Metrics that Measure Innovation and Creativity of a Company

Metrics that Measure Innovation and Creativity of a Company

Coming up with new ideas and implementing such ideas plays a vital role in the growth and development of every organization. Growth and development resulting from creativity and innovation have become difficult to measure because no specific outputs are associated with creation (Davila, Epstein & Shelton, 2012). To calculate the levels of growth and development, organizations have to adapt business metrics related to growth as their cultures with the implementation of new ideas. This paper shall evaluate the tabulated business metrics related to innovation, such as active products, research budget, total sales for new products, number of new commodities, and number of patents of two companies operating in the same industry producing similar products.

Determining Whether Active Products Indicates Innovation and if Invention is Continuous or Decreasing

Adding value to existing and developing new products is associated with research and technology. The company’s products remain viable for an extended period through development and research. Active products are associated with research and the implementation of new ideas and technologies (Sabadka, 2012). Functional products are signs of innovation. Subsequently, many available products indicate incremental innovation because of improvements on the existing products that make them viable.

Determining if Research and Development Means Innovation or Labor Efficiency

New ideas provide helpful knowledge that improves the existing processes in an organization. The study provides the knowledge required to develop, modify, and enhance the company’s products, technologies, and operations. Research indicates innovation as it leads to new ideas that create new products and add value to old products. For instance, the company INNAG, Inc., which has the highest research and development headcount of 52, is the same organization with the highest percentage of recent commodities launched in the recent past. Based on this analysis, increased research and development headcount indicates innovation but not labor efficiency.

What Will Happen if Active Products Increased Over Time

Active products in an organization are indicators of innovation. Over time, an increase in the number of functional products will impact the market and the company. For instance, valuable products improve the company’s competitive advantages. In this case, INAGG, Inc. has a market competitive advantage over AMMB, Inc. because it has many active products.

The Company That is Likely to Have Innovation and Creativity.

INAGG, Inc.’s culture supports innovation and creativity. This organization has many new products compared to AMMB, Inc. New products are due to the implementation of new ideas from research and technology. The existence of high numbers of active products indicates innovation as new ideas foster adding value to the existing products.

Dedication of Non-Research Staff Time in Innovation Culture

According to Sabadka (2012), using non-research and development staff can experiment with new products. This experimentation is done through the training of inexperienced staff. During the investigation, non-research and development staff get equipped with new knowledge about how the product is developed and works. The knowledge and skills gained can be used in the future when experienced staff is not available.

 Instances Where More Patents Do Not Qualify as Good Innovation Measures

The easy way to measure innovation is through patents. Unfortunately, patents are not good indicators of measuring innovation because of competition among companies that produce and offer similar goods and services. For instance, a company can falsely increase the number of patents to outshine other companies with similar products.

Limitations of Metrics Perceived to Be the Best Indicators of Innovation Culture

High research and development personnel require a lot of resources. Hiring and training research persons is expensive. Increased numbers of new products launched need an additional workforce to market the products. This increases the company’s operation costs. Under some scenarios, such as competition, patents give false information as the indicator of innovation.

How a Combination of the Metrics Can Overcome the Limitations

By employing trained personnel to conduct market research based on patents of companies producing similar products, we can overcome the problem of false information resulting from competition.

How Business Intelligence is Used to Evaluate the Limitations of Innovation Metrics

Business intelligence assists companies in making better decisions. Business intelligence enables the company’s management to identify ways of maximizing profits, analyze market trends, compare the company’s performance with the competitors, spot market gaps, and discover innovation-related issues. Business intelligence enables the company to study, analyze, and invest in essential metrics such as creativity and innovation.

Conclusion

Business intelligence should be the critical factor in implementing business metrics perceived to be innovation indicators. Subsequently, companies should employ trained and skilled research personnel. Further, enough resources should be allocated for research to promote creativity and innovation.

References

Sabadka, D. (2012). INNOVATION POTENTIAL METRICS. Annals of the Faculty of    Engineering             Hunedoara-international Engineering journal10(3).

Davila, T., Epstein, M., & Shelton, R. (2012). Making innovation work: How to manage, measure, and profit from it.—FTpress.

ORDER A PLAGIARISM-FREE PAPER HERE

We’ll write everything from scratch

Organizational creativity and innovation have proven to be challenging concepts to measure. There is not a particular output that indicates organizational levels of innovation. To flourish, innovation and creativity must be fostered within the organization. They must be established as cultural values for the organization to see the benefits.

Metrics that Measure Innovation and Creativity of a Company

Prompt

Write a paper evaluating business metrics for innovation. Although business metrics generally measure symptoms or outputs of an organization’s culture, we can find correlations between some business metrics and the quality of an organization’s innovation culture. Review the table shown below and answer the following questions.

• Consider the metrics in the table and evaluate if each is a good measure of innovation and creativity.

• Is the number of active products an indicator of innovation, or whether the innovation is incremental or discontinuous?
• Is research and development (R&D) headcount an indicator of innovation or labor efficiency?
• What would it mean if any of these metrics increased over time?

• Evaluate and select which company (INAGG, Inc. or AMMB, Inc.) is most likely to have a culture that supports innovation and creativity.

• How might non-R&D staff time experimenting with new products indicate an innovation culture?
• What are some scenarios where having more patents would not indicate an innovation culture?

• Discuss the ability and limitations of metrics such as the ones in the table and business intelligence (BI) to measure an organization’s ability to innovate or support employee creativity.

• What are the limitations of the metrics that you think are the best indicators of innovation culture?
• Could some of the limitations be avoided by using a combination of metrics?
• How could business intelligence be used to evaluate the limitations of metrics?