Evolution and speed measures for innovation

I keep hearing “becoming more nimble“, “quickly responding to customer needs with ideas”, “rapid prototyping” that inherently speak of a speed metaphor in innovation. But what if we were proceeding in the wrong direction but very fast. An independent speed measure without looking at the evolution direction is meaningless and risky from an investment perspective. Very similar to running a project that is on time, under budget but for the wrong requirements.

It would be useful to look at the evolution within a space as ideas get developed using different methods.

For speed of course the measures will have some form of time in the denominator like

  1. Ideas per month per area
  2. Prototypes completed per month per technology
  3. Investments per year per portfolio

These can be plotted easily for comparison of speed across a time frame.

But what about the direction, here I feel directly tying business alignment on longer term goals and strategy comes in. A simple evolution potential is a web plot touching multiple different evolution directions usually within a single portfolio or in some cases many portfolio. It is a relative figure that gets plotted across the dimensions comparing against the maximum possible limit or an ideality (usually a scientific limit, like speed of light,  mobile internet reach, maximum load etc or the Ideal Final result we talk in TRIZ). All the axes are equidistant and same scale as the values are normalized as below

Normalized plot value ={Actual value – minimum need} / {Maximum/Ideal value – minimum need}

For example dimensions of a CRM system evolution you may have

  1. Communication / engagement frequency
  2. Revenue per sales staff
  3. % sales from new technology / service
  4. customer service satisfaction index

each round of innovation around maximizing these dimensions will be tracked on a single plot like below, giving you a sense of progress from those ideas. (Try and imagine what your head of sales told in last quarter analyst meeting on any of the metrics)

EvolutionPotential (2)


Important but Tough to Measure

Yes we have heard some large board rooms loudly claiming “if we cant measure, we cant manage”. There are things that are inherently tough to measure but does not mean they are not important. Can the same board rooms claim “innovation”, “engagement”, “integrity”, “knowledge management”, “social media” are not important for their business, just because they cannot measure?

So the issue not about whether we can measure or not, but only broadening the nature of measures that will make sense for each one of them, not a number, not an index, not a ratio, may be yes to a collection of stories, how about a perception map, even fitness landscapes.

Look wide sometimes, not deep always to manage.


Innovation Survey Questions to Management

Binary Yes/No questions on innovation are typically quick and here are some examples

1. When was the last time you heard an original idea for your business?

2. My people log ideas into a central system regularly?

3. I choose ideas to invest in at least once a year, a quarter or a month?

4. My review process for the portfolio includes new idea implementations?

5. We derive strategy from a family of ideas?

6. We have set criteria for all ideas based on utility, applicability, market, originality, uniqueness, costs etc.?

7. Our people know the exact business constraints within which their idea has to work?

8. We communicate these constraints on a regular basis and watch the responses?

9. We do specific campaigns for ideas periodically?

10. New idea implementation gives our people better appraisal ratings?

11. There are groups that work together on original ideas voluntarily without organizational support?

12. We are aware of these groups and consult them on specific needs

13. Our customers get ideas from our people for their needs regularly

14. Business plan meetings include at least 5% new junior people

15. Value addition is part of our commitment / contract

16. Outcomes from specific innovation exercises are available to everyone in the organization?

17. I dedicate time to look at new ideas from the field, new needs from prospects or within sales/service functions

18. My strategy is aligned to customer needs

19. My business earns 40% from new service/product lines formed less than 3 years ago

20. My leader is considered lead innovator or user for our own products

You may also choose such adjective oriented questions for specifics; usually responses are on a scale

1. Our meetings show readiness to listen to new ideas

2. We have sense of availability of resource/cash/time

3. We have past experience of failed experiments that we can leverage

4. We have measures for innovation at various levels including people/team/organization across HR/IS/Strategy/Finance functions


Say no to ROI

Michael Mitchell made a presentation on Travel Industry trends recently. Key take-away from the session personally was on the fitment between cultures and systems and on RoI. Having been part of many M&As, made hard choices on systems, benchmarking systems, deciding where to invest for the travel industry, Michael is uniquely qualified and his perspectives are unique as well.

He started from his experience with a couple of mergers and how the choice of systems actually is not of systems itself but of culture. In any M&A does not necessarily mean the best systems will prevail but systems that support the culture that is conducive for business will be picked and sustained. Making the wrong choice means erosion of brand value (in industries like travel the brand development takes as much as 20 years) and service to customers which are actually closer to culture than IT systems. On a follow up question from Jas on how will a conglomerate like SITA develop and deploy across cultures, Michael reinforced the point that it was still a matter of choice on culture that is dominant. So as always systems fit culture and not the other way around.

There was this trend that IT leadership in the industry showing positive outlook on investing in initiatives that had "shorter RoI cycles", commenting on it he said it was not the right thing to do. My question to him was when does RoI cease to be a measure of impact, and what are the alternatives. His response was if an investment was being made to reduce costs (typically cost of transactions around a core service delivered) it is relevant, but the equation becomes murky when revenue is involved. Take advertising for example, it is hard to quantify revenue that came specifically from a marketing initiative and applying RoI is erroneous here. Incremental revenue analysis was suggested as an alternative, but in my opinion that will still have the issue of attribution of credit.