Robert Tucker is an expert on innovation processes and President of the California-based consulting firm The Innovation Resource. His book, Driving Growth Through Innovation: How Leading Firms Are Transforming Their Futures, is the result of a three-year study of more than 20 of the world's most innovative companies. In this brief, December 2005 interview with MRT, Tucker discusses innovation metrics in the context of a larger innovation process.
MRT: Generally, what is the role of metrics in driving innovation?
Tucker: Metrics are essential to the success of any innovation initiative and can encourage actions and behaviors that drive organic growth. But they are often difficult to get right. The best metrics, I believe, are elegantly simple and carefully considered before implementation. The worst are needlessly complex and detailed and create busy work. These are likely to be either misused or unused.
MRT: Is there a single metric that is most effective for driving innovation?
Tucker: The 3M metric – “percent of current year sales due to new products released in the past N-years” – is still the most widely-used metric and the most helpful since it focuses on revving up growth. I’ve even seen service firms use this metric and it seems to apply very well. However, one study indicates that only about one-half of companies are using this metric.
MRT: What other measures are successful innovators using?
Tucker: [Successful innovators usually have] some means of measuring their pipeline of product and strategy innovations. Strategy innovations would include the number of new markets you have entered successfully in the past period or that are in your pipeline, new value-added services, new distribution channels, etc. Another category of innovation – process innovation – is much more manageable because you are essentially measuring productivity growth. So an easy assessment of revenue per employee is often used here as a way of keeping score.
MRT: Collecting metrics is different from using them effectively. What would you recommend in terms of the effective use of innovation metrics?
Tucker: Metrics that are used to financially reward or punish have a potential to create disunity. It’s my belief that metrics should be used primarily for comparison purposes. Citibank, for instance, takes a fairly thorough snapshot of where each division (by country) stands in terms of its innovation output, primarily new products, and new revenue from new products. They can provide a portrait of what a given division produces in terms of new products, success rates, the number of ideas in the pipeline, etc. If that division is falling short in a given area, they can use these measurements to show where they’re falling short versus high performers. I think it’s very important to have these sorts of drill-down metrics as a snapshot of where you currently are. I would advise using them for that purpose as opposed to using them to reward compensation.
Robert Tucker’s Key Insights on Innovation Metrics
Research | Posted: 2009-03-20
Publication | Posted: 2008-08-01