Innovation is one of the most important engines for the growth of the economy and the progress of human civilization. In purely economic terms, it serves as the primary means of productivity growth. A great example of innovation facilitating growth is the creation of Silicon Valley.
Kicking off as an incubator of industry-academia relationship in the 1940s, Silicon Valley has managed to remain highly innovative. Decades of innovation have led to high economic prosperity. Silicon Valley’s home state, California, has a greater GDP than all but four countries across the world.
As technology further immerses itself in human society, innovation has never been more important. Companies are making long-term bets on groundbreaking ideas. But while most organizations often start off being innovative, in some cases, they lose their creative culture because of too much focus on executing a cash-generating business model.
The Roadblocks To Innovative Culture
Three of the biggest challenges in establishing and maintaining an innovative culture within your organization are getting your employees to buy into the fact that a business that is successful today may not be successful tomorrow, hiring people who can think outside the box and measuring the impact of your innovation.
While hiring and employee buy-in may require you to work deeply towards cultural change within your organization, the third challenge can be addressed more easily. If you want to evaluate how creative and useful your ideas are, it also becomes easier to convince your existing employees about the need to constantly innovate.
This short article mentions some tips to measure the impact of your innovation in 2020.
Account For The Modern Forms Of Innovation
During the 19th and 20th centuries, organizations would simply review the success of patents and research on the bottom line to get an idea of how successful their ideas are. Patents and R&D continue to retain immense value for innovation impact, especially for traditional manufacturing firms. But the challenge of measuring innovation impact in the 21st century is the changing nature of innovation.
An elementary step is recognizing the different forms of innovation in the 21st century. Over the past six decades, the economy has undergone a transition from products to services and experiences.
Much of the new value creation and innovation are happening through cutting edge business models and novel services. Therefore, giving these modern methods a fair shake can be very useful for your company.
Diversify Your Innovation Metrics To Include Behavior
Modern economies are service-oriented. The success of service-based innovation or business model innovation often relies on the actions and experiences of consumers. Therefore, including behavioral science metrics can be useful in measuring the impact of innovative customer experiences.
For example, if you have created a new intuitive user interface for your app, you can run a quality appraisal of its performance by the changes it produces in your user’s behavior and preferences.
Integrate Innovation Into Traditional Performance Metrics
While this tip is an extension of point #2, integrating innovation into traditional employee performance metrics such as sales-related KPIs can help in measuring the internal impact of your idea.
You can assess the innovativeness of your team based on initiatives taken rather than just the revenue generated. Metrics such as new ideas generated and insights generated from customer interactions can help measure the delta of innovation within your teams.
Scout For The Right Tools
The process of innovation requires that your employees tap into the creative problem-solving potential of their brain. It also gets unstructured and messy at times. Bringing structure to the process can be done by finding the right tech tools.
An idea software where you can look at ideas, evaluate them as a team, and decide on the execution, can be beneficial. Such software can also help you look at an overall snapshot of your innovations, making it easier to determine what works and what doesn’t.
Compare The Expected And Actual Impact Of The Intangibles
Along with the more complicated behavioral science metrics on customer behavior, you can consider including one simple mechanism for measuring the impact of your innovation – the delta between the expected and actual.
Before launching a new product or service feature, note down the specific feelings and experiences that you want to create for your customers. Once the product or service feature is released, collect feedback, and find out what the actual feelings and experiences of customers are.
Such a simple comparison can be incredibly powerful in helping you understand how useful your creation can be. It answers the question: “Did my innovation create the intended value for my customer?”
Look At The Traditional Metrics From A Different Angle
Investments in innovations within companies tend to stop prematurely because companies often use financial KPIs to measure the success of an idea. Companies make use of revenue from innovative products and services as an important metric. Should you do the same?
You may argue that traditional metrics necessarily don’t apply to modern innovation. However, a creative vision does not come to a grinding halt within organizations because of poor performance on conventional metrics. Rather, it is the poor numbers within a standard time frame that cuts funding short.
Since the impact of innovation may often not be immediate, being too rigid with your target dates can cause you to potentially miss out on a great idea. For this reason, the differentiating element is an appropriate deadline. You can use traditional metrics to partly measure the success of your idea if you keep a long enough time frame.
Innovation Cannot Be Ignored By Organizations
Organizations have realized that the velocity of change in the 21st century is too fast to take the risk of not innovating and getting left behind. Hopefully, these tips will help you measure the impact of your innovation and ensure that your business is geared towards staying ahead of the competition.
But, remember that innovation within an organization is ultimately dependent on its culture, therefore gauging the scope of growth should work in sync with developing a desire to innovate within employees.