Wednesday, September 24, 2008

New Measures for Innovation in the era of Customer Delight and Less Junk


If Innovation is so important then why don't businesses pay more attention to getting it right. Afterall, the landfills are full of junk that people discarded long before those products reached their end of useful life. There are plenty of unwanted or underused services to go around as well.

So, why does this happen? Great question. I liken it to happiness. People know what happiness is by comparison to other things that make them happy but there isn't great and widespread understanding of what happiness actually means let alone how to achieve and maintain it. Imagine having a happiness scorecard for your personal life.

Okay now back to the business world. Like happiness, the word innovation is overused and not well understood especially when businesses and technology have evolved past the current management and business performance measurement systems. Sure we can crank out the financials and show investors the annual report but what about the balance sheet of innovation? What does that look like? How often is it refreshed? How well are the measures integrated across the organization? What about customer, partner, and culture measures?

In the "Information Right Now" age, bad products don't stand much of a chance. Customers in a connected world have access to reviews, peers, family, and trusted advisors to steer them toward products that delight. Also, it is more common than not today that no one company provides the customer the entire experience. There is a complex web interwoven between interdependent companies that all share in the spoils when a customer is delighted. This will increasingly be the case as companies focus on what is core and critical and partner with others in the ecosystem that do the same. If there were not already enought market pressures to force better innovation practices then the environmental impact could be one to take notice of as well. Think of your future customers' landfill quota and hope that your junk doesn't add to it.

We need new thinking in our innovation practices. It is time for better measures for things that have traditionally been accepted as invisible, ignored, or taken for granted.

See also my related blog post in June Innovation Checklist – 10 Questions for a 15 minute checkup that recommended having an innovation scorecard.

Here are a few internal and external measure that come to mind for that innovation scorecard.

Internal measures
Purpose Alignment
Process Alignment
Discipline in Execution
Results Measurement
Exception Processing
Culture Engagement
Authenticity

External measures
Customer Delight
Channel Performance
Ecosystem Relevance
Macrogetitness

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Internal measures
Purpose Alignment
Portfolio management of innovative ideas. Show stage of ideas/businesses and rank according to current potential and current risk.

Process Alignment
Every employee should be on boarded, trained and well versed in how ideas mature and flow within the company. This is a binary measure at an individual level and at an org level a percentage complete.

Discipline in Execution
Evidence that the Vetting process has stopped some ideas from maturing. If you pass everything through your net is too narrow or you lack discipline. If you pass nothing you may have a left brain right brain conflict. Better if there is a hook to pass them through at an appropriate time e.g. upon a certain qualifying event. Over time this metric is balanced against execution gaps and resource mix.

Measure Resource Mix
Build, buy, partner to maximize stakeholders, leverage, skills, and capacity. Not all ideas come from inside your building(s). Measure should be a discrete number and stage and performance of relationship.

Execution Gaps
Are there any? Are they persistent? Track gaps by innovation area. Persistent gaps reduce the probability of success.

Results Measurement
Removal from market product or services that failed to delight (this could lead to course correction through early failure). Measure failures v. failures that led to further innovation. Capture and socialize learnings with other and future teams.

Exception Processing
The number of times somebody in the company approached the Innovation Ombudsman. What? You don’t have an Innovation Ombudsman. How serious can you possibly be. Funny thing is companies have safety officers and the like but lack a goto person for all matters innovation.

Authenticity
Measure whether the requisite levels of investment internally and externally for launch of new products is in place for products and services to ensure flight. If there isn’t a holistic plan that employs contributions from multiple disciplines/perspectives (wisdom of crowds) that is backed by real functional underpinnings then you score lower.

Culture Engagement
A metric to cover internal authentic dialogue on all matters innovation or lack thereof. Give people a scoring system to rate communications and meeting effectiveness. Low – that was a waste of time, distracting noise. High – that furthered our collective cause or captured useful information from a potential customer, etc.

Make visible the worldwide strategic operating plan appropriately messaged to all levels of the company. This is binary “yes/no” available to personnel by department with a percentage to indicate people that have read it.

External measures
Customer Delight
Measure or Evidence of customer delight on new products or services (similar to Net Promoter Score) – compare to previous product or service experience.

Voice of the Customer
Evidence that voice of the customer and other market research was/is factored into the product development and launch considerations.

Win / Loss Reports
Evidence that win/loss data is factored back into product and business development. Multiplier score for losses that impact future wins.

Financial Performance
Revenue generation from new products and services.

Channel Performance
Measure for strategic fit, state of readiness, and results. Results are comprised ideally of customer exposure, conversion, and retention.

Ecosystem Relevance
Evidence of successful interdependencies with others in the ecosystem that complete the compelling customer experience. Measure by level of “experience integration” complete and engagement stage.

Evangelism Index
Track what others (analysts, media, etc.) are saying about your company, products, and services. Could be hostile, neutral, or friendly.

Macrogetitness - from "Macro Get It 'Ness"
Evidence that macro trends were factored into the development and launch of the product or service.

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New thinking needs to start with dialogue about meaningful measures. New tools and processes to measure innovation progress will evolve to eventually catch up. Although to make that right there is an inherent dependency upon innovation. This might take a while; no wonder this hasn't been done effectively before! See related quote "Sometime you have to slow down in order to speed up" on Business of Innovation Quotes I Like Very Much .

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