Innovation ROI

13/08/2020

"...no one really expects an innovation ROI. Until they do. And then innovation leaders get fired." (quote from an article on innovationleader.com)

Sounds familiar? Or do you have Innovation KPIs in place?

Which of these KPIs measure 'TRUE INNOVATION'?

  • Annual R&D budget as a percentage of annual sales
  • Number of patents filed in the past year
  • Total R&D headcount or budget as a percentage of sales
  • Number of active projects
  • Number of ideas submitted by employees
  • Percentage of sales from products introduced in the past X year(s)

Apart from the final KPI, % of sales, which really measures the impact of innovation, all other measures in my eyes are only proxies for the potential of innovation.

I have asked quite a few innovation leaders over the last few month this exact question: "How do you measure innovation success?" The answers reached from "We honestly do not really measure innovation success." to very precise KPI for which the teams are responsible. One good example was the IDEATION TO CONVERSION metric: Of all ideas in the Ideation funnel, how many did we convert to a 'minimal viable product', meaning that it has been sold to first customers and can be scaled up. Both can be measured quite easily and are hugely relevant.

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