Running Head: METRICS aa aa aa aa a aa aa aa aa aa aa aa aa aa aa a aa aa a aa aa aa aa aa aa aa aa aa aa aa aa aa aa a aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa
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7-2 Short Paper: Metrics for Innovation
MBA 580
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METRICS aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa
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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.
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• 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
METRICS aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa
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past four years, patents in last four years, and employee time dedicated to
experimenting with new 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 aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa
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References
Aimiuwu, E., & Bapna, S. (2011). Measuring innovation using business intelligence
dashboards. AMSIC Proceedings.
Jackson, C., & Wiens , 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.
