Tag Archives: metrics

Our People Metrics Are Broken

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Our People Metrics Are Broken

GUEST POST from Mike Shipulski

We get what we measure and, generally, we measure what’s easy to measure and not what will build a bridge to the right behavior.

Timeframe. If we measure people on a daily pitch, we get behavior that is maximized over eight hours. If a job will take nine hours, it won’t get done because the output metrics would suffer. It’s like a hundred-meter sprint race where the stopwatch measures output at one hundred meters. The sprinter spends all her energy sprinting one hundred meters and then collapses. There’s no credit for running further than one hundred meters, so they don’t. Have you ever seen a hundred-meter race where someone ran two hundred meters?

Do you want to sprint one hundred meters five days a week? If so, I hope you only need to run five hundred meters. Do you want to run twenty-five miles per week? If so, you should slow down and run five miles per day for five days. You can check in every day to see if the team needs help and measure their miles on Friday afternoon. And if you want the team to run six miles a day, well, you probably have to allocate some time during the week so they can get stronger, improve their running stride, and do preventative maintenance on their sneakers. For several weeks prior to running six miles a day, you’ve got to restrict their running to four miles a day so they have time to train. In that way, your measurement timeframe is months, not days.

Over what timeframe do you measure your people? And, how do you feel about that?

Control Volume. If you have a fish tank, that’s the control volume (CV) for the fish. If you have two fish tanks, you two control volumes – control volume 1 (CV1) and control volume 2 (CV2). With two control volumes, you can optimize each control volume independently. If tank 1 holds red fish and tank 2 holds blue fish, based on the number of fish in the tanks, you put the right amount of fish food in tank 1 for the red fish and the right amount in tank 2 for the blue fish. The red fish of CV1 live their lives and make baby fish using the food you put in CV1. And to measure their progress, you count the number of red fish in CV1 (tank 1). And it’s the same for the blue fish in CV2.

With the two CVs, you can dial in the recipe to grow the most red fish and dial in a different recipe to grow blue fish. But what if you don’t have enough food for both tanks? If you give more food to the blue fish and starve the red fish, the red fish will get angry and make fewer baby fish. And they will be envious of the blue fish. And, likely, the blue fish will gloat. When CV1 gets fewer resources than CV2, the fish notice.

But what if you want to make purple fish? That would require red fish to jump into the blue tank and even more food to shift from CV1 to CV2. Now the red fish in CV1 are really pissed. And though the red fish moved to tank 2 do their best to make purple guppies with the blue fish, neither color know how to make purple fish. They were never given the tools, time, and training to do this new work. And instead of making purple guppies, usually, they eat each other.

We measure our teams over short timeframes and then we’re dissatisfied when they can’t run marathons. It’s time to look inside and decide what you want. Do you want short-term performance or long-term performance? And, no, you can’t have both from the same team.

And we measure our teams on the output of their control volumes and yet ask them to cooperate and coordinate across teams. That doesn’t work because any effort spent to help another control volume comes at the expense of your own. And the fish know this. And we don’t give them the tools, time, and training to work across control volumes. And the fish know this, too.

Image credit: Unsplash

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How Do You Measure Power?

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How Do You Measure Power?

GUEST POST from Geoffrey A. Moore

In a recent blog, I argued that management needs to be accountable not only for delivering current performance but also for investing in power initiatives that will fuel future performance. Compensation systems that focus solely on the former too often result in a hollowing out of the enterprise, as we have seen with any number of iconic companies that have “performed” their way to the sidelines.

But this begs a key question—how do you measure power? Specifically, what kind of metrics could supply a stable foundation for management accountability and executive compensation?

In my book Escape Velocity, when discussing managing for shareholder value, we introduced a framework called the Hierarchy of Powers. The idea is that investors, who are buying a share of your enterprise’s future performance, value your company based on how much power they think it has relative to other investments they could be making. In this context, we claimed there were five classes of power that got evaluated in the following order of priority:

  1. Category Power. Is your core business in a category that is growing, stable, or declining? This, we claimed, is the single biggest predictor of future performance.

  2. Company Power. Within that category, where is your company in the pecking order of companies? If you are number one, that is a huge advantage. If you are number two, it also provides tailwinds. After that, there are no more tailwinds to be had.

  3. Market Power. For companies that focus on one or more vertical markets, is your company the default choice for major prospects and customers in that segment? Wherever this is the case, it gives a material boost to your sales momentum and thus your company’s valuation.

  4. Offer Power. Do you get preference and/or premium pricing due to the differentiation of your offer? Do you win the lion’s share of any competitive bake-offs?

  5. Execution Power. Do you have a history of meeting or beating guidance on a consistent basis?

The model has stood up well over the years, but there is still the question of how to ensure accountability for investing in power when so much of our attention (and compensation) is focused on creating the next quarter’s performance. To that end, my colleague Philip Lay and I have been sorting through objective measures that signal material gains in power, ones that executive teams could readily track, and compensation programs could use to calibrate bonuses.

