Know Your Return on Innovation Endless ideas and prototypes don't mean anything if they're sitting on shelves. Get your innovations out there, and then get tracking.
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Eight months ago, employees at Handango had tons of concepts and plans but only few completed projects. "Very little was actually getting out to the consumer," says Bill Stone, 40, CEO of the 9-year-old Irving, Texas, company that provides content for wireless devices. "We suffered from too many ideas."
Welcome to 21st century innovation, where companies aren't lacking for ideas but are having trouble turning these ideas into profits. Only 43 percent of 332 executives in a recent Boston Consulting Group survey said that their companies track innovation as rigorously as their core business operations and business processes. "But what's interesting is that 3 out of 4 said 'We should,'" says James P. Andrew, a senior partner at The Boston Consulting Group and co-author of Payback: Reaping the Rewards of Innovation. "So there's an acknowledgement out there that we need to be doing a better job of more rigorously managing innovation."
So how exactly are companies measuring innovation? The three most popular metrics are: 1) customer satisfaction, 2) percentage of sales from new products and services, and 3) overall revenue growth. The problem is that these metrics may not tell the whole story. A different BCG/BusinessWeek survey, released in August, of nearly 3,000 executives found that only 43 percent were happy with the returns on their innovation spending--a 9 percent drop since 2006--and fewer executives wanted to increase spending on innovation. "That's a real concern," says Andrew.