Innovation Measures Fall Short, Says Study

Most companies are failing to adequately track their innovation efforts and measure the success of initiatives, according to research by The Boston Consulting Group (BCG).

Measuring Innovation 2007 is a companion publication to the consultancy's annual Innovation report, and uses the same survey of just under 2,500 executives worldwide. Findings have contributed to an annual list of the 'Top 25 Companies for Innovation', published in Business Week - in this year's ranking, Apple and Google retain first and second places, respectively, and Toyota Motor replaces 3M in third place.

BCG says the lack of robust measurement is proving frustrating for execs, two thirds of whom (66%) say innovation is a top-three priority, but only 46% of whom are happy with the returns on innovation investments and just 37% say they are satisfied with their companies' innovation measurement practices. Bucking the trend slightly, pharmaceutical, biotechnology and health care companies are more likely than others to be using adequate numbers of metrics to gauge the results of innovation spending.

Study leader, Senior Partner James P. Andrew, comments: 'Companies would do well to make measurement a much higher priority. Poor measurement practices translate into bad or incomplete information, wasted spending and, ultimately, a lower return on the investment in innovation.'

In terms of best practice, Andrew advises: 'A good starting point is to consider four key factors: start-up costs (or prelaunch investment), speed (or time to market), scale (or time to volume), and support costs, which include post-launch investments. These factors can be mapped onto a 'cash curve,' which will help the company depict cumulative cash investments and returns, both expected and actual. That depiction, in turn, supports smart, disciplined decision-making.'

BCG has 64 offices in 38 countries and is online at www.bcg.com.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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