Here’s what we propose should be the top two metrics for each class of power:

Category Power. The focus here is on portfolio valuation—how many categories does the enterprise participate in, and how is each category faring. Meaningful changes in category power typically come through M&A, often supplementing organic innovation that is looking to scale quickly. Top two metrics for each category assessed:

  1. Category Maturity Life Cycle status. The key stages are secular growth, cyclical growth, stagnant, and declining.
  2. Technology Adoption Life Cycle status. This model focuses specifically on the period of secular growth, breaking it up into the following stages: Early Market, Chasm, Beachhead, Bowling Alley, Tornado, and Main Street. The two big valuation changers are winning a beachhead market segment in the Bowling Alley and participating with meaningful share in the Tornado.

Company Power. In high-growth categories, the focus is on bookings growth and competitive win rates. In mature categories, it is on the stability of the installed base as well as bargaining power both with suppliers and with customers. The top two metrics are:

  1. Market share within each category. By far the most important metric, as market ecosystems organize around and give preference to the category leader.
  2. Balanced mix of power and performance categories. For global enterprises, in particular, portfolio balance creates optionality to deal with both bull and bear markets.

Market Power. In emerging categories, dominating a target market segment, as opposed to merely participating in it, is critical to crossing the chasm and creating a sustainable franchise. In mature categories, target market segment focus is key to creating above-market growth. The top two metrics are:

  1. Segment share. The most important metric because ecosystems that serve market segments organize around a segment leader only when it has dominant segment share.
  2. Growth rates within target market segments. This is particularly important in any economic downturn that impacts different market segments to highly varying extents.

Offer Power. This metric and the next are closely aligned with delivering performance in the current fiscal year. That said, they still signal successful investments in power. The top two power metrics are:

  1. Magic quadrant status. This is the most widely circulated third-party measure of offer power.
  2. Win/loss record in head-to-head competitions. This is the most credible measure of offer power.

Execution Power. This really is the land of performance, but there is still power in reputation. Top two metrics are:

  1. History of “meeting or beating” commits, be they forecast or, release dates. This is what gives confidence to customers and partners to give your team the nod.
  2. Customer success metrics. These include Net Expansion Rate, Net Retention Rate, and Promoter Score, all of which validate that you are keeping your sales promises.

Guidelines for Using the Metrics

Metrics are a device to ensure visibility and accountability, and nowhere is this more important than when dealing with something as abstract as power. The key is to associate the right metrics with the right people, the ones who can have the most impact on the level of power in question. This works out as follows:

  • Top Executives: Category Power, Company Power. The two key levers here are using M&A to strategic advantage and using the annual budgeting process to allocate resources asymmetrically to achieve strategic objectives.

  • Middle Management: Market Power, Offer Power. The two key levers here are using market segmentation to strategic advantage and allocating the resources under your control asymmetrically to achieve dominant shares in target market segments.

  • Front Line: Execution Power. The key lever here is to align and focus the resources under your control or influence them in order to deliver the performance you have committed to.

For purposes of compensation, promotion, and overall alignment, these metrics align well with OKR objectives and can be used wherever OKRs are focused on increasing power. Again, the goal is not to replace performance metrics but rather to complement them.

That’s what Philip and I think. What do you think?

Image Credit: Unsplash

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Using Leading and Lagging Indicators to Drive Your Business Forward

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You get what you measure, so make sure you’re tracking the right things.

Using Leading and Lagging Indicators to Drive Your Business Forward

GUEST POST from Soren Kaplan

I’ve seen a lot of organizations create strategies, programs, and projects focused on optimizing operations, streamlining processes, and driving innovation. Leadership teams put lots of energy coming up with the next big thing. But amazingly few teams think about how they’ll measure results. They may say they want revenue growth or cost savings, but that’s about the extent of it. Digging into the details by defining the specific metrics that will help track progress and forecast whether they’re going to achieve their goals in the future often gets neglected.

I’ve used this Key Performance Indicators template to address this challenge. Here’s the basis of why it’s important to use KPIs for your strategy and innovation initiatives, and how to use the template.

Strategy Without Successful Execution Is Just Brainstorming

Between developing strategy and executing it, there’s a step that requires creativity coupled with analytical thinking. It’s defining leading and lagging indicators. Many manufacturing companies and organizations that embrace Six Sigma know the importance of the metrics. Metrics help you quantify success, so you know when you’re achieving it and when you’re not.

Most companies focus on lagging indicators, like how much revenue they made in the last quarter, how many products they sold, or how many new customers they acquired. That’s important information, but those measures are obtained by looking in the rear-view mirror of what’s already happened. In addition to these things, you also need leading indicators to help you predict what will happen in the future. Here’s how to use both of these indicators to translate strategy into tangible implementation plans.

