Measurement of Success & Progress
Defining success and progress is key for Business Design and the implementation of a powerful innovation management system. However, killing creativity and innovation ambition is quite easy if you look at the wrong parameters within a given time horizon. So what are good parameters that help people guide themselves and others through an unpredictable innovation game? Here is our approach.
Bernhard Doll
Business Design Maverick
Every innovation management system needs a way to define and measure progress and success. We look at two time horizons:
Long-term success: We define long-term success through objectives. These are usually financial metrics, like revenue and profit, but also market share, competitive position, technology leadership, sustainability goals, and employer attractiveness. A good time horizon for objectives is five to ten years, depending on the industry. Short-term progress should always align with these long-term objectives. Objectives and the Picture of the Future are closely linked: objectives shape how we design the Picture of the Future. The key question in the end is: “What should the world of our customers and our organisation look like once we’ve reached our long-term objectives in X years?”
Short-term progress: We define short-term progress through KPIs (key performance indicators). These focus on a short time horizon of three to six months. They show whether current tasks drive progress that aligns with the objectives and the Picture of the Future. Classic financial metrics rarely work here, especially in organisations focused on research, development, and innovation. KPIs are great tools: they let employees and managers reflect on their tasks, behaviour, and results, and adjust where needed. That is why it is so important to define KPIs for short time windows – it keeps the link between behaviour and progress clear.
Here are some examples of what progress looks like in Business Design:
Consistent use of the end-to-end innovation process
Adoption of the defined Business Design roles
Number of ideas in the idea portfolio with the right risk appetite
Ratio of H1, H2, and H3 ideas in the idea portfolio
Ratio of projects focused on H1, H2, and H3 ideas
Number of projects stopped because a hypothesis was falsified
Number of projects that reach Phase V and go live
Ratio of projects in Phase IV to projects in Phase II in the end-to-end innovation process
Number of people trained in Business Design
Time needed to set up an innovation project (“setup”)
Total effort and time it takes an idea in the portfolio to reach its first euro of revenue or cost savings
Don't mix up long-term and short-term perspectives when you define how you measure progress and success. You will instantly kill creativity and "fresh" ideas beyond your core business if someone asks for a business case too early!