Measuring Innovation — Boston Consulting Group Survey

Well, since I took a potshot at BCG in an earlier post (here), I should give them kudos where appropriate.  I had a chance to chat with Harold Sirkin last year when BCG did some work for us (his book on innovation models with James Andrew is (here). 

Measuring innovation is a very knotty topic, so it was with great interest that I looked at this BCG senior management survey (here).  A couple key findings below:

Only 37 percent of survey respondents said they were satisfied with their company’s [innovation] measurement practices….  The single most widely used innovation metric is total funds invested in growth projects, which 71 percent of respondents said that their company employs.

No surprise on both figures, with a pretty simple cause-and-effect:

  • Firms use an industrial-style measure from out of a Soviet Five-Year Plan because it is easy to measure.
  • Realize that it doesn’t measure innovation, so they’re dissatisfied.

The most salient recommendation is to look at a set of measures across the product/service lifecycle (what they call the innovation cash curve):

The cash curve is a depiction of the cumulative cash investments and returns (both expected and actual) for an innovation over time…[making explicit four factors], start-up costs, or prelaunch investment; speed, or time to market; scale, or time to volume; and support costs, or post-launch investment.

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