Leading Indicators Help You Predict the Future

Leading Indicators predict how you will perform in the future. They are more easily managed than lagging indicators but are harder to define. For example, if you’re looking to increase sales, you might measure the number of emails you send or sales calls you make. If you know that one in 10 calls results in a sale, the more contacts you make, the higher your sale forecast. Same goes for if you’re running a manufacturing organization. Leading Indicators for a manufacturing plant might include number of incidents that cause production slowdowns or the availability of specific materials in the supply chain.

Lagging Indicators Tell You How You Did

Lagging Indicators are easier to measure because they quantify what happened in the past. For example, a lagging indicator for sales would be measuring the number of products sold last month or number of new customers that signed up for a service. This information is usually easy to obtain and measure. Lagging Indicators are essential for charting progress but are not necessarily that helpful when looking at the inputs needed for achieving your overall desired results.

Create Your Dashboard

If you want innovation, reduced costs, and greater performance, you need to figure out how to do it, and what it looks like when you get it. Creating a set of lagging indicators gives you targets to achieve. But lagging indicators without leading indicators won’t provide focus around what to do–or early warning signals that things might be off track. If you’re manufacturing products, for example, if you’re not measuring whether your suppliers are delivering your materials on time, you might get surprised one day when you realize you don’t have the raw materials you need to achieve your manufacturing targets.

Here’s how to create a simple dashboard that contains both leading and lagging indicators:

  1. Convene your team and identify the specific quantifiable targets that you need to achieve (your lagging indicators). Ask: What does success look like and how do we measure it?
  2. Once you have your lagging indicators, define the inputs needed to achieve them. Ask: What specific things need to happen for us to achieve these targets and how do we measure those things? (your leading indicators)
  3. With your lagging and leading indicators defined, use specific tools to gather and report on your data, whether a spreadsheet or online dashboard.

Management guru Peter Drucker once said, “What’s measured, improves.” If you want to improve your processes and business, figure out what you’re measuring. If you measure only the outputs (lagging indicators), your success will be far less predictable than if you’re also measuring the things that will get you where you want to go.

Image Credit: Praxie.com

This article was originally published on Inc.com and has been syndicated for this blog.

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Top 10 Human-Centered Change & Innovation Articles of October 2022

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Top 10 Human-Centered Change & Innovation Articles of October 2022Drum roll please…

At the beginning of each month, we will profile the ten articles from the previous month that generated the most traffic to Human-Centered Change & Innovation. Did your favorite make the cut?

But enough delay, here are October’s ten most popular innovation posts:

  1. Bridging the Gap Between Strategy and Reality — by Braden Kelley

  2. How Do You Judge Innovation: Guilty or Innocent? — by Robyn Bolton

  3. Scaling New Heights – Building Resilience — by Teresa Spangler

  4. What Great Transformational Leaders Learn from Their Failures — by Greg Satell

  5. Your Brand Isn’t the Problem — by Mike Shipulski

  6. What’s Next – Through the Looking Glass — by Braden Kelley

  7. Don’t Blame Quiet Quitting for a Broken Business Strategy — by Soren Kaplan

  8. The Ways Inflection Points Define Our Future — by Greg Satell

  9. How to Use TikTok for Marketing Your Business — by Shep Hyken

  10. Making Innovation the Way We Do Business (easy as ABC) — by Robyn Bolton

BONUS – Here are five more strong articles published in September that continue to resonate with people:

If you’re not familiar with Human-Centered Change & Innovation, we publish 4-7 new articles every week built around innovation and transformation insights from our roster of contributing authors and ad hoc submissions from community members. Get the articles right in your Facebook, Twitter or Linkedin feeds too!

Have something to contribute?

Human-Centered Change & Innovation is open to contributions from any and all innovation and transformation professionals out there (practitioners, professors, researchers, consultants, authors, etc.) who have valuable human-centered change and innovation insights to share with everyone for the greater good. If you’d like to contribute, please contact me.

P.S. Here are our Top 40 Innovation Bloggers lists from the last two years:

Subscribe to Human-Centered Change & Innovation WeeklySign up here to get Human-Centered Change & Innovation Weekly delivered to your inbox every week.

Top 10 Human-Centered Change & Innovation Articles of September 2022

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Top 10 Human-Centered Change & Innovation Articles of September 2022Drum roll please…

At the beginning of each month we will profile the ten articles from the previous month that generated the most traffic to Human-Centered Change & Innovation. Did your favorite make the cut?

