Innovation management measurement helps companies in understanding the current status of their innovation capabilities and practices. Throughout this control areas of strength and weakness are identified and the organizations get a clue where they have to concentrate on to maximize the future success of their innovation procedures. Furthermore, the measurement of innovation assists firms in fostering an innovation culture within the organization and in spreading the awareness of the importance of innovation. It also discloses the restrictions for creativity and opportunity for innovation. Because of all these arguments it is very important to measure the degree of innovation in the company, also in comparison with other companies. On the other hand, firms have to be careful not to misapply the wrong metrics, because they could threaten innovation and influence thinking in the wrong way.
Historical Development of Innovation Metrics
Innovation has been viewed as an activity on the micro-level for a long time. It was concentrated on individual inventors and firms and therefore, on the related products and production systems. However, in the past few years, there has been a development towards a macro-level view concerning innovation measurement. For example, in the European Union the innovation capabilities of the different countries are measured on the basis of objective economic numbers. There has also been a development from a one-dimensional view of innovation to a multi-dimensional view that considers other innovation indicators such as the different meaning of innovation in service sectors, the innovators’ dependence on the global competitive market and the socio-economic and institutional environment. Generally we can classify the progress of innovation metrics and the related indicators into four generations. The first generation (1950s-60s) focused on input indicators like R&D expenditures and capital. The following generation (1970s-80s) had its core area in the measurement of output indicators such as patents, products and publications. In the third generation (1990s) came along specific innovation indicators like innovation surveys and benchmarking and since the beginning of the new millennium process indicators such as networks, system dynamics and intangibles have played a major role in the diverse metrics.
Innovation Metrics
Diamond model
The Diamond Model is a measurement framework that considers five dimensions for the assessment of the degree of innovation: Strategy, process, organization, linkages and learning. In the assessment of the strategy three areas are being tested. First the model needs to know, whether the company has a well-managed strategic planning process in place, afterwards, whether innovation is incorporated within the entire corporate strategy and ultimately, whether the company has put in place mechanisms that assist the implementation of the corporate strategy. The assessment of the process area considers the robustness and flexibility of the organization's new product development process and the organization's ability to manage its internal processes. In the third area organization is being analyzed, if the structure of the organization allows innovation processes and if the management encourages employees to create and develop new ideas. Concerning the linkages area the model examines the firm's networking ability and the last major area of the Diamond Model explores the organization's commitment and ability to learn from its successes and failures and the willingness to train and develop its employees and to spread these learning to the entire organization. The more distinctive these five areas are as a combination the more innovative is a company.
Innovation Funnel
The Innovation Funnel Framework consists of nine stages in an innovation process. These nine single elements that are part of three major steps form an end to end innovation process. The first major step contains the input factors of the innovation process. In this model they are described as strategic thinking and portfolio management and metrics. The second step is the main part of the process with the single stages research, ideation, insight, targeting, innovation development and market development. In the final step the output of the process is analyzed through the selling numbers. The model suggests a feedback loop from the output step back to the input step as a learning loop to improve future results.