At the 2009 Product Development and Management Association’s Annual International Conference, McKinsey’s presentation on innovation metrics was very well attended by delegates. The McKinsey perspective on innovation metrics is that there is ‘no silver bullet – the art is in building the suite’.
Associate Partner in McKinsey and Company’s Cleveland office, Christopher Musso, noted that innovation is notoriously difficult to measure because effective metrics require generally agreed upon language, standards and visible effects. There are a number of challenges faced by companies who want to develop innovation metrics, namely, that innovation language is often ambiguous, innovation practice has few standard performance benchmarks, and it is often difficult to see the direct effects of innovation. Below are some of the insights that McKinsey’s Christopher Musso offered about metrics and specifically about innovation metrics.
Six facts about metrics that’s particularly true of innovation metrics:
- Metrics communicate strategic direction and drive performance – they do more than track
- Metrics must address strategic alignment, reward, and progress
- The best metrics cascade to meet the needs of many stakeholders
- If you have no target you have no metric
- Simplicity is key—measurement complexity undermines credibility and confuses people
- Progress metrics must be balanced with control metrics
Top innovation performers use a suite of metrics based on the following guidelines:
- 4 metrics maximum
- Metrics include targets
- Metrics use available data
- Metrics fit with culture
- Metrics are simple
- Metrics are only part of larger innovation performance dialogs
Metrics cascade with consistency to all stakeholders and balance progress with control