But enough delay, here are September’s ten most popular innovation posts:

  1. You Can’t Innovate Without This One Thing — by Robyn Bolton

  2. Importance of Measuring Your Organization’s Innovation Maturity — by Braden Kelley

  3. 3 Ways to Get Customer Insights without Talking to Customers
     — by Robyn Bolton

  4. Four Lessons Learned from the Digital Revolution — by Greg Satell

  5. Are You Hanging Your Chief Innovation Officer Out to Dry? — by Teresa Spangler

  6. Why Good Job Interviews Don’t Lead to Good Job Performance — by Arlen Meyers, M.D.

  7. Six Simple Growth Hacks for Startups — by Soren Kaplan

  8. Why Diversity and Inclusion Are Entrepreneurial Competencies
     — by Arlen Meyers, M.D.

  9. The Seven P’s of Raising Money from Investors — by Arlen Meyers, M.D.

  10. What’s Next – The Only Way Forward is Through — by Braden Kelley

BONUS – Here are five more strong articles published in August that continue to resonate with people:

If you’re not familiar with Human-Centered Change & Innovation, we publish 4-7 new articles every week built around innovation and transformation insights from our roster of contributing authors and ad hoc submissions from community members. Get the articles right in your Facebook, Twitter or Linkedin feeds too!

Have something to contribute?

Human-Centered Change & Innovation is open to contributions from any and all innovation and transformation professionals out there (practitioners, professors, researchers, consultants, authors, etc.) who have valuable human-centered change and innovation insights to share with everyone for the greater good. If you’d like to contribute, please contact me.

P.S. Here are our Top 40 Innovation Bloggers lists from the last two years:

Subscribe to Human-Centered Change & Innovation WeeklySign up here to get Human-Centered Change & Innovation Weekly delivered to your inbox every week.

Quantifying the Value of Empathy and Collaboration

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The Untapped Metrics

Quantifying the Value of Empathy and Collaboration - The Untapped Metrics

GUEST POST from Chateau G Pato

In the data-driven world of modern business, we have become masterful at measuring the tangible. We track ROI, KPIs, and market share with an almost religious fervor. But what if the most powerful drivers of innovation and long-term success are the very things we struggle to quantify? This is the paradox of empathy and collaboration—they are the invisible forces that fuel human-centered innovation, yet they are rarely captured on a dashboard. It’s time to move beyond this oversight and develop a new framework for measuring what truly matters.

We’ve long held a bias toward what’s easy to count: revenue growth, cost reduction, and time-to-market. These metrics are important, but they only tell a part of the story. They measure the output of an organization, but they fail to capture the health of the engine—the human element. A company with high empathy and strong collaboration is an engine that is well-oiled, resilient, and primed for continuous innovation. A company without it is a machine running on fumes, prone to burnout, internal conflict, and a failure to connect with its customers.

The challenge lies in making the intangible tangible. We must develop a new set of metrics that allow us to gauge the strength of our human connections. This isn’t about replacing traditional business metrics; it’s about complementing them with a deeper understanding of the organizational and cultural health that underpins all successful change. By actively measuring and managing the soft skills that drive hard results, we can create a more powerful and sustainable innovation culture. The metrics we need to tap into include:

  • Empathy Quotient (EQ) Scores: Measuring the ability of teams to truly understand and feel the customer’s experience. This can be done through surveys, observational studies, and qualitative feedback.
  • Collaboration Velocity: Tracking the speed and effectiveness with which diverse teams can come together to solve a problem. This involves analyzing communication patterns, project handoffs, and feedback loops.
  • Psychological Safety Index: Gauging whether employees feel safe to take risks, voice dissenting opinions, and admit mistakes without fear of retribution. This is foundational for a truly innovative culture.
  • Customer Experience (CX) Depth: Moving beyond simple satisfaction scores to understand the emotional journey of the customer and the depth of their connection to your brand.
  • Cross-Functional Innovation Rate: Measuring the percentage of successful innovations that originated from collaboration between different departments or teams.

Case Study 1: The Healthcare Innovator and Empathy as a Metric

The Challenge: A Disconnected Patient Experience

A large hospital system was struggling with declining patient satisfaction scores, even though their clinical outcomes were excellent. The data showed that patients felt disconnected and unheard during their visits. The problem wasn’t a lack of medical expertise, but a lack of empathy in the patient-facing process. The organizational culture was focused on efficiency and procedures, with little attention paid to the emotional experience of the patient.

The New Metric and Innovation:

The hospital’s leadership team, in a human-centered change initiative, decided to make **Empathy** a core metric. They created an “Empathy Index” by integrating a new set of questions into patient surveys, focusing on qualitative feedback about how they were listened to and how well their concerns were addressed. They also conducted observational studies to see how staff interacted with patients in real-time. This new metric, along with qualitative feedback, led to a simple but profound innovation: the “Patient Story” program. Staff meetings and training sessions were no longer just about protocols; they began with a personal story from a patient or a family member, reminding the staff of the human impact of their work. Furthermore, they launched a “Listening Skills” training program, explicitly teaching doctors and nurses how to actively listen and respond with empathy.

The Results:

Within a year, the hospital’s patient satisfaction scores saw a dramatic turnaround. The Empathy Index showed a significant increase, and the qualitative feedback was overwhelmingly positive. By making empathy a measurable and celebrated metric, the hospital shifted its culture, leading to a more connected patient experience and, ultimately, better health outcomes. It proved that a soft skill could drive hard, measurable business results.

