Measuring Innovation part 1: Frequently Used Indicators

http://www.innovationmanagement.se/2013/02/15/measuring-innovation-part-1-frequently-used-indicators/?goback=%2Egde_1817279_member_214551365  

One of the most common questions people ask me is how I measure innovation when conducting my research. The question echoes an underlying concern about how innovation can be captured and adequately measured. In this article I delineate the most frequently used innovation indicators, their strengths, and their drawbacks.

PUBLISHED: FEBRUARY 15, 2013
Written by Leif Denti

This article is the first part of a two part series on how to measure innovation in organizations. But let’s make it clear from the beginning. It is not easy to measure innovation since virtually all indicators risk missing some aspects of the process. For instance, patents or patent applications indicate some kind of technological progress but patents are seldom transformed into tangible products. In fact it looks bad for patents. 90 to 95 percent of all patents lack any market relevance and 99 percent fail to bring any profit to the firm (Stevens & Burley, 1997). Still, patenting is often necessary for many firms to keep their competitive advantage so clearly patents indicate something about the innovativeness of a firm. What about financial figures such as revenue? These risk being too broad since many other influences affect revenue besides innovation, including luck.

Below I summarize the most frequently used measures of innovation including their main advantages and drawbacks. For better clarity I divide them into three categories. Product/technology measures, financial measures, and subjective measures.

Product/technology measures

These indicators measure aspects of the innovation process which have the distal goal of transforming new ideas and technology into tangible products (goods or services).

Measure	Example study	Main advantage	Main drawback
New products or product improvements	Elenkov & Manev (2009)	Measures actual implementation	All products are not guaranteed to succeed
Patents or patent applications	Jung et al. (2008)	Measures technological progress	Patents are seldom realized
Patent citations	Makri & Scandura (2010)	Measures importance of patents	Patents may be self-cited
Invention disclosures or suggestions	Axtell et al. (2000)	Measures rate of idea generation	Ideas are seldom realized
Process innovations	West et al. (2003)	Measures improvements in processes and methods	Too much focus on processes is the ‘innovators dilemma’

Financial/market measures

These indicators measure aspects of the financial performance of an organization. Mainly in relationship to R&D spending and sales of new products (goods or services).

Measure	Example study	Main advantage	Main drawback
Ratio of sales of new products to total sales	Czarnitzki & Kraft (2004)	Indicator of success on market	Very broad, other factors confounds the measure
Ratio of sales of new products to R&D expenditures	Gumusluoglu & Ilsev (2009)	Indicator of R&D efficiency	Difficult to establish a valid baseline
Total R&D spending	García-Morales et al. (2008)	Easy to obtain	Does not indicate innovation efficiency
Number of employees in R&D	García-Morales et al. (2008)	Easy to obtain	Does not indicate innovation efficiency
New markets entered	Elenkov & Manev (2009)	Indicator of radical innovation	Roughly 60 percent of new products succeed

Subjective measures

Although the indicators above are among the most common when measuring innovation in firms, many of the activities that can be characterized as innovative risk being overlooked if innovation is measured solely using the broad searchlight of these quantitative measures. Activities like these can be labeled ‘dark innovation’ (Martin, 2012).  Examples include activities that are incremental (e.g., improvements in quality), involve little formal R&D (e.g. the concept of ‘skunk work’), and is seldom patented. One method to capture ‘dark innovation’ is to use subjective assessments.

Measure	Example study	Main advantage	Main drawback
Innovative work behavior (IWB)	De Jong & Den Hartog (2010)	Flexible, can measure any innovation activity	IWB’s does not unequivocally lead to tangible outcomes
Team innovativeness	Hurley & Hult (1998)	Flexible, can measure any innovation activity	Low correlations with number of implemented innovations
Organizational innovation	Chen et al. (2006)	Holistic assessment of the organization	Difficult to establish a valid baseline

Selection of measure is highly specific to the organization and depends on a number of factors. The relevance of indicators varies with technological domain and also depends on the specific product offering of the firm. Moreover, R&D functions of organizations may differ in degree of formalization which affects the degree to which ‘dark innovation’ takes place.

In my research which primarily concerns the innovation of individuals and teams in industrial (mainly automotive) R&D environments we have chosen a combination of quantitative indicators of innovation and subjective assessments of individuals’ innovative behaviors. This method covers outcomes of innovation as well as ‘dark innovation’ activities. In my next article we will look more closely at the elusive nature of ‘dark innovation’, as well as subjective assessments of innovation including what they measure and how they correlate with tangible outcomes.

By Leif Denti

Inovação se transforma em processo sem fronteiras e demanda adoção de novas metodologias nas empresas

(fonte AMCHAM SP)
— registrado em: Propriedade Intelectual
29/04/2011 16:00

A inovação se transformou em um processo sem fronteiras, exigindo que as companhias apostem em novos métodos de trabalho e na articulação de competências internas e externas. É o que avalia José Paulo Silveira, diretor associado da consultoria Macroplan - Prospectiva, Estratégia & Gestão.

