Innovation Activity KPIs: Building Bridges across Organization
“What are you doing the whole day?” or “Does that really help the company to move forward?”. The moment your company starts introducing innovation-driven activities, there will always be employees who question the purpose or the effectiveness of these strategies. Often, they will claim that innovation cannot really be “seen or measured” and, as a result, it’s a waste of time and money. Moreover, innovation activity is often treated as a separate branch of business — employees don’t see it as a fully integrated, strategically meaningful essential. The easiest way to change it is to introduce innovation KPIs targeting the company’s staff across the board.
What do Activity KPIs show?
There are different types of innovation KPIs. Some focus on impact, others on the process, financial output of innovation, etc. In this article, I want to introduce activity metrics.
These KPIs measure the “inputs” into the innovation process, demonstrate what level of innovation activity is going on in the company and display how wide the range of innovation activities is. (For clarification, in this article we consider innovation activities to be any activities organizations perform to design and implement their innovation strategy.)
Activity metrics are useful as short- to mid-term innovation KPIs because they can be measured straight away, whereas other KPIs often require more time to accumulate fundamental data for their measurement. Specifically, if you have just established a new innovation unit or team, activity metrics, which are not directly linked to an output, are the only way to assess the work of such teams at an early stage.
Why does it make sense to implement cross-departmental activity KPIs?
The cross-departmental work on innovation — and attaching relevant activity KPIs to this work — can form a common understanding of innovation inside the organization. This has a potential to build bridges between different business units inside the company. Furthermore, it makes innovation become a more collective goal rather than just a job of one, specific business unit.
Activity KPIs are not only relevant when demonstrating innovation-related activities to your management board. They can also target the staff across the board and make the whole organization be responsible for innovation. As a result, innovation activity KPIs can have a huge impact on your corporate culture alongside innovation strategy implementation.
How can innovation activity KPIs look like?
Innovation activity KPIs, whenever done right, can be seen as “innovation metrics of the organization” that show the innovation-related engagement of the entire staff, regardless of their position. Some examples of the cross-departmental activity KPIs include:
• number of employees involved in the next internal innovation process
• number of employees trained in “lean startup” methodology
• numbers of ideas submitted per unit/employee
• number of active users of the innovation intranet
• number of innovation projects within the company
These examples help to get a feeling of how many innovation activities are going on in your organization and not only inside the innovation unit. Because these are metrics that can be attached to any position inside the company, it is a great tool to make them a goal of the whole organization — not only selected employees. This gives the opportunity for an organization to introduce an organization-wide innovation focus. By making everyone responsible for innovation, we have the potential to change the company’s culture and promote digital transformation.
If we start to measure our activities, we should also measure our failures.
“Failure is a part of innovation, perhaps the most important part.” (Curt Richardson). If a company decided to move forward in terms of innovation, we also have to get rid of the idea that every new path we go, every idea we develop or every product we create will become a success. Like Albert Einstein said, “Anyone who has never made a mistake has never tried something new.” Because of that mindset, we should also establish KPIs which show our failures, for example:
• failure rate of ideas
• failure rate of products
• number of failed innovation activities inside the business unit
• number of failed pilot projects with external parties (e.g. startups).
But be careful, if we start to measure our failures, it is necessary that there is the required culture in the company to treat them as a learning tool and embrace their impact. In the field of innovation, it is important to accept failures as the unpredictable and unavoidable part of experimenting. And perhaps these failure KPIs will change the way employees comprehend and accept that failure is a growth mechanism for a long-term innovation success.
There is no golden rule how to measure your innovation activities. The KPIs will differ between organizations depending on cultural norms, unique needs, industries etc. You should be aware that KPIs are not only there to achieve financial control, but can also drive the behavior of employees as well as create a collective understanding for innovation in a company. Because if your staff does not work towards the same goals, innovation will always be seen as a constraint rather than as a great opportunity.
