How Not To Measure Innovation

Innovation is a tricky thing.  Innovation is a very nebulous concept and, even more nebulous, is how to measure innovation.  The Balanced Scorecard Institute has the following definition:

innovation is defined as the process of ideation, evaluation, selection, development and implementation of new or improved products, services or programs.

At first glance, this seems perfect.  Until you take a look at the fact that they calculate it as the “Return on Product Development Expense“.  For a Public Sector organization that doesn’t make a lot of sense for most of what we do.  So how else can we measure innovation?  I recently looked at a document that defined four key performance indicators of innovation within the Public Sector. I was surprised and disappointed by the performance indicators.  Let’s go through them and I’ll demonstrate what I mean.

1) KPI: Percentage of New versus Maintenance spend.  So, just because I label something as “new” it is considered innovative?  If I create a mobile application that shows you the contact information for anyone in the GoA it is “new” and therefore innovative.  But adding Facial Recognition technology into an existing mobile app to provide secure access to data is not innovative because it was cheap enough to be considered “maintenance”.  Wow.  (Uber implemented this technology in three weeks in their app.)

The idea that something needs to be “new” to be innovative defeats the idea that innovation can take time.  Or that innovation can be implemented in steps.  Innovation cannot be defined as the difference between “new” and “maintenance”.  I’ve seen a lot of “new” apps that were the antithesis of innovation.  But maybe their idea of innovation is not mine.  Or anyone elses.

2) KPI: Project Execution.  Yes, if you deliver ahead of schedule, under budget, you can be considered innovative.  Unless of course, you play the game and “under promise and over deliver”.  Tell people the app will take 6 months when you know it will only take 4.  And a million dollars when you know it will take less.  And that it won’t have feature X, but you somehow manage to squeeze it in.

I used to work for a consulting company, I know how this works.  On a fixed fee project you always added in contingency.  Always.  And as a result, you usually delivered according to the expectations you laid out.  This isn’t a real measure of innovation or successful project management, it is merely a matter of writing up the contract appropriately.  No innovation is involved as this has been done by consulting firms for decades.

3) KPI: Ratio of retired assets to new assets.  This one is a little grayer.  Just a little.  Indeed, such a small bit gray that in dim light you’ll never notice.  New assets can be innovative, but they don’t have to be.  This just measures the amount of change in an organization, not the amount of innovation.  Change can be innovative, or it can be setting you back.

4) KPI: Ratio of shared resources/assets versus unique resources/assets.  This gives you the false impression that “sharing” is innovation.  I learned about sharing when I was a baby.  In the IT world, we have been sharing for decades.  In the Internet world, we have been sharing for … well … decades.  There is nothing new here, nothing innovative.  Nothing transformative.

But here is where we need to take a step back.  Is this truly a ratio of innovation or is the organization being discussed here so far behind the times that catching up to 2005 is considered innovative?

Innovative is adding facial recognition to prove identity not coming in under budget.  But maybe that’s just me.  Maybe my expectations are higher.  Maybe I want people to reach for the stars above their head instead of the sand at their feet.  Maybe I want companies to realize that innovation is within their company, but they need to foster that innovation and not let it die out.

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