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How can KPI steer your innovation process?

8.5.17
Author: Dr. Sebastian Schegk, Zurich

Even if KPIs address the past performance, they do so in order to calibrate the involved processes for the future.

  • Even if KPIs address the past performance, they do so in order to calibrate the involved processes for the future.

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PARK INNOVAARE works at the interface of technology-driven companies and public research, such as at the nearby Paul Scherrer Institute (PSI). In one of the workshops of its INNOVATION in PRACTICE series, it looked at how to manage the innovation process. In this post, we summarize some of the insights from the animated discussion during the workshop.

First INNOVATION in PRACTICE reunited over 30 participants. They came from large corporations as well as from SMEs and start-ups. Each of them had a different experience and understanding of innovation, varying from incremental adaptations of products all the way to transformational innovations based on breakthrough technologies. But all the participants came to the same realization that innovation can and must be measured to control the innovation process and to steer it towards the given objectives. Therefore, Key Performance Indicators (KPIs) played for them a vital role in innovation management. But what kinds of KPIs should one measure and how?

KPIs are for the future, not for the past

One of the most important conclusions of the evening was that KPIs must be forward-looking. They are there to prepare the company for the future and not exclusively to measure the past. Even if KPIs address the past performance, e.g. compared to relevant market competitors, they do so in order to calibrate the involved processes for the future and not for registration purposes.

Among other things, a question of measuring creative processes was raised. Industry representatives shared their experience on how even a quality as subjective as individual creativity can be evoked, managed and driven forward through KPIs. Whereas in innovation management, KPIs are managerial and economically oriented, it is often technological KPIs that help drive creativity in certain fields. Thus, the discussion around KPIs in innovation management became centered around four groups of questions: are the company’s processes future oriented, is the company sustainable in its development, are its processes competitive, and what is the needed effort. In the end, each company will have its own set of KPIs that will help answer the following questions.

Future

  • Are we working on the right products for the future?
  • Will they still meet our customers’ needs and give us the competitive edge?
  • Do we have sufficient access to the key technologies relevant for the future?
  • How can we secure that access appropriately?

Sustainable Presence

  • Is our current portfolio already competitive enough, and how much has our innovation management contributed to it?
  • Are we using IP Management actively enough?
  • Does our IP Management help us prevent competitive products or even copycats?

Process

  • Do we have competitive processes for innovation in place?
  • How can we include suppliers and customers in our innovation process, and how can we make use of the full potential of our network?
  • Are we continuously reviewing and adapting our processes?
  • Are we learning from our failures?
  • Do we have the right understanding of the specific timeframe for renewal in our market?
  • Do we have a competitive performance in time-to-market?

Effort

  • How do our core earnings compare to our spending on R&D, and how does this compare to market benchmarks?
  • Do we have appropriate processes in place to control our budget for innovation?
  • Have we chosen the right split in our innovation budget between make-or-buy options?
  • Into what mix should we put our effort for design adaptations, incremental improvements, radical changes to products or processes, or even breakthrough transformations of the whole organization or market?

The above list just gives a flavor, represents a cross section of what practitioners have on their mind and should evoke further discussion within an organization. Companies will choose the best suitable set of KPIs depending on the strategic situation they are in and what they want to achieve.

KPIs in academia are different – must they be?

The relationship between private companies and public research institutes is not always easy, as both tend to live in their own world. A common understanding of the innovation process on both sides and how to control it will be crucial for success. Academia representatives at the workshop mentioned the management tools they were guided by. Academia devotes budgets to distinct topics, controls the monetary budgets and measures the outcome sometimes even with such a simple yardstick as number of publications per budget spent. And within a topic, academia asks for freedom to pursue any interesting trail with a “let a thousand flowers blossom” approach – only later picking the most promising flowers. Industrial companies, on the other hand, not only hesitate to join the rush to publish everything, they have learned to steer research and development towards results and strategic objectives. And thus they will need to take over the leadership in such collaborations with academia; joint KPIs will help them to do so.


The author: Dr. Sebastian Schegk is Managing Partner at Healthcare Experts Zug and Project Manager “Nuclides for Life”, a joint initiative of the Paul Scherrer Institut and PARK INNOVAARE designed to bring latest developments in the radiopharmaceutical sciences into clinical application as a service for Swiss hospitals.


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