Key Insight: By creating a quantifiable metric for empathy, organizations can drive cultural and behavioral changes that lead to significant improvements in customer experience and business results.

Case Study 2: The Tech Giant’s Collaboration Velocity

The Challenge: Siloed Innovation and Slow Development

A leading technology company was an acknowledged innovator, but its sheer size had created a problem: its teams were working in silos. A new product idea would often get bogged down as it moved from engineering to marketing to sales, with each department operating on its own timeline and with its own metrics. The result was a slow, inefficient development cycle and a high percentage of promising projects being abandoned due to a lack of cross-functional alignment.

The New Metric and Innovation:

The company’s leadership team recognized that a lack of collaboration was their biggest barrier to growth. They introduced a new metric: **Collaboration Velocity**, which measured the speed at which cross-functional teams could move a project from ideation to launch. They tracked the number of inter-departmental meetings, the frequency of cross-team knowledge sharing, and the speed of project handoffs. This data revealed the key bottlenecks. As an innovation, they introduced a “Fusion Team” model. Instead of having a project move sequentially through departments, a small, multi-disciplinary team with representatives from engineering, design, and marketing was assigned to a project from day one, with shared goals and metrics. Furthermore, they used a “Project Pulse” tool to track the sentiment and psychological safety within these teams, ensuring the collaboration was healthy and productive.

The Results:

The results were immediate and impactful. The company’s Collaboration Velocity improved by over 40% in the first year. The Fusion Teams were able to launch new products in half the time of the traditional model, with far greater internal alignment and market success. The company’s overall innovation output increased, and the new metric gave leaders a clear, data-driven way to prove the value of breaking down silos and investing in collaborative team structures. The intangible value of collaboration became a powerful, measurable driver of competitive advantage.

Key Insight: Measuring the health and speed of collaboration provides a clear path to breaking down organizational silos and accelerating the pace of innovation.

The Path Forward: A New Era of Measurement

The future of innovation belongs to those who are brave enough to expand their definition of what can be measured. We must stop treating empathy and collaboration as unquantifiable “soft skills” and start seeing them as the strategic, measurable assets they truly are. By developing and integrating these new metrics into our dashboards, we are not just adding to our data; we are gaining a richer, more holistic understanding of our organizational health. This allows us to make more informed decisions, nurture a culture of trust and psychological safety, and, most importantly, build a more resilient and human-centered engine for continuous innovation. It’s time to stop flying blind and start quantifying the forces that are truly driving us forward.

Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.

Image credit: Pixabay

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Importance of Measuring Your Organization’s Innovation Maturity

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Importance of Measuring Your Organization’s Innovation Maturity

by Braden Kelley

Is our organization a productive place for creating innovation? How does our organization’s innovation capability compare to that of other organizations?

Almost every organization wants to know the answers to these two questions.

The only way to get better at innovation, is to first define what innovation means. Your organization must have a common language of innovation before you can measure a baseline of innovation maturity and begin elevating both your innovation capacity and capabilities.

My first book Stoking Your Innovation Bonfire, was created to help organizations create a common language of innovation and to understand how to overcome the barriers to innovation.

The Innovation Maturity Assessment

One of the free tools I created for purchasers of Stoking Your Innovation Bonfire, and for the global innovation community, was an innovation maturity assessment with available instant scoring at http://innovation.help.

My 50 question innovation audit measures each individual’s view of the organization’s innovation maturity across a number of different areas, including: culture, process, funding, collaboration, communications, etc.

When multiple individuals at the same organization complete the questionnaire, it is then possible to form an organizational view of the organization’s level of innovation maturity.

Each of the 50 questions is scored from 0-4 using this scale of question agreement:

  • 0 – None
  • 1 – A Little
  • 2 – Partially
  • 3 – Often
  • 4 – Fully

To generate an innovation maturity score that is translated to the innovation maturity model as follows:

  • 000-100 = Level 1 – Reactive
  • 101-130 = Level 2 – Structured
  • 131-150 = Level 3 – In Control
  • 151-180 = Level 4 – Internalized
  • 181-200 = Level 5 – Continuously Improving

Innovation Maturity Model

Image adapted from the book Innovation Tournaments by Christian Terwiesch and Karl Ulrich

Innovation Maturity is Organization-Specific

The best way to understand the innovation maturity of your organization is to have a cross-functional group of individuals across your organization fill out the assessment and then collate and analyze the submissions. This allows us to make sense of the responses and to make recommendations of how the organization could evolve itself for the better. I do offer this as a service at http://innovation.help.

What Do the Numbers Say About the Average Level of Innovation Maturity?

To date, the innovation maturity assessment web application at http://innovation.help has gathered about 400 seemingly valid responses across a range of industries, geographies, organizations and job roles.

The average innovation maturity score to date is 102.91.

