From aerospace to retail, every industry is impacted by disruption, whether it’s from new technologies, new customer experiences, or even new business models. Many companies have responded to these threats by reinventing themselves—often from the inside out. When the metamorphosis includes an innovation platform, leaders are typically left to determine not only how to leverage the solution, but also how to measure its impact.
“Crowdsourced innovation” —the process of inspiring, collecting, and accelerating ideas from the “crowd,” such as your employees, partners, and customers, at scale—has proven to be incredibly effective. But crowdsourcing is a business discipline that must be managed and measured, or it will not withstand the competitive pressure for resources and continued investment. So, what should organizations be measuring to demonstrate that innovation is an essential activity to achieve their business objectives?
Assess direct financial value
The first consideration should be direct financial value. This could include breakthrough ideas brought to market, or reduced costs. Being able to tie your innovation platform back to the financial impact on the organization is critical to help justify and secure investment from senior stakeholders who want to understand direct results tied to the bottom line. Planview Planview IdeaPlace’s recent 2019 State of Crowdsourced Innovation Report identified that nearly two thirds (66%) of organizations cite lack of measurable results as the biggest risk to program success, underlining the importance of demonstrating this value back to the business.
From the start, program managers should be thinking about direct financial value. Although financial value can be tough to measure in the early days, it’s important to set goals, commit to reporting on those goals, and put processes in place to be able to do so when you reach that point in time. When it comes to measuring direct financial value, start by asking yourself:
- Did the innovation program produce any breakthrough ideas that were brought to market?
- Did the incremental revenue problem presented to the group result in the creation of new features, functionality, or line extensions that added to the bottom line?
- Did the productivity solutions reduce costs?
Make time for softer metrics
While hard numbers are compelling, remember that softer metrics—such as culture change, employee engagement, and skill-building—also play a significant role in measuring the impact of your innovation platform. Indeed, the process of gathering and surfacing ideas and solutions from employees, customers, and partners can drive business value before you’ve even gotten to the idea implementation stage.
Softer metrics relating to participation and collaboration—such as the number of people contributing to ideas, how regularly they participate in innovation initiatives, and how frequently diverse teams are interacting—can give you insight into the progress you are making on building a culture of innovation, inclusion, and employee engagement. As a bonus, softer metrics can be reported on easily, as well as early, in the life of your innovation program.
Adopt a tracking mechanism to measure value
According to Planview’s recent research, a large number—44 percent—of innovation program managers aren’t tracking the ROI on actionable ideas at all. This is not only hindering their ability to report results back to the business, but also limiting their capacity for making improvements to the program and obtaining better results.
For example, of those program managers who track where the best ideas come from, 34 percent said that the ideas they choose to implement came from a person outside the group or business unit sponsoring the challenge “most, nearly every, or every time.” If this was identified by program managers as a common trend, then they may feel more empowered to open up more innovation campaigns, or “challenges,” beyond the expected crowd. They may also tap into different populations across the organization, knowing that expanding their reach can produce higher quality of ideas. The good news is that nearly half (48%) of companies are tracking ROI on some or all actionable ideas, but there is still a long way to go before every company is measuring the full business impact.
Ultimately, when an innovation platform is combined with an intentional innovation program, it melds creativity with a rigorous idea generation process, transforms blue sky possibility into disciplined measurement, and drives impact from ideas—all while building that all-important culture of innovation. Across our customer base, we can see that crowdsourced innovation programs are most likely to succeed long-term when internal stakeholders understand the value to the business.
This value must be managed and measured like any other business activity or, ultimately, the innovation program will lose support and resources. With expectations around measurement also increasing with program longevity, innovation teams should bake in a tracking mechanism and plan for measuring value into their programs from the start. This will make it easier for the program to scale and demonstrate its impact from day one.
In this post, we’ve discussed a few tactics you can use to measure the impact of your innovation platform. And while knowing the impact of your platform is critical, it’s only part of how you build a sustainable innovation program. Your company’s culture is just as important—in fact, companies continue to cite creating a culture of innovation as their top strategic goal. Learn how companies like Pfizer, AT&T, and Siemens are transforming their cultures in 11 Proven Ways to Turn Your Culture into a Culture of Innovation.