Segundo ele, os avanços tecnológicos, a movimentação de classes sociais e as tendências de consumo no mercado globalizado demandam alterações nos procedimentos envolvidos para transformar ideias em fins produtivos.

“As empresas, no que diz respeito à gestão da inovação e à condução de pesquisa e desenvolvimento (P&D), devem ter atualmente a capacidade efetiva de combinar inteligência interna e externa, mediante a prospecção de oportunidades não somente entre os colaboradores, mas em outras empresas, outros setores e países, através do diálogo com clientes e parceiros. Até então, a visão era de dentro das companhias”, disse Silveira, que participou nesta sexta-feira (29/04) do comitê de Inovação da Amcham-São Paulo.

Liderança ampliada

Diante desse cenário, o papel desempenhado pelos líderes de inovação nas organizações torna-se mais complexo, destacou o especialista, que foi secretário de Planejamento e Investimentos estratégicos do Ministério do Planejamento e superintendente do Centro de Pesquisa e Desenvolvimento da Petrobras.

“Eles passam a atuar mais como empresários do que como chefes de laboratórios porque precisam ter uma visão gerencial ampliada”, comentou. Esses gestores devem reunir habilidades de comunicação para promover parcerias, captar fontes de recursos externas e, principalmente, desenvolver talentos.

Para Silveira, o caráter estrategista das áreas de inovação corporativa tende a ser cada vez mais valorizado. Os centros de P&D e inovação devem ser vistos como unidades de resultados e não de custos. Dessa forma, os líderes têm de saber apresentar adequadamente os business cases, isto é, as possibilidades de ganhos e os riscos embutidos nos projetos aos tomadores de decisão.

“A inovação representa risco, isso é indiscutível, mas há maneiras de mitigar, controlar e dosar”, disse, referindo-se a possibilidade de criação de carteiras de inovação, a exemplo do que se pratica no mercado financeiro com as carteiras de investimentos, onde se faz o balanceamento dos riscos dos ativos.

Exemplo da Shell

A Shell, empresa que se destaca no mercado de petróleo, conforme o consultor, representa um exemplo mundial nas atividades corportrativas de inovação. Ela possui um grupo específico para capturar ideias composto por 25 profissionais e recebe investimentos da ordem de US$ 40 milhões por ano.  Cerca de 10% das ideias captadas são conduzidas em negócios, índice considerado elevado diante do percentual médio de 2 % de aproveitamento.

Na Shell, parte das ideias que foram aprovadas e não chegaram a ser incorporadas pela própria empresa foram destinadas ao Shell Technology Venture, que gere fundos de investimentos. “Outras empresas passaram a desenvolver os projetos, sendo parte delas fornecedoras, ou seja, houve apropriação indireta de valor.”

Foco nas pessoas

O gerente de Inovação da Itautec, Marcio Domene, e o consultor de Tecnologia do departamento de Inovação Tecnológica da Siemens, Jefferson Marcos Alencourt Pellissari, defendem que a inovação deve estar clara na cultura empresarial, proporcionando ambiente favorável para a troca de experiências e criações.

“As pessoas precisam saber que inovação não é somente aplicada a produtos, mas também a processos internos que podem nem estar aparentes ao público, mas que ampliam os resultados da companhia. Os gestores precisam disseminar esse assunto, discutir sobre patentes”, afirmou Domene.

Para Pellissari, cabe às empresas fazer a avaliação contínua dos talentos e ter uma política de reconhecimento de boas ideias, com oferta de prêmios como remuneração e também a valorização moral, como a divulgação dos nomes e respectivos projetos a toda organização.

Por: Daniela Rocha
** A reprodução deste conteúdo é permitida desde que citada a fonte Amcham.

BOLT - innovation

http://www.b-mc2.com/2012/12/06/cooperation-essential-for-innovation/

[...]
BOLT drives cooperation and motivation through communication and insight. If we can change the way we communicate, we will change the way we cooperate, if we reach higher levels of insight into what needs to be accomplished the structure will adapt, there is no structure, by itself, which can result in delivering higher levels of insight.

What could you expect if communication, insight, cooperation and motivation become the core of your organization? (Green arrows) First, leaders can harness the collective intelligence of their organization when formulating the strategy. When the organization is involved at some level of the formulation, cooperation and motivation grow, and you can expect both innovation to improve and execution to speed up.

When everything will be said and done, BOLT’s main contribution will be the realization that Culture and Structure are irrelevant to achieve higher levels of cooperation and motivation. To succeed, leaders such as Tim Cook or Steve Ballmer, and their organization as a whole, need to focus on the way we communicate and raise, by all means possible, the level of insight into what is being accomplished.
[...]