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« From fireworks to paint | Main | Survival of the creative – how to get fit for innovation…(Part I) »

October 19, 2006

Comments

Eline

Well, I'm wondering what these figures say about innovation actually. Think it says more about the consumer than Philips itself, because they're the ones buying the products, right?

Maybe nice to know: I listened to a Philips presentation by Emile Aarts and found it quite inspiring. Mostly the way Philips looks at innovation by collaborating with others. Elaborate story on the picnic 06, Cross Media weblog: http://picnic06.typepad.com/weblog/2006/10/visions_of_ambi.html

And about your questions, don't have a clue :-) I sometimes wonder if innovation can be measured at all...

Djeevan Schiferli

From a Business Week article:

One of the biggest mistakes companies may make is tying managers' incentives too directly to specific innovation metrics. Tuck's Govindarajan warns that linking pay too closely to hard innovation measures may tempt managers to game the system. A metric such as the percentage of revenue from new products, for instance, can lead to incremental brand extensions rather than true breakthroughs. In addition, innovation is such a murky process that targets are likely to change. "There's a dialogue that needs to happen," says Govindarajan. "Operating plans may need to be reviewed, or you may need to change plans because a new competitor came into your space."

Susan Schuman, CEO of Stone Yamashita Partners, which works with CEOs on innovation and change, says that besides numbers-driven metrics, some clients are adding subjective assessments related to innovation, such as a manager's risk tolerance, to performance evaluations. "It's not just about results," she says. "It's how did you lead people to get to those results."

That's one reason the bastion of Six Sigma-dom, General Electric Co. (GE ), has begun evaluating its top 5,000 managers on "growth traits" that include innovation-oriented themes such as "external focus" and "imagination and courage." GE has also added more flexibility into its traditionally rigid performance rankings. GE will now have to square its traditional Six Sigma metrics, which are all about control, with its new emphasis on innovation, which is more about managing risk. That's a major change in culture.

http://www.businessweek.com/magazine/content/06_17/b3981401.htm

Djeevan Schiferli

And another one:

"Companies are more and more often
reporting to Wall Street on their Percentage of Revenue from New Products, but that tells us very little about
the business impact of innovation. Consider some of the problems with this approach: Is this 'new' revenue
profitable? Is it doing more than cannibalizing the existing base [of revenue]? What's counted as a new
product? Feature addition? Line extension? What about services and embedded innovation? What conclusions
can we draw about what drives success?"

What I'm reading is that there is no standard common agreed set of metrics yet on how to measure the impact of innovation...

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