Innovation is the key to longevity. Every business that wants to continue or grow needs to embrace innovation.
Take the classic example of Blockbuster and Netflix. When Netflix started making waves in the late 1990s as a home delivery DVD rental company, Blockbuster stuck to its tried and true brick-and-mortar approach.
As Netflix nurtured an innovative tech-minded culture, first by implementing a subscription model and then by adding streaming, it became a veritable entertainment giant and swallowed the market before Blockbuster could catch up with their own home delivery service.
Netflix embraced innovation and Blockbuster did not, and as technology continues to transform businesses and industries on a nearly daily basis, failing to embrace that culture of change could mean missing out on your ideal future.
But how can you make sure you are using your time and money to its fullest potential? You need a reliable way to measure your approach.
We have put together a handy guide to understanding how to maximize your innovation strategy.
Measure Innovation to be More Competitive
Failure is sometimes a fact of life in corporate innovation.
For every great idea, there are ten more that simply will not pan out. Being able to understand and evaluate the benefits of innovation activities is one of several key reasons you need to metrics to follow.
The fear that plagues many corporations when appraising their innovation program is that it hemorrhages money into R&D that will not ultimately pay off.
Having a reliable set of metrics that can weigh the cost of innovation with the eventual benefit will allow decision makers to understand the true impact and keep the corporate strategy on course.Being able to understand and evaluate the benefits of innovation activities is one of several key reasons you need to metrics to follow. Click To Tweet
Your company will have a tangible view of what works and what doesn’t, and can adjust accordingly.
Ultimately, innovation is about staying one step ahead of your competitors, and by measuring the overall success of your program, you can make valuable comparisons with the strategies of the competition.
Not All Innovation is Created Equal
Now that you know that innovation is important, and that measuring it can reap some extremely valuable benefits, what is the next step?
Well, innovation is not painted in just one color – there are actually two types of innovation, each with their own varying degrees of benefit.
The first type, internal innovation, is normally employee-driven, and focuses mainly on changing corporate culture and, to a lesser degree, expanding and improving products and offerings.External innovation is what really helps companies in the long term. Click To Tweet
While this can be useful for budding companies who have yet to solidify their innovation ecosystem, enterprises with more experience often bypass internal innovation in favor of its counterpart.
External innovation, also referred to as open innovation, covers a much wider variety of objectives.
External innovation refers to working with companies outside of your enterprise such as startups or strategic partners to pursue endeavors that will change the market or create a new industry altogether.
It can lead to the development of new technologies or services, and offers more meaningful impact for customers and their needs.
While internal innovation can serve a purpose early on, external innovation is what really helps companies in the long term. This is how enterprises keep ahead of trends, create fruitful partnerships with other companies and expand their overall scope and reach.
What Are Activity Metrics and Why are They Important?
There are two measurable sides to every innovation program – activity metrics and impact metrics.
Activity metrics encompass what your program actually does to develop new innovations.
It includes the number of software vendors contacted, the number of solutions tested, the number of proof-of-concepts (PoCs) run, etc.Throughout the proof-of-concept phase, activity metrics will be an innovation program’s primary means of evaluation. Click To Tweet
Activity metrics basically include whatever the program achieves before implementing new technologies. PoCs are the backbone of external innovation because enterprises need to discover, test and evaluate software vendors to decide how to best meet their innovation needs.
Throughout the proof-of-concept phase, activity metrics will be an innovation program’s primary means of evaluation.
What are Impact Metrics and Why are They Important?
Impact metrics are all about results. What tangible impacts have your innovation programs achieved over a certain period of time?
This is when you start to really see the benefits, and you begin to see a return on your initial investment.
These benefits can be everything from marketing exposure, customer satisfaction, employee retention and, most importantly, revenue.
However, you must consider several sources of revenue, whether it is through sales or through less direct means like optimization.
Long, frustrating processes used to be the price enterprises were forced to pay for innovation.
Now, with the ability to simplify and streamline the proof-of-concept process, companies can save time, energy and resources across the innovation board.
Don’t Forget About Your Competition
Companies with a strong innovation focus can get so focused on their own pursuit, that they lose sight of their competitors.
Nobody does business in a vacuum, and likewise, innovation is never completely isolated.
While you may not have access to the same metrics and figures for your competitors that you are afforded through your own program, there are ways of keeping an eye on their progress.
Following the innovation spending of other enterprises can help you understand how they prioritize innovation in their overall growth strategy and how smartly they spend those innovation dollars.