Using Metrics for R&D and Innovation - Innovation MasterClass May 5
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The document discusses metrics for measuring research and development (R&D) and innovation. It begins by listing the top 5 traditional metrics as spending, headcount, percentage of sales from new products, patents, and new products released. However, it notes that metrics need to shift focus more to processes, engagement, and outcomes. Leading indicators that predict outcomes are favored over lagging outputs. Comments discuss measuring innovation enablers, experimentation, impact over time, and qualitative alongside quantitative metrics. Change in metrics over time and impact on capabilities are important.
Using Metrics for R&D and Innovation - Innovation MasterClass May 5
- 1. www.15inno.com 15inno by Stefan Lindegaard at LinkedIn Groups stefanlindegaard@me.com Twitter: @lindegaard Hey! Free books on 15inno.com! Using Metrics for R&D and Innovation
- 2. What should we measure? How should we do it?
- 4. Common understanding on input, process and output Top 5 metrics (Goldsense Group, 2013): 1. R&D spending 2. R&D headcount Both are input metrics, the next three are output metrics
- 5. “Headcount is a key metric for R&D. In operations, the unit of production capacity is generally “a piece of equipment assisted by people.” In R&D, however, the unit of production capacity is generally “people assisted by a piece of equipment.” An R&D organization’s capacity is best measured by its people. Appropriately, these are the top two metrics.” Bradford Goldsense Is spending, headcount really that important? The power of the ecosystems can change this.
- 6. Common understanding on input, process and output Top 5 metrics (Goldsense Group, 2013): 3. % of current sales due to new products/services launched in x years 4. Patent production 5. New products released Too little focus on process metrics?
- 7. Common understanding on input, process and output Much focus on leading versus lagging indicators
- 8. Lagging indicators: Historic, can’t be changed (patents granted, expenses, new revenue) Input, output is fairly easy to identify. Processes are more difficult, but could be more rewarding. Leading indicators: Predictive, can be changed (patents filed, development time spent, # of ideas and ongoing projects) Jimm Feldborg, Director Global Projects
- 9. Leading indicators let you know what to expect. Have two leading indicators for each one lagging. (Doug Wick)
- 11. Number of innovation-related rewards and recognitions Numbers from various feedback mechanisms, showing employee acceptance and understanding of the initiative Results from the innovation self assessment capability maturity framework (survey measuring five levels of maturity related to innovation behavior) Percentage of our budget dedicated to innovation, research, and exploration of emerging technologies Shareholder value created from innovation activities. (Shareholder Value = IT Efficiencies + Business Value provided to the IT customers) # of ideas generated in specific innovation harvesting campaigns # of ideas harvested from campaigns, turned into implementable projects # of Intel patent submissions #Number of white papers published
- 12. 1) Focus on engagement, training and participation of individuals. Get critical mass 2) Shift / add focus on innovation pipeline (active projects by stage, flow of projects, development, launch and kill) 3) Shift / add focus on end goals (ROI, successful products/services, revenue/savings from new launches, optimized processes) Hundreds of potential metrics, but not more than 8-10 Jeff Murphy, former Executive Director
- 13. What should we measure? How should we do it? Why you should NOT pay too much attention to this?
- 15. Faster pace, shrinking window of opportunity, less time for cash cows Driven by global megatrends: faster, more open, more transparent and more connected The future of innovation is open and holistic (go beyond technology and products = business models and services)
- 16. A new paradigm for innovation changes the perspectives and approaches for metrics on research and innovation
- 19. What are good metrics for or good ways to quantify foundational activities / enablers (i.e. databases or knowledge system or proprietary devices that accelerate the development of products for a customer)? Today, we measure usage, users, # of projects it was used in. Klaus Gassenmeier, Givaudan Experimentation is key due to many unknowns
- 20. Ask yourself at management team level: What are our company objectives and how do we best measure them? If you change your company's objectives or measurements later, that's fine. In fact, I would argue that if you're producing charts that nobody is reading or acting on, you're probably measuring the wrong stuff. And if you're not meeting as a team to discuss these metrics and have a regular debate about how you're doing and what needs to change, then I can assure you that you'll never reach your destination. You'll have no idea when you're off course. Mark Suster, GRP Partners
- 21. Using the metrics for R&D is a critical subject. Importantly from the point of view on how the project is doing - "no-go" - "pivot or not pivot" etc. Additionally, as we use these metrics, how is the best way in the evaluation of employees during performance appraisal or bonus purposes? Jim French, Panasonic Reward behaviors as well as outcomes; what metrics can be applied to “smartfailing”?
- 22. How to track the R&D impact during a multi-year time cycle? How to quantify the impact of an R&D activity when the output takes a different form than the original idea but was influenced by it? Both qualitative and quantitative metrics seem to be needed and more importantly assessing R&D based on an indicator of change that R&D brings to the company that needs to innovate continuously could be an idea. Jean-Claude Junqua, Panasonic Change is key - don’t get stuck with fixed metrics; measure impact on overall innovation capabilities in each project?
- 23. Get in touch! www.15inno.com 15inno by Stefan Lindegaard at LinkedIn Groups stefanlindegaard@me.com Twitter: @lindegaard Hey! Free books on 15inno.com! A recent comment on 15inno.com KPI = Kill Potential Innovation