MEASURING INNOVATION

Better measurement practices will yield more better, which can translate into a significantly higher return on innovation spending.
According to a report by BCG one of the best ways to think about what does and doesn’t need to be measured is through the lens of the cash curve. The cash curve is a depiction of the cumulative cash investments and returns for an innovation over time, from idea generation through to the point when the product or service is removed from the market.
The curve makes explicit four factors that affect the success of an innovation and its ability to generate a return. Those factors are
1.Start-up costs or prelaunch investment:
a)The number of full-time staff involved
b)Operating expenses
c)Capital expenditures
2.Speed or time to market:
a)Actual time to market
b)Time to key checkpoints
c)Actual versus planned full-time-employee hours
3.Scale:
a)Actual versus planned volume produced.
b)Actual versus planned product availability
c)Actual versus planned distribution.
4.Support costs:
a)Cannibalization of existing products in the portfolio
b) Pricing actions
c) Marketing and promotional activities

Viewing the measurement efforts through the lens of the curve, in combination with the frame work of inputs, process and outputs will enable the company to develop measurement systems that capture the data executives need in order to manage the innovation process more profitably.