It is important for an organization’s leaders to have an understanding that value will be derived from both incremental improvement, through things like quality and Lean Six Sigma, and also from breakthrough improvement – what is typically called “innovation.”
There are four innovation related metrics to focus on which will, over time, give you the ability to analyze resource allocation in a particular area. They are:
- Efficiency: Savings and brand equity development via quality improvement of processes and offerings.
- Incremental: New value creation via offering development in your core competency area.
- Radical: New value creation via offering development in areas adjacent to your current core competencies.
- Transformational: New value creation via offering development in areas very different from your current business focus.
Innovation leaders need to:
- assess if your organization is investing an optimal amount of effort into this Strategy Area, if it has fallen off the radar screen, or if it has become a dangerous obsession
- explore a real world example from a Fortune 500 Global Company
- learn a success tip from Coca-Cola. Watch this video to learn from Doug Bonthrone, Director of Global Services Strategy at Coca-Cola:
Watch out! Beware of only creating metrics for innovation that are focused solely on your organization’s offerings (products and services).
To find the sweet spot of increasing innovation and improving efficiency, organizations must identify and monitor key measurements. If they don’t they run the risk of derailing innovation efforts, their efficiency efforts, or both. Read more
Success Tip: Start gathering data from your organization. What’s your current mix of innovation from core, adjacent and transformational? How does that compare with others in your sector? Start small experiments. For example, if your company has less than 1% from transfomational – try for 5% and watch what happens. Read more
Remember: There is no defensible reason why innovation and quality efforts can’t occur concurrently. And, as Peter Drucker said:
What gets measured gets managed.