Implicit in those posts was the assumption that innovation is beneficial to the business. But how do you measure that?
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Fortunately, last nights #innochat set about crowdsourcing some answers to that question. #Innochat is a weekly chat (noon EST / 5pm GMT) on Twitter where innovation gurus from around the world swap notes and debate ideas.
The framing post for yesterday’s chat laid out the five questions to be asked in an effort to go past the theory to help organizations quantify the value of their innovation efforts.
“Of course innovation isn’t just about ideas, but the results are what matter, not always the route you take to get there,” said chat moderator Andrew Townley (@atownley).
— Sunil Malhotra (@SunilMalhotra) October 16, 2014
What is the business value of innovation?
“The business value of innovation is growth,” said LeAnna J. Carey (@WomenInnovate).
Matt Hunt (@huntm), Founder & CEO, Stanford & Griggs, expanded on that. “[The] value of innovation is growth but it’s only one asset class in a growth portfolio,” he said. “Every org needs to grow even to stay flat.”
“It is interesting that our default is that the value from innovation is primarily
viewed in terms of monetary gain,” said Andrew Marshall (@DrewCM), CEO of Primed Associates in New Jersey.
“Business value in innovation can be captured variously: worth, usefulness, advantage, benefit, gain, profit, good, help, merit,” he added.
Luis Solis (@innoalchemist) in Boulder, Colo., said value could be “cycle time, client penetration or retention, and so forth…all lend themselves to $$.”
Author of the Innovation Alchemist, Solis said, “Innovation in pursuit of what? Always ask that question.”
John Lewis (@JohnWLewis), one of the chat moderators and an innovation consultant in England, said the value is to “gain competitive advantage and position yourself at the forefront of your field.”
“We need to redefine value and have a new line of value reporting on balance sheets. Innovation is not about bean counting,” said Sunil Mohatra (@SunilMalhotra), founder of IdeaFarms in India.
In what time scales should innovation deliver business value?
“Now. Now. NOW!!!!!” suggested Marshall.
“Right. Should always work to deliver value from the beginning,” said chat moderator Townley.
However, Marshall later elaborated that “timescales depend on the market context. Some value may not be realized for years or decades.”
“Value needs to be tangible and realized quickly. Value doesn’t need to be monetary and can be diverse,” said Channin Liedtke, (@ChanninLiedtke), who works in the hotel business in Alberta, Canada.
Initial payoffs could be a PR boost at first with monetary gains later, he said.
“We can plan but not sure we can schedule value. Like trying to push the river,” said Matt Recio
(@mattbrat1) in Atlanta, GA.
“I think it’s fair to want some sort of value quickly,” said Liedtke.
“[I] recommend a mixed bag of short, medium and long term delivery of value,” said Harvey Wade (@HarveyJWade), in the UK.
How do you ensure that innovation delivers business value?
“Link compensation to results! Job, salary and bonus, plus options…the startup way. No value, no Business,” said Solis.
“By testing assumptions as soon as possible at a lean costs,” said Bruno Winck (@brunowinck), who splits his time between France, India and the US.
Solis agreed. “Lean startup’s answer: constantly test with customers. Assume less; verify more.”
Meanwhile, Marshall rolled out the famous Benjamin Franklin quote: “In this life nothing can be said to be certain, except death and taxes.”
“Retrain the Controller,” Malhotra suggested.
Asked to expand on that, he said, “My experience w controllers – simply accountants. The whole business case idea is about quantifying qualitatives.”
Which is more important for effective innovation: control, constraints or accountability?
“It is essential to have shared and clearly understood challenges and some measures of success,” Lewis said.
“Doesn’t the answer really depend on the life cycle of the business/startup? (Most companies don’t last 10 years these days,” said Judy Gombita (@jgombita), a consultant in Toronto.
“I think constraints are one of the biggest drivers of #innovation, and you innovate in the areas you can exert some control,” said Townley.
“Accountability. Always. To the goal. To each other. To the organization. To yourself,” said Liedtke.
“I don’t think you can be “doing” innovation. It’s not a process or program, rather an outcome,” said Kevin Dulle (@IdeaFreak).
“Sorry. Must disagree. Innovation can be addressed as set of processes. Depends on how you choose to practice,” said Marshall.
“I’m thinking accountability drives results; innovation can’t deliver value w/o execution,” said Recio.
“Efficient innovation (if there’s such a thing) needs controls, effective innovation needs tolerance for failure,” said Malhotra.