Take the Guesswork Out of Innovation With Metrics
When you hear the word “innovation,” you probably don’t think of numbers. Instead, you might think of Steve Jobs unveiling the first iPod, the funky beanbags in Google’s unique office space or a building made of glass that defies the laws of gravity. The amazing world of innovation, it seems, is made of images, not numbers.
But as businesses continue to evolve at high speeds, your company needs to be in a state of constant innovation to keep up. While thinking intuitively about innovation might lead to some good ideas eventually, innovation takes time and money. You need to invest wisely and any smart investment is backed by metrics.
With metrics, you can isolate the very products and offerings your customers crave. You can then adapt your business to suit them. And it's not just about creating the next new thing; it’s about creating something that customers want. And although measuring innovation isn’t exactly cut-and-dried, some metrics can point you in the right direction.
Here are some ways to tap metrics to help you turn your ideas into truly game-changing innovations:
People tend to doubt that a data-driven approach to innovation will work -- mostly because they assume a direct performance metric is required to measure success. But the truth is that if you’re innovating well, your performance will improve across the board, from revenue to employee performance and customer satisfaction.
True innovation can happen when you use metrics to spot market gaps and fill them with need-based solutions. Take Swiss pharmaceutical company Novartis’ innovation strategy, for example.
Before it invests in a health care innovation, it examines what patients need. The company takes its strategy a step further by uncovering multiple uses for a new discovery. For instance, it uses parallel testing to see if it's possible to treat a range of cancers with just one drug. Recently, the company received approval for Afinitor to be used to treat advanced breast cancer as well as other types of cancers.
Once you develop your innovative solution, use performance metrics to measure how well it fulfills your customers’ wants and needs. Use quantitative customer surveys, gauge demand across product lines and validate new ideas with your audience.
This will enable you to determine how your return on investment is affected by your top innovations.
Coca-Cola, for example, launched a "venturing and emerging brands" team in 2007 to locate the company’s next billion-dollar brand. The group stays abreast of trends to enable Coca-Cola to take advantage of the niche markets that it has historically struggled with -- among them, teas and energy drinks. In 2008, Coca-Cola bought a stake in Honest Tea on the team's recommendation and eventually purchased more of the company. Coca-Cola’s moves have been validated: Honest Tea’s sales of $38 million in 2008 became $100 million by last year.
Create a system by which employees are encouraged to come up with ideas and turn your whole company into an innovation machine. Keep in mind that innovation takes time and effort, so make sure your employees are compensated for their work.
Connect incentives to ingenuity, and your employees will likely come up with more great ideas. Just look at Unilever: It created an initiative to drive innovation by encouraging employees to purchase products at a heavily discounted rate and offer feedback.
As a result, its employees essentially became in-house beta testers.
Of course, innovation can be fun. But by incorporating metrics into your innovation strategy, you give your company a leg up.