Stefan Lindegaard asks...
What metrics should we apply for open innovation?
I hear more and more requests on how to apply metrics to open innovation.
Personally, I do not really believe in metrics. The innovation community (companies, consultants and academics) has tried this for the last 20 years on innovation in general, but no success.
I agree that companies need some metrics to evaluate and hopefully convince executives that open innovation work, but they need to be careful not to turn this into too much of an issue. It is just so difficult getting this right and the efforts spend trying to get this right can be used in other ways.
What kind of metrics should we focus on? What works? What metrics can we compare across companies / industries?
Anything worth doing is worth measuring, but as I see it, Innovation is as about as hard to measure as anything. It's more a process, than a destination. It's like good management, it's measured in the results. Agree?
Hi Stefan – I disagree, metrics can be useful. Having said that, I'm not a big fan of measuring everything that moves in order to justify what you're doing and cover your back. What is useful is what guides and informs your decisions, and tells you what's likely to happen in the future.
Kevin
Innovation in its entirety can't be measured. However, the steps to achieve innovation are measurable just like any project. Completion of tasks area measurable. The conglomeration of all those tasks and the outputs related to them comprise innovation.
Innovation is a journey. And throughout the journey, we can measure what's been achieved along the way.
Kevin and Ben, we can agree on this. Can you give any specifics on what to measure? Your backgrounds might enable you to do so.
Stefan – one example is the predicted value of your new product portfolio, and how close that comes to the strategic goal of revenue you need to deliver from innovation. You can measure the contribution OI makes to that goal, and judge whether more resources on OI/more collaborations can deliver the goal faster or beat it. In my view the most valuable metrics are those that influence decision making. If they don't help your decisions, you're either justifying your existence (occasionally necessary) or wasting your time. Kevin
Innovation itself is probably not tangible enough to be measured, but the process of open innovation needs to have some metrics, targets and benchmarks, no? How else can a company or director ascertain the success of the process and his/her management of absorbing external knowledge/information/experience?
I'd say one of the obvious metrics is the ratio of ideas submitted to materialized projects (over a duration that matches the industry and lifecycle of product development in that industry). What do you think?
As an overall metric for the "implementation strength" I'd completely agree. But I'm sure that there are tons of companies where the CEO has three ideas, all of them are implemented, but is this company open in their innovation processes? (did I understand you right?)
Everything can be measured, the question is if it reflects the things you want to know the proper way, what you measure is what you get remember.
But as open innovation is a new paradigm, new measures need to be developed and tested. I've talked to several high-tech SMEs about open innovation. A few measures i used is the size and type of network, (who are you collaborating with and how many) another is the balance between exploitative and explorative innovation, one company deliberately kept a 25/75 balance, and actively steering their innovation portfolio on it. Another measure was aligning the company's OI mindset with their innovation strategy. And so on
I'd agree with many of the comments above that simplicity rules when trying to measure open innovation. For us, it's going to be a very simple goal statement of performing x number of OI-based initiatives this year – which is pretty easy to measure against.
Now, how do we measure what is an "OI-based initiative"? Either the idea for a new offering needs to come from an external source, or the execution (productization) of the idea needs to happen externally. (And yes, we do have goals for both) We are not yet focusing on revenue / profits of OI initiatives as we continue to build out this organizational capability – but, I have no doubt that this will come.
We are trying to measure the number of product offerings that have an OI component; where we define OI as where we collaborate with a third party in the use of their idea and/or technology in the development of our product. This is not easy as we do not include instances where we are using or buying something off the shelf. We too are not yet focusing on revenue / profits of OI initiatives as we continue to build out this organizational capability.