Why is measuring innovation so difficult?

by Phil Atherton, on 25 Feb 2020 4 min read


Proving the value of innovation isn’t easy. So we’re starting a conversation about getting better at measuring the work we all do.

How can you prove the value of innovation when it’s so hard to measure? According to our latest findings, businesses consider this their biggest innovation challenge.

There’s no arguing with the fact that businesses recognise the importance of innovation. To be precise, 61% of respondents to PwC’s Innovation Benchmark Report are embracing open innovation to generate new ideas.

Further research found that 84% of executives agree that innovation is vital to growth strategy, yet only 6% of all respondents are satisfied with innovation performance. But why?

It’s highly unlikely that almost every business is failing to come up with fruitful innovative ideas. A more likely explanation is that people don’t know what metrics to use to effectively prove the value of an innovation – therefore, 94% of executives discard its performance.

So, why is innovation so hard to measure?

Let’s take a step back to consider what it is about innovation that makes it so difficult to quantify.

Innovation can have different meanings depending on the organisation, the situation and the person managing it. It also touches many different parts of the business, making it hard to define and even harder to measure.

This inevitably leads to confusion around what the innovation team is for and what they should be focusing on.

Is innovation about coming up with new ideas and products to take to market? Is it about finding ways to be more productive, or refine existing processes? Is it about securing the long-term future for the business or delivering against short-term goals?

Having a clear definition for what innovation means for your business and a practical set of metrics to measure performance by is essential when proving its value.

The problem with current metrics

Despite the sheer amount of data created today and the powerful tools we have on hand to analyse it, the majority of innovators are still using fairly traditional methods to measure their innovation value – such as sales, productivity and access to low-cost resources.

Yes, analysing the percentage of sales from products introduced in the past few years and the number of active projects over a certain period is useful for evaluating results and gaining investment. But it doesn’t give you a complete overview.

Measuring innovation within a company or a project is a lot more complex than that. For instance, how do you measure disruptive innovation? Especially when you create a new market altogether and there isn’t anyone else to compete against.

Another challenge of measuring innovation today is something called a “metrics overload”. Yes, metrics can be effective. However, if you have too many trying to measure every small criterion, you can easily miss the heart of the matter and struggle to feel satisfied with your approach to measuring innovation.

Having too many metrics can lead to an overactive emphasis on measuring, rather than creating.

Measuring what matters

Businesses can get stuck in measuring the wrong stuff. If you need new products or services to position yourself as a market leader, then you should measure progress towards achieving those things.

Your metrics should align with your strategy, not the other way around.
Rob Sheffield, Director of Bluegreen Learning

The bottom line is, you can spend hours creating complex dashboards to try and justify the worth of innovation, but they must be clear, otherwise, they’re rendered worthless.

If a project takes years to realise a benefit, incremental value delivery could be one potential solution. Creating MVPs (minimum viable product) and launching, testing and measuring results will enable you to demonstrate value more frequently.

Another final thing to think about when measuring innovation is your customers. According to PwC’s 2017 Innovation Benchmark report, 54% of companies say having a customer engagement strategy helps define innovation from early creation and 35% of companies state customers as their most important innovation partners.

Running a soft launch and collating customer feedback off the back of can give you quantifiable results. You can use the information presented to improve ideas and ensure you’re heading in the right direction.

Metrics, metrics, metrics

We’ve spoken a lot about metrics in this article without giving any precise examples. That’s because we believe there isn’t a one-size-fits-all approach you can simply replicate.

The latest ISO for Innovation Management notes the importance of proper measurement of innovation:

“The innovation performance of an organisation is dependent on processes that are operating towards a common purpose. Measuring the interaction between elements develops the understanding of their interrelation. Managing these elements as a system, improves organisational learning, effectiveness, and efficiency."

Our solution is to start a conversation about getting better at measuring innovation – bringing industry experts in to share their experience in the hopes you’ll find something of value to your business and add to your innovation strategy and practice.

Got something to say about measuring innovation? Talk to us on Twitter, LinkedIn or Facebook.

Topics:Innovation Management