The 6 innovation KPIs you should be tracking

Innovation isn’t a tangible thing. You can’t pour it into a jar and you can’t weigh it in pounds and kilos. Working out how much of it is going on in your company, then, can be a pretty tricky task.

Moreover, the innovation funnel is a multi-dimensional process with various potential and real impacts on your company. Many of these impacts will be tangible benefits for the present and immediate future, whilst others are less easily quantifiable, often taking years or even decades to come to fruition.

It’s clear that a sound approach to innovation key performance indicators (innovation KPIs) is a crucial factor for assessing the impact of your innovation programme and proving its business value to stakeholders. However, building a framework that adequately reflects your programme’s impact is no easy task. This week, we want to give you some pointers to help you track and manage your innovation KPIs over time.

1. Engagement

Engagement with your innovation programme is the root of every project you’re going to move through the funnel. It’s essential, therefore, that you track this metric independently of other outcomes. One great way to do this is to measure how many ideas are being generated by your stakeholders and who exactly is generating them. 

2. Actionable ideas

You need ideas to start the innovation process moving. However, they’re not what makes your company money. You need those ideas to pass through your sorting system into a project management framework so they can be mobilised for execution. This is what we call functional innovation – the number of ideas that make it through your funnel to be primed for the build phase. Tracking this metric will help you to realise if there are bottlenecks in your sorting process. Ambivalence, procrastination and hesitancy can be innovation killers, as can stakeholder drift and ambiguous project processes. However, this metric will tell you when are where they are happening. 

3. Projected profitability

Every functional idea that comes out of your innovation funnel will need to be assessed for its potential profitability. Otherwise, your decision makers will have a hard time deciding what’s valuable to the company. The projected profitability of your innovation programme is the sum total of each of these individual project projections. Make sure not to overestimate these projections – it can hamper your companies growth in the long term.

4. Actual profitability

If you have innovation projects that have already gone live, you can come up with an actual profitability figure with a sum of their gross income calculations. Be aware that some more intangible project benefits, like efficiency building or collaboration, can have very real effects on your bottom line whilst being difficult to quantify. For these sorts of projects, we recommend looking to company-wide growth metrics. You can isolate the contribution of your innovation projects by removing projected growth figures in other departments from the total growth metric.

5. Costs

For a true value analysis, you’ll need to remove the costs of your innovation programme from your profitability metrics. Don’t forget that there are two cost metrics involved here; the cost of getting the project live and the costs of running the innovation programme. How you divide the labor of these separate liabilities is up to you, however, remember that it’s not accurate to take away total programme costs from a single project. There is more at stake in your innovation programme than a single project outcome!

6. Cultural impact

This is perhaps the most difficult metric to capture on paper. However, an innovation programme can be the catalyst for broader working changes across your entire organisation. To measure these sorts of changes, consider a long-term approach to innovation KPIs. You can look at improvements to overall team performance, business-market interactions, employee satisfaction and retention – whatever you feel is most relevant to your company culture. Get creative about the way you understand your business.

Every week, the team at Wazoku help companies to track innovation metrics throughout their innovation funnels. If you’d like to learn more about how we do it, get in touch with us.