1. The “Why” problem: Today’s most popular metric, the Vitality Index (% of sales from new products) doesn’t tell you why your % is going up or down. 2. The “When” problem: The lag time in your feedback loop is too long: Changes you make in the front-end-of-innovation will take years to generate significant revenue. 3. The “What” problem: The Vitality index focuses on your results. You need metrics that focus on your capabilities. Only by building these can you have confidence that you’ll improve your innovation results.
More in article, 3 Problems with Innovation Metrics
Does this seem like terrible advice? Especially in our age of hyper-attention to quarterly results? But if you focus too much on business results, you’ll degrade them over time. Why? You must also focus on capabilities. Steven Covey cautioned us to balance P (production or “results”) with PC (productive capability). Sadly, many business leaders forget the “capabilities” part. One capability is understanding the needs of your customers… so you can develop better products… for better business results.
See The 7 Habits of Highly Effective People, by Steven Covey
Business leaders focused on the short term are just showing up. They compete for market share this year, hit the reset button, and repeat the process next year. No serious, long-term capability-building. Count yourself fortunate if you compete against such companies. They’re easy to beat with the right time horizon.
More in article, Build Growth Muscles at Your Company (Originally published in B2B Organic Growth Newsletter).
Do you know if your company is improving key capabilities? Understanding customers’ needs, assessing competitive alternatives, creating data-driven value propositions, etc.? A race team that just counts wins—instead of pit crew times and engine torque—stops winning. Understand the capabilities that drive innovation and start measuring them.
Read more in the article, 3 Problems with Innovation Metrics (Originally published in B2B Organic Growth newsletter).