it can be applied at any stage of the product life cycle. Called the Return on Product Development Expense (RoPDE™), this indicator measures the performance of product/service innovation and development by incorporating the common factors of innovation (increased number and quality of good ideas, increased efficiency in the implementation of good ideas and improved overall success from the implementation of good ideas). RoPDE™ is calculated by subtracting product development expense (PDE) from gross margin (GM) and dividing the total by product development expense (PDE):
RoPDE™ = (GM-PDE)/PDE
Quantitative indicators are able to give you the hard data on your innovation efforts, so I suggest that you choose the ones that measure the particular aspects of innovation that matter the most to you and include that in your analysis of whether your innovation efforts are paying off.
Qualitative measurements: public opinion
Of course, numbers can only tell a part of the story; qualitative measurements can give you the juicy information behind the data. Qualitative research methods such as surveys and focus group discussions can give an in-depth picture of how your innovation efforts are paying off, but a cheaper and less complicated way to accomplish the same goal is through social media. Thanks to the readiness of the public to give their opinion on something in an instant, there will most likely be a number of people that are willing to give (or have already given) a no holds barred opinion of your innovation efforts. Social media platforms can also show you how popular your innovation efforts are (for example, Twitter uses hashtags consisting of a short word or phrase in which the most popular hashtags are publicized as Trends as well as data on how many people are reading your information). Therefore, qualitative ways to measure your success rate with innovation may offer ore insights than the numbers do, for people can give their direct and honest impression no interpretation of numbers required.