For more than three decades companies have relied on the vitality index–% of sales from new products. While helpful, this innovation metric is neither predictive, prescriptive, nor precise. It’s time to supplement this lagging indicator with two leading innovation metrics… the Growth Driver Index (GDI) and the Commercial Confidence Index (CCI). These will help your business build growth capabilities and ensure you’re working on real—not imagined—customer needs.
Preview: New Innovation Metrics
You need leading indicators to drive your new-product innovation forward… not watch it in the rear-view mirror. With two new innovation metrics, you’ll build growth capabilities and ensure you understand customer needs.
Today, the most commonly used innovation metric is the vitality index: percentage of revenue from products launched in the past three (or five) years. But if this is your only metric, you’ve made a spectator sport out of improving innovation, when it should be a participant sport. This is especially troubling in new product development… where your innovation work can take years to produce meaningful revenue. It’s like turning up your thermostat and having the furnace come on next week.
Don’t supplant the vitality index, but rather supplement it… with new innovation metrics that are leading indicators. In this paper you’ll learn…
The lagging nature of the vitality index isn’t its only problem. Like other non-ideal innovation metrics, it suffers from three deficiencies: