MIT Sloan Management Review Article on Creating Better Innovation Measurement Practices

For most companies, innovation is a top managerial priority. Many managers look at successful innovators such as Apple Inc. and Google Inc. with envy, wishing their companies could be half as innovative. To boost and benchmark innovation, managers often use quantitative performance indicators.1 Some of these indicators measure innovation as results or outcomes such as sales from new products. Others measure innovation as a process, using metrics such as the number of innovation projects in progress. And some track input measures such as the number of ideas generated, while still others focus on the innovation portfolio, by looking at factors such as the percentage of investments in breakthrough projects versus product line extensions.

Our research on innovation measurement suggests that the key managerial challenge is not identifying metrics — there is no shortage of measures to choose from. Nor should the goal be to find the perfect metric, since that quest is often futile. Rather, the crux of effective innovation measurement is to understand the problem that measurement should solve for the organization and, based on that insight, to design and implement a useful and usable innovation measurement framework appropriate to the organization’s needs.

About the Author

Anders Richtnér is an associate professor at the Stockholm School of Economics (SSE) as well as CEO of SSE Executive Education in Stockholm, Sweden. Anna Brattström is a postdoctoral fellow in the department of business administration at Lund University in Lund, Sweden. Johan Frishammar is a professor of entrepreneurship and innovation at Luleå University of Technology in Luleå, Sweden. Jennie Björk is a researcher and Mats Magnusson is a professor of product innovation engineering at KTH Royal Institute of Technology in Stockholm.

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