The past five articles talked about how innovation teams can use first hand research and customer feedback to find new opportunities for growth. They use Design Thinking to constantly empathize with the user and find where there are gaps and build better solutions. This seems great and important work, and also a heck of a lot of fun. Great for the innovation team, but what about the teams grinding away in operations, putting out fires, and dealing with customer complaints for products already on the market?
Companies need to come up with ways that hold innovation teams accountable for delivering value to the organization. Sales teams, operations teams and admin teams all have accountabilities that are directly related to business objectives. However, innovation teams aren’t always directly connected to these business objectives. Here are a few issues that can arise when creating accountabilities for innovation teams.
First, innovation teams that are tied to short-term revenue are doomed to fail. They should never be as profitable as existing business units, and therefore, if revenue is their prime objective, existing businesses will always win. If the team works towards these types of objectives, they will only choose low-risk projects tied to existing customers, and create incremental gains. Not a bad thing, but if that’s all your innovation team does, your organization will lose the race to new customers that are always changing.
Second, innovation teams that are tied to lowering costs will never be creative. They will take simple concepts and spend a significant amount of money on technology to solve basic operational problems. This happens often where the cost of technology spirals out of control when innovation teams are measured only on operational savings. In many cases there are operational solutions to solve these problems. On the other hand, when technology can be implemented to enable operational excellence and efficiency, it should not be discounted, but it can’t be the only way innovation teams are measured.
Finally, innovation teams that are measured on ‘creativity’ fail to create longevity inside their organization. Creativity is part of everyone’s job and if 100 per cent of that creativity falls on a small team not core to the business, it lets all of the other teams off the hook to look for creative solutions in their own business. Innovation teams are very well suited to train and coach creativity inside the organization, but not be responsible for the outcomes.
This sets up the next question of how should innovation teams be measured. Every business is different, so priorities will be unique, but here are a few ways to connect to some measurable business outcomes through innovation:
- Create a path to revenue. As an innovation team, you have to get really good at tracking the prototypes that were created early on in the process to what they end up being once developed at scale. Work with operations, sales, and product teams to find out how the work the innovation team did early on contributed to new products/services being released to customers. How much revenue did that create? How much did that save the organization?
- Build an organization of learning. Innovation teams are usually the most curious, because they are paid to look into the future and beyond existing products and customers. How can the innovation team be responsible for teaching every part of the organization to be Design Thinkers? How do you create empathy for your customer at every interaction? The results can be measured in customer service numbers, net promotor score, and number of teams running design thinking activities.
- Measure the innovation activities, not the outcome. Predicting the future is a fool’s game. But, by measuring specific activities that innovation teams take to support the organization’s future growth seems like a logical step. Organizations talk about the value of learning through failure, well, innovation teams are the one part of the organization that will fail more than it will succeed. To become a learning organization, the innovation team must share these lessons on a regular basis to the other teams. Measure these activities that will ultimately help the company.
Measuring innovation is difficult, but it’s also incredibly important to do. Measurement creates objectives and accountabilities for these teams that will clearly and specifically create real business value to the rest of the organization.
If you have other ways you are measuring the success of innovation teams email firstname.lastname@example.org.
Craig Haney holds a Masters degree from University of Waterloo in Entrepreneurship and has been leading the charge for corporate innovation in Canada for almost 10 years. His work with Canadian Tire Innovations helped launch the corporate innovation program at Communitech. Currently Craig is the Vice President of Europro, a large real estate developer in Ontario.