Forecasting Innovation: Observe and Measure for Future Success
When creating and forecasting innovation, it is vital to set metric goals and track these metrics. One of Robert’s Rules of Innovation, Observe and Measure, in terms of the performance of the program implementation, needs to be built-in as a critical and recurring element.
Though many companies measure past innovation by studying lagging indicators, Robert reminds us to measure leading indicators to monitor real-time advancement and forecast future successful innovation. Robert’s Rules of Innovation help you to discover the top 5 R&D metrics used by the industry and more.
Some of the key leading indicators and metrics include:
- The number of new products ideas that your company has in the hopper and/or is working on.
- Total patents filed, as patents granted belong in the lagging indicator section.
- Total innovation team members involved in new product development.
Many of the most successful companies in the world observe and measure a successful innovation program. For the 3rd year in a row, Saleforce.com is #1 on Forbes List of the World’s Most Innovative Companies. Founder and CEO Mark Benioff spent over $4 billion acquiring and training innovators. Here, he shares some thoughts on innovation:
“I don’t care if it’s my idea, an employee’s idea, a competitor’s idea, a partner’s idea or some other associate’s idea. I can’t do it all. I don’t have all the ideas. My job is to build a culture of innovation. That’s something we try to enforce. We encourage it. We value it. We notice it. We compensate for it. We require (innovation).”
In order to nurture a culture of innovation, observe and measure not only past performance indicators but also learn to forecast innovation by observing and measuring key leading indicators. A system of metrics will objectively show your progress and success each step of the way. Be sure to measure the time spent in each gate, and the time spent to get to the next gate. Plan. Do. Check. Act. You might even consider going for a Gemba Walk.
No matter where you start, it is essential to follow a course of action that produces ongoing improvement. Successful Key Performance indicators (KPIs) follow the SMART Criteria (s.m.a.r.t). They are:
- Specific ‐ pertaining to the goal of the organization
- Measurable ‐ for the organization to assess its progress
- Achievable ‐ realistic in terms of the business environment
- Relevant ‐ directly linking the business and metrics
- Time-Bound ‐ placing goal achievement in a certain time frame.
The best lagging indicator by far is the current year percentage of sales attributable to new products released in the past year/3 years/5 years especially when linked to annual objectives for all and related to the reward system. When all associates have this common objective and incentive, companies will produce, deliver and thrive in innovation.