| Innovation is indisputably one of the most important strategic and operational levers available to managers
for creating competitive advantage, regardless of industry sector. Recent studies suggest, though, that there
remains a serious disconnect between what firms are hoping for and what they are reaping from their
investments in innovation. Conventional approaches to performance measurement, while serving
performance-driven firms well in a variety of traditional areas focusing on cost, efficiency and speed, have
as yet had little impact in the area of innovation management.
This old management adage has been fuelling the
debate on innovation performance measurement
for a long time. Although many management
practitioners abide by the rule of thumb "that
which gets measured gets done", many innovation
practitioners justifiably note that innovation by
its very definition is intangible and, at least in
part, dependent on serendipitous occurrences in
the innovation environment. Indeed, the
measurement of innovation performance is
currently, as it has been for many years, a highly
controversial topic. For example, the continuing
debate on how much of innovation can be
directly and deliberately influenced spills over
into the thinking on innovation performance
measurement. Traditional approaches to
performance measurement typically inform about
'what' has happened but do not address the 'why',
leading many managers to view the innovation
process as a 'black box' that defies rational
managerial analysis.
Innovation performance measurement thus continues to be a problematic management challenge. The
purpose of this report is to address the most pertinent of the many questions raised by innovation
practitioners and managers today:
• If, indeed, innovation is at least partly driven by serendipitous events, to what extent can it be
measured?
• What measurements of innovation are meaningful, that is, what are the measurements that can be
acted on?
• What are the assumptions underlying any measure of innovation performance?
• What limitations are there to measurement, both physical and conceptual?
• What are the underlying assumptions that justify the measurement of innovation performance?
• What are the limitations and constraints on any meaningful measure of innovation performance?
• What is the best way to design a measurement system?
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