Surprised to see a financial guy writing a blog on April 15th? Probably not. We all love tax day, when we scramble to collate and scrub our financial records to do everything possible (but also legal) to reduce our taxes. Operating a business without metrics can often lead to that same type of scramble when we are put to the task of evaluating business segment performance. This is why I was so surprised to see that, according to our most recent benchmarking survey, more than 40% of companies in the advanced stages of open innovation are not employing the use of metrics. Absent this, how can you measure progress towards your goals? How can you evaluate your efficacy?
Using metrics for measurement and guidance is only as effective as the quality of those metrics. That is why we work with our clients to establish open innovation metrics tied to pre-defined goals. Depending on whether you are in the early stages of open innovation or you are optimizing its use, those metrics will vary significantly. So where do you start?
Well, where do you start with your tax information? I typically break the information down into the sections of the return. Pages 1-4, Schedule A, Schedule B, Schedule C, etc. Determining metrics can also start with similar compartmentalization. How so? Departmentalization of impact. For instance, financial (hard and soft impact of both revenue and cost), time (acceleration of ideation through product development and then on to dollarization), and new opportunity creation (relationship and network building that yields growth in ancillary areas and knowledge, not just the focal point of the task or topic at hand).
Gauging success and defining metrics is as much art as it is science. Your business model, your corporate structure and your culture all affect the determination of what metrics are most important to you and how you choose to evaluate your progression and ultimate success. But you cannot have a painting without picking up the brush and splashing color on the canvas, so what are you waiting for?
Contact us today to launch your open innovation program with NineSigma.