Evaluating Business Metrics
9927Overview
Organizational creativity and innovation have proven to be challenging concepts to measure. There is not a particular output that indicates organizational levels of innovation. To flourish, innovation and creativity must be fostered within the organization. They must be established as cultural values in order for the organization to see the benefits.
Prompt
Write a paper evaluating business metrics for innovation. Although business metrics generally measure symptoms or outputs of an organization’s culture, we can find correlations between some business metrics and the quality of an organization’s innovation culture. Review the table shown below and answer the following questions.
Consider the metrics in the table and evaluate if each is a good measure of innovation and creativity.
Is the number of active products an indicator of innovation, or an indicator of whether the innovation is incremental or discontinuous?
Is research and development (R&D) headcount an indicator of innovation or labor efficiency?
What would it mean if any of these metrics increased over time?
Evaluate and select which company (INAGG, Inc. or AMMB, Inc.) is most likely to have a culture that supports innovation and creativity.
How might non-R&D staff time dedicated to experimenting with new products be an indicator of an innovation culture?
What are some scenarios in which having more patents would not be a good indicator of an innovation culture?
Discuss the ability, and limitations, of metrics such as the ones in the table and business intelligence (BI) to measure the ability of an organization to innovate or support employee creativity.
What are the limitations of the metrics that you think are the best indicators of innovation culture?
Could some of the limitations be avoided by using a combination of metrics?
How could business intelligence be used to evaluate limitations of metrics?
Metric INAGG, Inc. AMMB, Inc.
Number of active products 12 6
Research and development (R&D) budget $10M $14M
R&D headcount 52 33
% of sales from products introduced in the past four years 15% 35%
Number of new products launched in the past four years 7 3
Employee time dedicated to experimenting with new products Not tracked 10%
Number of patents in the last four years 7 23
Note: Both companies are in the same industry and make similar products. They have the same number of total employees, revenue, and length of time in business.
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