Innovation Metrics

Here is a list of metrics, indicators, and other important data-to-consider that I've collected over time. Some of them I've personally used in projects, others are references from books and articles whose origin I have lost. I will be adding more in this same post as they come up. Feel free to recommend some in the comment section and if they are valid I'll add them up.

Remember you should select metrics according to your Innovation Strategy and processes, as well as your company’s balance scorecard and other KPI. Some measures showed here are not metrics but will definitely help you manage innovation or at least create good business presentations.

Investment and Resources

Budget percent allocated to innovation efforts

% of capital invested in innovation activities such as submitting and reviewing ideas. This percentage can also be divided in each type of innovation: incremental or radical.

% of workforce resources dedicated to innovation. It can be measured in employees’ hours, number of employees or technology, not only money.

Number of innovation tools or methodologies available in the company.

Margin requirements for investment

Innovation Resource utilization (%) = Asigned / availability.



% of capital invested in R&D.

R&D Productivity = Lifetime Gross Margin / Lifetime R&D

R&D spend as % of revenue = Revenue / R&D overlay * 100.

R&D budget that is non-internal

Free time allowances for R&D employees

R&D staff turnover

Idea Generation

Number of ideas submitted by employees in a period of time.

Number of idea submitted that follow the innovation strategy / total of submitted ideas

Number of ideas submitted by customers

Number of ideas submitted by suppliers or alliances

Ratio of number of concepts to actual products = Actual Products / Total number of concepts. How many ideas actually come true?

Number of apt ideas generated per creative sessions or workshop


Project Selection

% of Killed Projects = killed projects / total projects submited. If the percentage is high maybe you are being too strict and you should review your selection criteria or maybe your selection criteria is OK but need to work in the quality of ideas.

% of early no’s on project proposals = number of projects killed at the first stage of proposal / total number of killed proposals. Why are projects being killed so early? Killing a project before it causes more costs is good but beware on what you are killing and why.

Sum of costs of “killed” projects or stopped active projects.


Organizational Culture

% of employees that belong to minority groups. See the post “Tolerance and Innovation”.

% of employees that have innovation as a key performance goal.

% of employees that have received a training in innovation methodologies.

% of executives time spent on strategic planning rather than day-to-day operations.

Number of employees that have different educational or cultural backgrounds (mutidisciplinary and multicultural)

Number of entrepreneurs in the company individuals who have started their own business or show signs of business leadership and ambition.

Number of new competencies (skills or knowledge acquired by employees which differ from the business core knowledge and skills).

Number of innovation experienced team members

Number of cross-functional initiatives

Number of creative thinking sessions or workshops

Portfolio Management

% of new products launched vs. The entire portfolio.

Product Innovation Index Number of new, innovative, or upgraded product features distinguishable from the previous product.

Number of new lines of products launched.

Number of new markets entered in the past year.

Number of ongoing ventures / experiments / investigations.

Number of times in the past 5, 10 or 15 years that the company’s core business has changed or redefined.

New product success rate (meeting expectations)


Process / Execution

Reduction in new product/process development time/cost

Within target budget/sales/profits

Number of gateway returns

Product / Servics characteristics meeting customers expectations

Product / Servics characteristics meeting company's strategy

Percentage of innovation projects outsourced

Timming and Launching

Time to market. (you can divide it in different stages and measure times, comparing it against expected time or earlier times to market)

Number of projects late-to-market If you were already working on a project but competition launched it first.

Number of Engineering Changes before launching (effectivness of the design group)

Number of Engineering Changes after launching (especially useful for IT)


Sales and Revenue

% of sales due to new launched product or services = Sales from launched products / Total sales.

% of revenue that comes from partnerships or joint ventures.

Break-even time

Average time-to-profitability for changes to existing products or services

Average time-to-profitability for new products or services

Return on investment

Return on equity

Sales Growth

Residual income

Average of prices paid by costumers

Average annual sales per costumer


Other results and Value

Cost, development time, delivery time, quantity and price of products and services offered.

Share of Wealth = the change in the company´s market value / the change in the total industry’s market value during the same period of time.

Market share increase / decrease because of new products.

Market penetration increse because of new products.

Consumer's brand recognition and perception because of new products.

TAM (Total Adressable Market) created by new products or services

Number of clients increase / decrease because of new products

Frequency of repeat costumers

Number, complexity and size of customers, partners and suppliers

Customer satisfaction with innovation activities

Number of customer complaints.

Number of recalls or cost of recalls.

Numbers of New Product innovation awards / Design recognitions receibed

% of shelving won because of new products

Number of strategic alliances (suppliers, other companies, government, educational institutions)

Geographic diversity of products and sales

Number of new patents granted

Number of scientific papers, articles or publications where brand is advertised as innovative by others (Blogs included!)

Competitive position within industry

Amount and quality of customer data acquired related to innovation

If you want to apply the best metrics and measures personalized for your company and with IT systems that support them... hire ChromaticWorks ;)

No comments:

Post a Comment