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Metrics and Open Innovation: What Should We Measure?

March 26, 2013 Open Innovation 3 Comments

This is a difficult topic. There is definitely some in the adage of “if you can’t measure it, you can’t manage it”. However, I have seen too many examples in which smart people get side-tracked on what really matters – the output – as they try to develop metrics in order to satisfy executives further up in the system.

The development of metrics for innovation in general has been a major topic for more than two decades. Yet there is no clear guidance on how companies should approach this in a way that makes it possible to measure internally let alone across competitors and/or different industries.

One reason is that larger companies have several business units with different kinds of products and services. Even with the same company, it can feel like comparing apples and oranges. We also need to remind ourselves that innovation has lots of unknowns and intangibles and you cannot afford to loose the needed flexibility in order to meet some specific metric parameters.

Furthermore, it also takes getting enough data to show trends and patterns. In these times of fast change, there is a good chance that the processes you set out to measure will change significantly over time making it more difficult to actually use this input for measuring purposes.

As companies are still developing their open innovation capabilities, I think the main focus should be on measuring progress in what you do. Perhaps you can find some inspiration in this:

Organizational maturity: How well is your organization adapting to this new paradigm shift? This can be measured by the use of simple surveys among the employees and by cross-checking with external partners.

Ecosystem happiness: Your partners are important for innovation success so you need to develop metrics that track the progress within an ecosystem. Perhaps there should be an ecosystem or partner happiness index. Yes, it sounds corny, but there might be something in this idea.

Thought leadership / branding of capabilities: How others view your open innovation capabilities is critical. There is lots of experience on tracking marketing and PR efforts that can be relevant for getting a better understanding on this. A few potential metrics could be number of visits to the destination site, followers on Twitter, discussions in communities and mentions in articles.

Innovation output: Metrics on this can provide an overview on how innovation projects with a key external element perform compared with projects having a high degree of internal input.

I also found the below slide from an older presentation on Nokia’s open innovation efforts. It builds on some of Chesbrough’s earlier work. You can also find more inspiration in the below resources.

Resources:

Here you can find some resources on this topic. It is a collection of 15inno blog posts and other relevant articles, blog posts or websites. Please note that some of the 15inno posts might need an update, but they are still worth looking into. The comments are also helpful in giving an additional perspective.

15inno blog posts

Innovation Metrics: Input From Intel, Sara Lee, Grundfos and J&J

What metrics should we apply for open innovation? (discussion)

Increasing the Innovation Productivity

How to Measure Open Innovation Value – Part 1

How to Measure Open Innovation Value – Part 2

Other resources:

Measuring the Value of Open Innovation: Metrics, NPV and ROI (subscription required)

P&G: New Goals for C+D to Accelerate Our Innovation

Metrics for Open Innovation – “what’s my open innovation quotient”

The Problems with Metrics

Innovation Metrics – Part 1

Innovation Metrics – Part 2

Innovation Metrics – Part 3

What are your thoughts on this? Can you share other good resources on metrics for (open) innovation?

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Currently there are "3 comments" on this Article:

  1. Val says:

    Good topic, and thank you for bringing this topic up!

    I believe the lack of a common language is a high hurdle, that must be surmounted, before a common knowledge management architecture can be put in place. In turn, using the common knowledge management architecture, correlations between architectural elements and throughput must be recognized. Then once correlations are understood, we can address, the effect-cause-effect relationships between the knowledge management architecture, throughput, and specific metrics leading to the KPIs of open innovation.

  2. Sussland says:

    Lord Kelvin said "what you do not measure you do not know". I agree “if you can’t measure it, you can’t manage it”. The issue is that there are no generally accepted measures for the intangible resources – like the innovation capabilities, the talents, the vision & alertness. I offer original metrics in my "The Innovative Enterprise" Create Space 2013, now available on the main on-line bookstores. But, I believe that before getting to the metrics one has to understand pretty well the construct of the management system. To that effect, my aforementioned book presents a comprehensive and congenial Open Management Platform. Kind regards, Willy

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