How to measure innovation within a company?
Innovation in business
Innovation represents the improvements that can be made to something existing or, on the contrary, revolutionize by creating the non-existent.
Let's start by defining innovation.
The degree of innovation within a company is a factor of its attractiveness. Continuous innovation creates customer loyalty and opens doors to new markets.
First, we will try to categorize your company in order to know you better.
Then, we will look at the different degrees of innovation that exist in a company.
Types of innovative companies
Three categories exist to classify the degree of innovation within a company. To know in which typology your company falls, you need to analyze your Business Model (BM) and your value proposition and customer segmentation in place.
Their innovations are based on an already created product/service that they evolve with more or less significant improvements.
These are companies that innovate by constantly questioning themselves. The improvements and innovations are made on their products/services, but also on their Business Model, their strategies and their management.
The character of revolutionary companies is based on their ability to create an innovation that opens them up to a blue ocean. They invent a product or a service by responding to a need that did not previously exist. This basic innovation allowed them to develop and build their turnover on it.
The units of measurement of innovations
The units of measurement of innovations
To measure the degree of innovation in your company, you need to analyze the existing situation over a period of at least one year. You will base your analysis on four, non-exhaustive, factors.
The degree of innovation management
To innovate, you have to know how to get out of your comfort zone, and that means the way you go about finding new projects.
Are you still old school or completely open to change?
Your answer to this question will already tell you how innovative you are. The more open you are to experimenting with new management techniques and idea creation, the more likely you are to find innovative projects.
How do you do it?
To find a new idea, you can start with techniques you traditionally use like brainstorming. But, when searching for ideas, you will reach a limit.
To make your team think outside the box, don't hesitate to use other lesser-known methods of idea generation. For example, design thinking, brain writing, mind mapping or focus groups. By trying new techniques, you will diversify your points of view and by extension your vision of what exists.
Finding your next step for improvement will also require questioning. A company that is able to identify its flaws quickly already has a high degree of innovation.
How to do it?
To succeed in changing your management style, you must first tackle your strategy and determine what you want to change, develop or eliminate. This will be a first starting point.
The number of projects based on an innovation
The second factor to examine must be driven by an analysis of the existing.
You need to count how many of your projects are based on an improvement, a reinvention or an invention. Some companies do not innovate and their business is based on a product/service that does not move from one year to the next, so their degree of innovation is not high.
On the other hand, other companies create new products/services, improve existing products/services several times a month or a year. You should base your analysis on these projects and determine to what degree you are an innovative company.
The number of patent filings
The number of patent filings is the most telling factor of your degree of innovation, the more you file, the more innovative you are. The patent is by default the universal measure of innovation.
The impact of innovation on the market
How have your products/services improved, or even revolutionized, the lives of your customers? How many of your prospects have become customers following the launch of one of your innovations? How many of your customers have become loyal thanks to these improvements?
These are questions that will guide your analysis. The impact you have on society and its consumption are impact indicators. It represents the second measurement factor. Your market and your customers will help you make the determination of success.
Your company's turnover
Finally, your turnover is intimately linked to your innovation and its success in the market, so it is the third indicator in your innovation measurement.
Rankings on business innovation
The process of measuring innovation is done internally, to allow you to position yourself and reflect on your strategy. But there are organizations that analyze with their own factors a list of companies with a high degree of innovation, for example on an annual basis.
The main factors are:
the quality of patents filed
the recognition of intellectual property at the international level
the unique value of the innovation developed
the commercial success of the innovation
the rate of return on the innovation
the turnover of the company
The most famous companies for this kind of ranking are : Thomson Reuters, Forbes, Boston Consulting Group and Fast Company.
You now have all the information that will help you start an innovation measurement process within your company.