This places the current mean innovation maturity score at the border between Level 1 (Reactive) and Level 2 (Structured). This is not surprising.
Looking across the fifty (50) questions, the five HIGHEST scoring questions/statements are:

  1. We are constantly looking to improve as an organization (3.12)
  2. I know how to submit an innovation idea (2.83)
  3. Innovation is part of my job (2.81)
  4. It is okay to fail once in a while (2.74)
  5. Innovation is one of our core values (2.71)

The scores indicate that the typical level of agreement with the statements is “often” but not “always.”

Looking across the fifty (50) questions, the five LOWEST scoring questions/statements are:

  1. Six sigma is well understood and widely distributed in our organization (1.74)
  2. We have a web site for submitting innovation ideas (1.77)
  3. There is more than one funding source available for innovation ideas (1.79)
  4. We have a process for killing innovation projects (1.82)
  5. We are considered the partner of first resort for innovation ideas (1.83)

The scores indicate that the typical level of agreement with the statements is “partially.”

What does this tell us about the state of innovation maturity in the average organization?

The numbers gathered so far indicate that the state of innovation maturity in the average organization is low, nearly falling into the lowest level. This means that on average, our organizations are focused on growth, but often innovate defensively, in response to external shocks. Many organizations rely on individual, heroic action, lacking formal processes and coordinated approaches to innovation. But, organizations are trending towards greater prioritization of innovation by senior management, an introduction of dedicated resources and a more formal approach.

The highest scoring questions tell us that our organizations are still in the process of embedding a continuous improvement mindset. We also see signs that many people view innovation as a part of their job, regardless of whether they fill an innovation role. Often, people know how to submit an innovation idea. And, we can infer that an increasing number of organizations are becoming more comfortable with the notion of productive failure, and communicating the importance of innovation across the organization.

Finally, the lowest scoring questions show us that process improvement methodologies like six sigma haven’t penetrated as many organizations as one might think. This means that many organizations lack the experience of having already spread a shared improvement methodology across the organization, making the spread of an innovation language and methodologies a little more difficult. We also see an interesting disconnect around idea submission in the high and low scoring questions that seems to indicate that many organizations are using off-line idea submission. Zombie projects appear to be a problem for the average organization, along with getting innovation ideas funded as they emerge. And, many organizations struggle to engage partners across their value and supply chains in their innovation efforts.

Conclusion

While it is interesting to look at how your organization might compare to a broader average, it is often less actionable than creating that deeper understanding and analysis of the situation within your unique organization.

But no matter where your organization might lie now on the continuum of innovation maturity, it is important to see how many variables must be managed and influenced to build enhanced innovation capabilities. It is also important to understand the areas where your organization faces unique challenges compared to others – even in comparing different sites and/or functions within the same organization.

Creating a baseline and taking periodic measurements is crucial if you are serious about making progress in your level of innovation maturity. Make your own measurement and learn how to measure your organization’s innovation maturity more deeply at http://innovation.help.

No matter what level of innovation maturity your organization possesses today, by building a common language of innovation and by consciously working to improve across your greatest areas of opportunity, you can always increase your ability to achieve your innovation vision, strategy and goals.

Keep innovating!

This article originally appeared on the Edison365 Blog

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OKRs vs. KPIs: Choosing the Right Framework for Innovation

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OKRs vs. KPIs: Choosing the Right Framework for Innovation

GUEST POST from Art Inteligencia

In the world of innovation, measuring success is as crucial as the innovation process itself (a powerful one being The Eight I’s of Infinite Innovation from Braden Kelley). Among the most popular tools for tracking progress are OKRs (Objectives and Key Results) and KPIs (Key Performance Indicators). Though they often appear interchangeable, each serves distinct purposes and can significantly impact the direction and success of innovation initiatives. So, how do we choose the right framework for fostering innovation?

Understanding OKRs and KPIs

OKRs are a framework that sets ambitious objectives linked with quantifiable key results. Invented by Intel and popularized by Google, OKRs encourage stretching beyond comfort zones to achieve groundbreaking advances.

“OKRs are not about spreadsheets. They are about focused and inspired work.” – John Doerr

KPIs, on the other hand, are metrics used to evaluate the performance of organizations, employees, or particular activities. They are generally well-defined and are used to track targets and processes that are stable and need consistency.

Case Study 1: Google – The Triumph of OKRs

Google’s remarkable growth and innovation can, in part, be attributed to its successful use of OKRs. Larry Page and Sergey Brin adopted OKRs from Intel, aiming to balance daunting aspirations with precise actions.

In a pivotal instance, Google aimed to “organize the world’s information and make it universally accessible and useful.” The associated key results included increasing the number of pages indexed and enhancing user satisfaction through a streamlined user interface. This clear alignment of bold objectives and tangible results spurred innovation without stifling creativity, showcasing the transformative power of OKRs.

Case Study 2: A Traditional Manufacturer – The Stability of KPIs

Consider a traditional manufacturing company focused on operational efficiency and quality control. Here, KPIs are indispensable for maintaining precision and reliability in production.

