METRICS FOR IDEA GENERATION
By Dr. Brian Glassman
Ph.D in Innovation Management
Metrics are one of many tools to monitor the performance of a process. For
idea generation there are no general metrics which span across industries. Instead,
an innovation manager must select idea generation metrics based on the strategy
of their company and their current idea needs. The following white paper will
discuss the selection of metrics for idea generation projects, and the
management of the process given its’ inputs and outputs. Further, a management chart tool is introduced to aid in managing the process. Intro
My Ph.D advisory board members at Purdue insisted that I find a common set of outputs and performance measures for idea generation that I could base an objective study on. Unfortunately, I struggled to find any such metrics, and I finally concluded that there were no general set of metrics for idea generation which were applicable across industries; hence I had to settle on subjective measures for my studies.
Interestingly as my research continued, I found that an individual company could adopt a custom set of idea generation metrics which would suit them very well. The following section will explain why there are no general metrics applicable across industries, but the subsequent section will show you how to select metrics specific to your company and its needs.
In my search for general metrics I had to consider many things, the most important being the differences amongst industries and their particular new product idea needs. The literature suggested many metrics for idea generation: patents per employee, ideas per employee, quality of ideas, time to generate ideas, quality of ideas, cost to create an idea, an ideas ability to fill the front end portfolio, revenue per idea, and so on… Interestingly, I found that none of these metrics were applicable across several industries; let me give some examples to demonstrate.
Ideas per Employee
“Ideas per employee” can be thought of as a simple useful metric,
but how many new product ideas does a company really need? Small startups, which
are highly resource constrained, should dedicate their business to one or two
products and hence they have a very small need for new ideas. Large manufacturing
companies with several thousand employees (like lawn mower manufactures) could
similarly have a limited budget for developing new products and effectively
only need a moderate size batch of new product ideas, maybe say 400 to 500 to
build on. However, companies in creative
areas, like home furnishing products, need a constant stream of ideas to stoke their product lines. In this case “ideas per design employee” is a vital metric because it directly translates into the effectiveness of their design department at coming up with new ideas.
Another interesting metric is “revenue per idea created” because it accounts for the output of the idea generation and innovation process, but again this is not generally applicable. Take two companies one in technology and one in housewares. The technology company has to invest large amounts of money to develop a single idea, thus it is in their interest to seek out a large number of ideas and develop only the best; where as, for the housewares company this metric may be useful in showing how effective the design department is at creating successful new product ideas.
Some Metrics only Effective for Specific Project Types
To complicate things further, a set of metrics may be only effective for certain types of projects. For example, if that same housewares company wants to make a radical new product line they should create a lot more ideas than normal and not hold the design employees to that “revenue per idea created” metric. However, if the idea generation activities are tasked with supporting an existing product line it may be reasonable to use a “revenue per idea created” metric.
Going through the above mentioned list of metrics one can easily pick industries in which a particular metric does not make sense or is even harmful; and conversely, one can pick metrics which are logical and helpful. So the question becomes, what metrics should a company use to help guide its’ idea generation process?