Successful businesses have attained their goals and objectives primarily because they have concrete metrics to measure where they are now and what exactly they need to improve in their company. This holds true to innovation as well. By knowing how to measure innovation in your business, you could measure the efficiency of your company processes and initiate sustainability in the business.
Traditional methods in measuring innovation have entailed counting defects in the company, measuring costs, and tracking cycle times. However, this conventional method can not be effective in today's business environment. As companies become more familiar with business processes, several institutions have ever come up with several methods in measuring innovation.
One of the best examples of business management strategies is Six Sigma, which has risen in popularity and has been used by companies all over the world for a variety of applications. This has been initially developed and implemented by Motorola, which is able to improve the quality output of business processes through pinpointing the cause of errors and looking for ways to remove them. This exercises quality management methods such as statistical methods. This method can then be able to create an infrastructure where it identifies the experts who are able to implement this effectively in the company.
Additionally, the National Endowment for Science, Technology, and the Arts (NESTA) will be creating an index that has the ability to provide an accurate image of the sectors in the market in which research and development is not a big factor. The innovation index that NESTA is developing is due in 2010, which intends to build a roadmap of the country's economy, including how to measure the impact of innovation on all sectors of the industry.
To simplify, innovation has five primary factors for measurement. These factors look at the core processes in the company. These involve performance, quality, timing, finances, and development costs.
In measuring performance, you should consider what the company can be able to do in providing solutions for its customers and clients. This factor in the requirements is needed to complete service. This is also needed in comparing the performance of the company to that of its competitors. For quality, businesses can count the number of defects as well as delays. In knowing this, companies can further increase or moderate the quality of the service that they deliver.
Timing is also important, as it clearly looks at how fast the company can access the market. In order to measure this, the company should look at the speed of internal development or cycle time as well as its speed in delivering this to the client, which is known as external market timing.
In terms of measuring finances, companies factor in revenues, costs incurred, and margins. By knowing how much and when companies can expect its revenues and how much money they can expect to come in to the company from their projects, they could look at how profitable the business really is in the industry. In this regard as well, businesses should look at development costs for specific projects and if these would be profitable to the company. Knowing how to measure innovation greatly assists in this endeavor as well.