The company aimed to reduce waste and improve product quality. By utilizing KPIs such as scrap rate, production downtime, and customer defect rate, they implemented incremental improvements that led to significant cost savings and enhanced quality.

This structure allowed them to consistently meet customer expectations and stay competitive, showcasing how KPIs serve businesses prioritizing stability and incremental innovation.

When to Use OKRs

OKRs shine in environments where transformative change is sought. Think of startups, tech firms, or any company looking to disrupt the status quo. OKRs encourage risk-taking, freeing teams to explore uncharted territories. They are ideal for organizations that embrace experimentation and are willing to pivot based on insights and discoveries.

When to Use KPIs

KPIs are optimal for situations that require reliability, consistency, and precise tracking. They fit well in established processes where steady improvement and performance monitoring are crucial. Industries like manufacturing, logistics, or healthcare, where the margin for error is minimal, benefit greatly from KPIs.

Integrating OKRs and KPIs for Holistic Innovation

Rather than choosing between OKRs and KPIs, consider blending them. Organizations can leverage the ambitious spirit of OKRs while grounding them with the stable, measurable metrics of KPIs.

For instance, a tech company could set ambitious OKRs to innovate a new product line with radical features, using KPIs to monitor development timelines, budget adherence, and defect rates. Such integration ensures a balance between aspiration and accountability, driving sustainable innovation.

Conclusion

The choice between OKRs and KPIs ultimately hinges on your organizational objectives, industry demands, and desired outcomes. Understanding their intrinsic differences and strategic applications is paramount in optimizing innovation effectiveness.

By carefully considering your framework choice and exploring the potential of combining these tools, businesses can foster an innovative culture that is both adventurous and accountable, paving the way for sustained success.

Innovation thrives on clarity, ambition, and measurable outcomes. Whether through OKRs, KPIs, or a tailor-made blend, harnessing the right framework is key to nurturing the next breakthrough.

Extra Extra: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

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Sustainability Metrics That Measure Impact in Innovation

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Sustainability Metrics That Measure Impact in Innovation

GUEST POST from Chateau G Pato

In today’s rapidly evolving world, the importance of innovation cannot be overstated. However, in our drive for progress, the necessity for sustainable practices has become increasingly clear. This article delves into sustainability metrics, examining how organizations can effectively measure their impact in the realm of innovation. With sustainability metrics, we make the abstract tangible, translating ideals into actionable insights.

What are Sustainability Metrics?

Sustainability metrics are tools and methodologies used to quantify an organization’s environmental, social, and economic impacts. These metrics provide frameworks for assessing the sustainability of innovation efforts, ensuring that new products, services, and business models align with principles of social responsibility and ecological balance.

Case Study 1: Interface, Inc.

Innovation in Modular Flooring

Interface, Inc., a global leader in modular flooring, is a shining example of how sustainability metrics can drive innovation. The company’s Mission Zero commitment aimed to eliminate any negative impact it may have on the environment by 2020. Central to this mission were robust sustainability metrics that assessed carbon footprint, water usage, and recycling rates across their operations.

Interface leveraged their EcoMetrics database to track and measure these factors, leading to groundbreaking initiatives like the “ReEntry” recycling program. This program reclaimed and recycled old carpet tiles, reducing both waste and raw material consumption. As a result, Interface’s innovative approach not only met their sustainability goals but also unlocked efficiencies and improvements in their manufacturing processes, reinforcing the link between sustainable practices and economic benefits.

Case Study 2: Unilever

The Sustainable Living Plan

Unilever’s Sustainable Living Plan is another exemplary case of using sustainability metrics to transform innovation. The initiative set ambitious targets across three areas: improving health and well-being, reducing environmental impact, and enhancing livelihoods. Key to their strategy was measuring the lifecycle impact of their products, from sourcing to disposal.

By implementing tools like the lifecycle analysis, Unilever could calculate carbon emissions, water usage, and waste production at every stage of the product lifecycle. This data-driven approach spurred innovations ranging from water-efficient production techniques to biodegradable packaging. Crucially, these innovations resulted not only in reduced environmental footprints but also fostered brand loyalty and consumer trust, showcasing how sustainability metrics can drive business success.

Integrating Sustainability Metrics into Innovation

Organizations looking to integrate sustainability metrics into their innovation processes should follow these steps:

  1. Define clear objectives: Establish what aspects of sustainability are most critical to your organization and set clear, measurable goals.
  2. Choose relevant metrics: Identify the most appropriate metrics for your objectives, such as carbon emissions, energy consumption, or social impact.
  3. Leverage technology and data: Use advanced analytics tools to collect, analyze, and interpret data effectively, ensuring accurate measurement and reporting.
  4. Foster a culture of sustainability: Ensure all team members understand the importance of sustainability, fostering innovation aligned with these values.

