Brixton Ventures Lab stands as the forefront consultancy for corporate innovation in Latin America, collaborating with global organizations to shape their competitive advantages for the next decade. Having executed over 20 innovation programs across diverse sectors and countries, the organization sheds light on the evolution of the regional innovation ecosystem.
Why Measure Innovation?
Measuring innovation is more than a trend; it's a necessity for navigating the dynamic corporate landscape. In an era where organizations strive for continuous improvement, tangible metrics serve as the compass. Brixton Ventures Lab acknowledges the challenge faced by innovation directors and managers in showcasing their teams' results and measuring performance accurately.
The absence of structured measurement systems often compels organizations to resort to metrics ill-suited for innovation's unique nature. The repercussions of not having a robust measurement framework include ineffective efforts, resource wastage, lack of clear mission and vision, and the absence of a sustainable strategy.
How to Measure Innovation: New KPIs Unveiled
Innovation, being a process of experimentation and investment with unpredictable outcomes, demands a tailored approach to measurement. Traditional corporate metrics fall short in capturing the nuances of innovation. The concept of Innovation Accounting, as proposed by Eric Ries, introduces KPIs designed specifically for innovation initiatives. Brixton Ventures Lab suggests three categories of KPIs: Monitoring KPIs focusing on innovation teams and progress, Governance KPIs centered around evidence-based decision-making, and Global KPIs providing a holistic view of innovation investments in a business context.
Establishing KPIs requires a strategic mindset. Leaders should contemplate the ultimate goal of the innovation initiative, determine success factors, and decide on the frequency of measurement based on the initiative's timeline and available resources. However, a pitfall lies in succumbing to "vanity metrics," which merely showcase a positive image without reflecting the actual impact on the business. Differentiating between "vanity metrics" and "actionable metrics" is pivotal for meaningful measurement.
Navigating the Innovation Portfolio: A Dynamic Approach
As organizations embark on multiple innovation projects, managing the resultant portfolio becomes imperative. The dynamic process of portfolio management involves constant evaluation, selection, and prioritization of projects. Metrics for innovation portfolios should assess factors such as customer value, economic value, strategic alignment, market competitiveness, costs, feasibility, and risks. This approach ensures a balanced portfolio aligned with the overall innovation strategy.
Innovation doesn't exist in isolation; it requires integration with operational areas. Communicating results effectively is crucial for garnering support from internal stakeholders. Metrics should be designed with clarity, ensuring that every stakeholder comprehends their significance. Establishing a robust communication plan involves mapping internal and external stakeholders, determining communication frequency, and potentially forming an "Internal Innovation Committee."
The ability to measure innovation effectively empowers organizations to validate hypotheses, generate insights, mitigate risks, simulate environments, validate product claims, and confirm solution desirability, feasibility, and viability. The overarching message is clear – innovation must not only be fostered, but measured and communicated strategically for enduring success.