Number of Active Products
This metric can provide some insights into the level of innovation but does not necessarily differentiate
between incremental and discontinuous innovation. The number of active products can also be
influenced by market demand, production capabilities, and other external factors. Another factor is a
company’s business strategy. A strategy could be to release as many products as possible but may only
return a small revenue margin (Are too many product, 2021). This metric is not a great indicator of
innovation as too many factors can influence these numbers.
R&D Headcount
R&D headcount may not directly indicate innovation as it can also be influenced by labor efficiency or
organizational structure. In a statement made by Forbes, there are examples of companies that have
spent large amounts on R&D but failed to bring successful products to market, while others have been
successful despite spending relatively little on R&D (Viki, 2016). However, a higher R&D headcount could
suggest a company's commitment to innovation and new product development.
Metrics Increased Overtime
Over time, an increase in these metrics could suggest that the organization invests in innovation and
creativity. This could be a pivot on the organization’s new strategy. Investing in R&D, experimenting with
new products, launching new products, and increasing the number of active products are all measures
to mitigate external environmental factors.
Non-R&D Staff Experimenting
This metric can indicate an innovation culture, as it shows the company's willingness to invest in
experimentation and exploration. A higher percentage demonstrates the company's commitment to
promoting a culture of innovation and creativity.
More Patents do not Mean Innovation
While having more patents may indicate a higher level of innovation, it is not always a reliable metric.
Some companies may have many patents due to factors such as strategic patenting, defensive
patenting, or legal requirements. There are even known companies that participate in patent trolling.
This is when a company acquires patents, not intending to develop or manufacture products but
enforcing the patents against other companies through litigation or demanding licensing fees (Phelps,
2016).
The metrics used for this evaluation certainly have limitations in measuring an organization's ability to
innovate or support employee creativity. It does not factor in collaboration and communication between
different teams within the organization. Nor does it measure the effectiveness of the organization's
innovation process or the ability to turn ideas into successful products. Other limitations include the lack
of differentiation between incremental and discontinuous innovation, possible distortion due to external
factors, and the fact that metrics may not accurately capture the intangible aspects of an innovation
culture.
However, using a combination of metrics can help mitigate some of the limitations, providing a more
comprehensive view of an organization's innovation culture. Business intelligence can be used to
analyze the relationships between different metrics, identify trends, and reveal insights that single
metrics may not provide. This can help organizations better understand their innovation culture and
address potential weaknesses.
While business metrics can provide valuable insights into an organization's innovation culture, it is
essential to recognize their limitations and use a combination of metrics and business intelligence tools
to obtain a comprehensive understanding of the company's innovation and creativity potential. In the
case of INAGG, Inc. and AMMB, Inc., AMMB, Inc. appears to have a stronger innovation culture based on
the evaluated metrics.
