In our work we observe many barriers to innovation and IP development. The barriers cut across industries and technologies, and they hinder value creation for large and small companies alike.
The innovation and IP leader who is able to overcome the barriers has an opportunity to advance the company's competitive position with better products and services, faster time to market, more efficient operations, stronger IP, and the resilience necessary to respond to rapidly changing market conditions and critical business problems.
The first step in overcoming your company's barriers to innovation and IP development is to recognize that the barriers exist and audit the organization to define them. Below are some of the most common and impactful barriers that we observe in our work. The list is not meant to be exhaustive, but it touches on issues many innovation and IP leaders can relate to in some way.
This second installment in a series of five posts on this subject explores ideas for overcoming the second barrier listed above – having no way to measure success. You can read the first installment on establishing direction here. We will explore how to overcome the other three barriers in future posts.
Strategy requires execution to create business value, and metrics are required to measure execution performance and value creation. This is true of any type of business strategy, but we have found that it is particularly challenging for innovation and IP strategy where the targeted result is often intangible. Finance, operations, and accounting managers are well trained in tracking operations performance and analyzing the value of tangible assets. Unfortunately, it is difficult to find credible sources of information on how to measure innovation performance, and it's even harder to find thought leaders who agree on the "right way" to measure the value of IP.
So, how can you measure success from an innovation or IP strategy?
First, turn to the strategy to clarify the definition of success. For a large government contractor, successful execution of an innovation strategy might be to increase the rate of winning new contracts by offering more innovative services in its bids. For a consumer products company, successful execution of an IP strategy might be to increase profitability of its products through stronger patent protection.
Then, based on the definition of success in executing your strategy, identify or design a set of a simple metrics that you have the ability to measure and easily communicate to your executives, top management, and staff. In the large government contractor example from above, perhaps the right metric is a comparison of contract win rate between bids offering new or improved services versus bids offering legacy or traditional services. In the consumer products company example, perhaps the right metric is a comparison of the profit margins for patent-protected products versus non-patent-protected products.
Communicating the innovation and IP strategy success metrics to your executives and top management demonstrates that you are focused on value creation, which can mean the difference between a well-funded and under-funded strategy. It is also critically important to communicate those metrics to your staff so they understand how they can contribute to meet performance targets that will maximize value for the company.
But even if you have a clear strategy, and the metrics by which you plan to measure performance, what is the process for execution? We will explore that in the next installment in this series.