Measuring Innovation and Customer Change

Image of Diana Jovin
Diana Jovin

Measuring innovation performance is critical if innovation departments wish to be relevant to the C-suite and to strategy. However, many innovation efforts lack the foundational support to get to the data that matters.  For example, consider two common approaches to innovation -- pitch days, for the purpose of choosing a handful of ideas to incubate; or corporate venture capital -- you can see that the key premise is downstream revenue.  You won’t know until years later whether the ideas receiving investment are ideas that can succeed, and often investment is premised off of the success of the pitch rather than the merit of the idea.  

Managing innovation as a core business process, however, opens the door for measurement that meaningfully impacts investment, sales, and strategy.  Here are some key ideas about how to create and analyze leading indicators, rather than make startup bets that may or may not play out:

-- Testing at Scale

Companies have to TEST a lot of ideas before deciding which ones merit investment.  This builds on the notion of customer development introduced by Steve Blank.  If you interview 100 customers (or prospective customers) about a proposed idea, you can gather data that will tell you with accuracy whether to continue, pivot, or shut it down.

We build on this premise by observing that if you test ideas at scale -- that is, you increase the number of startups being investigated from 5 to say, 200, you will know which ideas matter.  You can apply go / no go criteria to the data collected about your customer idea(s) that allow you to shut down or pivot less promising ideas sooner, allowing for a fast fail culture.  The ideas that are approved for investment receive it based on customer data, not based on a team pitch, and are more likely to scale with fewer hurdles.

-- Measuring Customer Change

With 200 ideas x 100 customer interviews (that’s 20,000 customer interviews your employees have done), companies gain substantial information about what’s happening in their market (or adjacent or new markets). This is a huge amount of market information.  By assigning metadata to the information gathered, companies can see if the ideas gaining traction are ideas that:

  • Grow revenue with existing customers
  • Resegment existing customers
  • Add new customers

Companies might find that within an existing customer group that looks somewhat uniform, there are subsegments willing to adopt an innovation.  (An example is cloud-based IT - some may be willing to embrace it earlier than others.)

The second idea here is that the data delivers important information on timing - when customers are willing to change.  Companies may have a great idea but need to be prepared to match the timing of its introduction to when customers are willing to adopt it.  Validating ideation with customer interviews at scale, in this way, helps companies improve timing of their introductions. 

-- Continuous Foresight

By repeating the above process, companies can have a continuous read on what’s happening in their market, what customers are willing to adopt, how their innovations are going to impact customer segments.  This data is produced by an innovation engine run as a business process in partnership with sales and strategy.  The innovation engine becomes a sensing network that can inexpensively predict what innovations will help get, keep, or grow customers, and by iterating on this process, companies gain built-in continuous foresight.  In this way, an innovation program that is really good at understanding customers can be an incredibly efficient way to figure out the future.  

-- The Infrastructure

How do you do this?  These are the key elements:

  • A fully digital infrastructure that guides innovation teams through a systematic process while capturing data
  • Employee teams, rather than outsourced innovators
  • Online education that provides employee teams with what they need to know
  • Analytics for teams, coaches and executives
  • Top-down buy-in to embracing a platform strategy to innovation (that is similar to how companies use CRM to guide sales strategies)

This is why we have developed an Innovation Performance Management Platform at Hypershift Systems -- an all digital, online, systematic enterprise software system that can scale to meet your global innovation needs, coupled with world class coaches to get you started. 

Innovation performance is critical if innovation departments wish to be relevant to the C-suite and to strategy. However, many innovation efforts lack the foundational support to get to the data that matters.  For example, consider two common approaches to innovation -- pitch days, for the purpose of choosing a handful of ideas to incubate; or corporate venture capital -- you can see that the key premise is downstream revenue.  You won’t know until years later whether the ideas receiving investment are ideas that can succeed, and often investment is premised off of the success of the pitch rather than the merit of the idea.  

If you'd like to discuss how we can help you get started, please click here to schedule a meeting with Andre Marquis.

 

 

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