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Running Head: METRICS 1
7-2 Short Paper: Metrics for Innovation
MBA 580
November 28,2021
SNHU
METRICS 2
The measurement of innovation is considered to be of paramount necessity as it can help
to improve creativity (McKinsey & Company, 2021). Some of the metrics that have been
presented are
Metric Evaluation
No. of active projects Insubstantial indicator of innovation It does not
guarantee success in the innovative initiative.
R&D budget Substantial indicator of innovation It could
influence innovation effectiveness.
R&D headcount Insubstantial indicator of innovation - It does not
guarantee success in the innovative initiative.
% of sales from products introduced in
the past four years
Substantial indicator of innovation - It is a sign of
innovation effectiveness.
No. of new products launched in the past
four years
Substantial indicator of innovation It is a sign of
innovation effectiveness.
Employee time dedicated to
experimenting with new products
Substantial indicator of innovation It could
influence innovation effectiveness.
No. of patents in last four years Substantial indicator of innovation - It is a sign of
innovation.
The number of active projects indicates that the company is adopting incremental
innovative strategy.
The research and development (R&D) headcount is an indicator of labor efficiency.
When lesser people are able to work on an area, it indicates their efficiency is high.
METRICS 3
The increase in the number of new products launched and % sales in the past four years is
an indicator of innovation. Similarly, an increase in the number of patents is also an
indicator of innovation. The increase in active products Is not a proper measure of
innovation as it might not guarantee the success of the projects. The increase in the R&D
headcount is also an inconclusive indicator of innovation, as the degree of creativity is
determined by the efforts, ideas, and contributions of the employees.
The company whose culture supports innovation
The company that is most likely to have a culture that supports innovation is AMMB, Inc.
The increase in sales and number of patents in the last four years are the main indicators that
suggest it.
The time dedicated by non-R&D staff to experiment with new products is an indicator of
an innovation culture. It shows that people get the opportunity to showcase creativity and
new ideas in the work setting. They get to work in an environment where they can
explore their creativity and take risks.
Some of the scenarios in which having more patents are not a good indicator of
innovative culture include the introduction of weak rights that can increase the expense of
safeguarding innovation and adopting weak patient protection that might cause sub-
optimal innovation as people might spend insufficient time and resources on the
innovation (Jackson & Wiens, 2015).
Measuring the ability of an organization to innovate
The best indicators of innovative culture include R&D budget, % of sales from products
introduced in the past four years, number of new products launched in the past four years,
patents in last four years, and employee time dedicated to experimenting with new
METRICS 4
products. The limitation of the R&D budget is limited insight into the productive use of
the financial resources. The limitation of the % of sales from products introduced, new
products launched, and patents in the past four years include restricted insight into the
degree of innovative attributes in the products. The main limitation of the ‘employee time
dedicated to experimenting’ metric is the insufficient insight into how productively they
use their time.
Some of the limitations could be avoided by combing a few of the metrics such as the
number of active projects and the number of patents in the last four years, and the number
of new products launched in the past four years, and the employee time dedicated to
experimenting with new products.
Business Intelligence can be used for evaluating limitation metrics by helping to track
innovative capacity in an organization (Aimiuwu & Bapna, 2011).
METRICS 5
References
Aimiuwu, E., & Bapna, S. (2011). Measuring innovation using business intelligence
dashboards.9AMSIC Proceedings.
Jackson, C., & Wiens9, J. (2015, April 6). How intellectual property can help or Hinder
Innovation. Ewing Marion Kauffman Foundation Kauffmanorg. Retrieved November 24,
2021, from https://www.kauffman.org/resources/entrepreneurship-policy-digest/how-
intellectual-property-can-help-or-hinder-innovation/.
McKinsey & Company. (2021, August 2). How to take the measure of Innovation. McKinsey &
Company. Retrieved November 24, 2021, from https://www.mckinsey.com/business-
functions/strategy-and-corporate-finance/our-insights/how-to-take-the-measure-of-
innovation.
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