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Innovation Performance Measurement: Striking the Right Balance

Grist Limited
September 1, 2004
50 Pages - SKU: GRT1096987

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Innovation Performance Measurement: Striking the Right Balance

Innovation is indisputably one of the most important strategic and operational levers available to managers for creating competitive advantage, regardless of industry sector. Recent studies suggest, though, that there remains a serious disconnect between what firms are hoping for and what they are reaping from their investments in innovation. Conventional approaches to performance measurement, while serving performance-driven firms well in a variety of traditional areas focusing on cost, efficiency and speed, have as yet had little impact in the area of innovation management.

This old management adage has been fuelling the debate on innovation performance measurement for a long time. Although many management practitioners abide by the rule of thumb "that which gets measured gets done", many innovation practitioners justifiably note that innovation by its very definition is intangible and, at least in part, dependent on serendipitous occurrences in the innovation environment. Indeed, the measurement of innovation performance is currently, as it has been for many years, a highly controversial topic. For example, the continuing debate on how much of innovation can be directly and deliberately influenced spills over into the thinking on innovation performance measurement. Traditional approaches to performance measurement typically inform about 'what' has happened but do not address the 'why', leading many managers to view the innovation process as a 'black box' that defies rational managerial analysis.

Innovation performance measurement thus continues to be a problematic management challenge. The purpose of this report is to address the most pertinent of the many questions raised by innovation practitioners and managers today:

• If, indeed, innovation is at least partly driven by serendipitous events, to what extent can it be measured?
• What measurements of innovation are meaningful, that is, what are the measurements that can be acted on?
• What are the assumptions underlying any measure of innovation performance?
• What limitations are there to measurement, both physical and conceptual?
• What are the underlying assumptions that justify the measurement of innovation performance?
• What are the limitations and constraints on any meaningful measure of innovation performance?
• What is the best way to design a measurement system?


Executive summary
• You can’t manage what you don’t measure
• Research findings
• Research methodology
• Report outline

Chapter 1: The case for measuring innovation
performance
• Importance of R&D
• High failure rate
• Best practice

Chapter 2: Why do firms measure what they measure?
• Why measure innovation performance?
• Purposes of measurement

Chapter 3: Nature of innovation measurement
• Different approaches
• Predictability of measures
• Operational effectiveness
• Financial performance measures
• Application of measures

Chapter 4: The impact of measurement schemes on
performance
• Quantitative and qualitative metrics
• R&D and NPD measures

Chapter 5: Frameworks for innovation performance
measurement
• Measurement procedure
• Arthur D. Little’s innovation process model
• Balanced scorecard framework
• Lucent value creation model
• Phenomenological approach to innovation
• Metrics for the control of strategic alliances
• European Commission/Eurostat’s Oslo Manual
• EIRMA framework
• Henley-Incubator innovation ecosystem framework

Chapter 6: Managerial and organisational implications
of innovation performance measurement
• Innovation performance measurement dilemma
• A new way of thinking
• Managerial implications

Chapter 7: Case studies
• Ikanobanken (IKANO Group)
• Innogy
• Royal Mail
• Scipher
• Shell GameChanger

List of figures and tables
• The strategic purpose of innovation performance
measurement
• The purpose of measurements, their importance and the
degree to which they are successful
• Innovation performance measurement clusters according to
the scope and nature of the measurement
• Innovation performance approaches in terms of frequency
of hit and return on investment; progression of approaches
• Rationale, strategic roles and purpose of measurement
• Input-related innovation performance indicators
• Process-related innovation performance indicators
• Output/outcomes-related innovation performance
indicators
• Arthur D. Little innovation process model
• The balanced scorecard for assessing a project
• Henley-Incubator innovation ecosystem framework

Innovation Performance Measurement: Striking the Right Balance

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