Over the past few weeks I have written about ten different innovation metrics. While innovation is complex, and there is no single secret to success, the most powerful lever available to the Chief Innovation Officer, however, may be the measure, analyze and act cycle. Innovation thrives on clarity and a good measurement system can generate insight into what is driving results.
To date, in our exploration of innovation metrics and measures we have looked at inputs, predictive measures, ratios, and percentages. If we want to report on things that senior executives really care about, then we need to talk in terms of absolute dollars of output. Tracking incremental revenue and net operating profit from innovation is the best way to shine a light on the benefits of new products
Our continued exploration of innovation metrics brings us to a classic that has been widely adopted by leading organizations to measure the effectiveness and productivity of their investments in innovation. The innovation vitality index is most often calculated as the percentage of gross revenue generated from products that have been launched in the past three years. In its pure form it measures the turnover of the firm’s product portfolio to ensure that it is continually being refreshed.