Conclusion

Sustainability metrics are not merely compliance tools but powerful enablers of innovation. By measuring impact and setting clear sustainability objectives, companies like Interface and Unilever have demonstrated that sustainable innovation is not only possible but also profitable. As organizations continue to navigate the complexities of modern business, their commitment to sustainability will undoubtedly shape the future of innovation.

Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.

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The Role of KPIs in Measuring Innovation Performance

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The Role of KPIs in Measuring Innovation Performance

GUEST POST from Art Inteligencia

In today’s rapidly evolving business landscape, innovation has become an imperative for survival and growth. Organizations around the globe are striving to harness innovation to drive competitive advantage, increase market share, and improve customer satisfaction. However, measuring the performance of innovation initiatives poses a significant challenge. Enter Key Performance Indicators (KPIs) – a vital tool in quantifying success, identifying areas for improvement, and driving innovation forward. But how can KPIs be effectively utilized to measure innovation performance? Let’s explore.

Understanding Innovation in Organizations

Innovation is not just about groundbreaking products or novel services; it encompasses processes, business models, customer experiences, and even organizational culture. Measuring its performance, therefore, requires a multilayered approach tailored to the strategic objectives of the organization. KPIs can provide a structured framework and a clear direction to streamline the measurement process.

Defining KPIs for Innovation

KPIs are quantifiable metrics that reflect the critical success factors of an organization. In the context of innovation, KPIs must be carefully selected to align with the organization’s vision and strategic goals. Effective innovation KPIs typically fall into a few categories:

  • Input Metrics: These measure the resources and efforts invested in innovation, such as R&D expenditure, number of innovation projects, or employee training hours.
  • Process Metrics: These KPIs evaluate how innovation is managed and executed within the organization, reflecting the efficiency of innovation processes, speed to market, and development cycle times.
  • Output Metrics: These assess the outcomes of innovation efforts, including number of patents filed, new products launched, and incremental revenue from new offerings.
  • Impact Metrics: These KPIs measure the broader effects of innovation on business performance. This includes customer satisfaction, market share, and long-term financial performance.

The Importance of Tailored KPIs

The challenge with measuring innovation through KPIs is ensuring they are relevant to the unique context of each organization. A one-size-fits-all approach is likely to falter. Instead, organizations should customize KPIs based on their innovation maturity, industry specifications, and strategic goals. The right KPIs can uncover insights that lead to actionable strategies for enhancing innovation performance.

Case Study 1: 3M’s Commitment to Innovation

3M is often hailed as a model of innovation, boasting a track record of transforming inventive ideas into profitable products. For decades, 3M has successfully used KPIs to drive its innovation strategy. The company has set a specific KPI: 30% of its sales must come from products developed in the past five years.

This KPI fosters a strong culture of innovation, incentivizing teams to consistently innovate and refresh their product offerings. By regularly assessing the percentage of sales from new products, 3M ensures a steady pipeline of innovative ideas while maintaining focus on customer needs and market trends. The KPI is embedded across the organization, with executive compensation often linked to performance in this area. As a result, 3M continues to push the envelope, sustaining its competitive edge in various industries.

Case Study 2: Google’s Use of OKRs in Innovation

Google’s prolific innovation engine can be attributed in part to its use of Objectives and Key Results (OKRs), which are a complementary approach to KPIs. OKRs facilitate a robust framework for fostering and measuring innovation efforts. At Google, these objectives are set quarterly and revolve around ambitious, oftentimes audacious, innovation goals.

Key Results are established alongside these objectives to track progress and ensure alignment with company-wide priorities. For instance, an objective could be to “improve user engagement on YouTube,” with key results related to the duration of video watches, number of content uploads per day, or specific feature rollouts. Through this dynamic approach, Google remains agile and enables teams to seek moonshots, while maintaining accountability and visibility into innovation activities.

Implementing and Iterating KPIs

Successful implementation of KPIs for innovation requires thorough planning, cross-functional collaboration, and ongoing assessment. Organizations should regularly revisit and refine their KPIs to reflect changing strategic priorities and market conditions. Introducing a feedback loop from employees, customers, and other stakeholders can provide valuable insights into the effectiveness and relevance of KPIs.

Remember, KPIs aren’t an end in themselves; they are tools to guide decisions and enhance innovation capabilities. It’s important for organizations to cultivate a culture of learning and experimentation, where KPIs evolve alongside innovation processes.

Conclusion

KPIs play a pivotal role in measuring innovation performance, driving accountability, and aligning efforts with strategic goals. By carefully selecting and implementing KPIs that resonate with the organization’s unique innovation context, companies can navigate the complexities of the innovation landscape more effectively. Through case studies like 3M’s commitment to sales from new products and Google’s use of OKRs, we see the tangible impact of KPIs in fostering a culture of continuous innovation. Ultimately, in this age of rapid transformation, those organizations that adeptly leverage KPIs in their innovation endeavors are better positioned to thrive and lead the future.

Extra Extra: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

Image credit: Pexels

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