metrics to measure innovation success
TRANSCRIPT
Metrics to Measure
Innovation Success
“Innovation is anything, but business as
usual.” - Anonymous
Quantifying Innovation Financial Impact
An innovation management system will identify a full range of:
Revenue increase prospectsCost reduction possibilitiesRisk avoidance opportunities
Innovation Programs have incredible benefits and produce significant positive impact, some of which are harder to quantify such as work culture and employee engagement but are critical considerations as an organization determines the just cause.
“Because doing nothing was even a bigger risk"
Norbert Reithofer, CEO BMW AG
Welcome to the Age of InnovationWe are transitioning from the Age of the Experience (2010-2015) where companies competed on the quality of experience and an ability to engage consumers to beyond - the Age of Innovation (2015+) 1
Companies that place innovation at the heart of their purpose, transforming experiences, processes and business models will win and will keep on winning…
1: EY’s report on “Delivering agile innovation”* in June 2014
“The ability to innovate - and to do it quickly and constantly - has become a competitive differentiator” Unknown
Metrics to Measure for Innovation Success
In order to develop a sustainable innovation program the following data points should be considered:
Idea funnel Idea quality and implementation ratioLaunched ideasAverage value by innovation typeIdea type, category and alignment with corporate strategyComplete cost inventory
“Bruce Power was able to generate a $193 Million dollars in cost savings through Planbox for fiscal year 2014"
Tom Calvert - Manager Business Improvement
Idea Funnel, Quality & Implementation Ratio
Break your idea funnel in to the following stages and determine the implementation ratio:
SubmittedExploredApprovedDevelopedLaunched
“Ideas@work system was set up using Planbox technology helping Northwestern Mutual gather ideas from over 4,500 employees and 18,000+ Financial advisors across the US”
Troy McMahan – Director Asset Management
Ideas Launched Type, Category & Value
Enter Launched idea % by Idea category:Revenue generating - impacting your top lineCost reduction - impacting your bottom-lineRisk avoidance - impacting your top- and bottom- line
Break each of the above categories by the Average value by innovation type:
Incremental - Small meaningful change on how you do businessExponential - Significant improvement over how work got doneBreakthrough - Disruptor or Game changer that turns a market upside down
“Planbox’s has transformed the way that Verizon collects, prioritizes and implements employee ideas. Verizon has realized more than $25M in business benefits from employee ideation.“ Bill RuhlDirector - CMI Excellence and Marketplace Intelligence
Innovation Program Costs
Complete inventory of your innovation program costs:
Full time equivalent (FTE) including:Management SupportAdministration
Innovation management system costs: SubscriptionDeploymentTraining
Other costs:Rewards Communications
Using Planbox, Iveco generated an idea to develop a dual energy light duty commercial vehicle. The prototype was capable of switching to the most appropriate source of energy depending on the vehicle’s mission. This helped reduce fuel consumption by up to 30%.
“No business case will sell social software to a firm that doesn’t already value collaboration in its culture...If the ROI is needed to convince an organization that collaboration is a good thing - then ROI is the least of your problems…”
Larry Hawes, Gilbane Group
Sample Innovation Impact$4M+ additional value in 5 years for 500 person company * Assuming no Breakthrough (High Value) ideas
Innovation Program Idea category Year 1 Year 2 Years 3-5Revenue Increase
Incremental Value $ Low: Better monetize existing product $60,000 $100,000 $300,000Value $ Average: New Market Opportunity $600,000 $700,000 $1,900,000
Breakthrough Value $ High: New Product Development ? ? ?Cost Reduction
Incremental Value $ Low: Streamline Business Process $50,000 $50,000 $100,000Value $ Average: Improve Customer Experience $300,000 $300,000 $800,000
Breakthrough Value $ High: Transform Business Operation ? ? ?
Total Benefits Revenues + Cost reductions $1,010,000 $1,150,000 $3,100,000Investments
Licensing Subscription & One time Charges $95,000 $75,000 $225,000Support Internal FTE + Vendor costs $50,000 $50,000 $150,000
Administration Communication + Vendor costs $30,000 $30,000 $90,000Total Costs $175,000 $155,000 $465,000Financial Impact (Total Revenues + Cost reductions) - Total Costs $835,000 $995,000 $2,635,000
A Planbox solution advisor works with your team to build out a 5 year return on innovation analysis based on our experience, analytical models, tools, and proven customer results.
“The only irreplaceable capital an organization possesses is the knowledge and ability of its people. The productivity of that capital depends on how effectively people share their competence with those who can use it.”
Andrew Carnegie
How can your organization benefit from Agile Work Innovation?
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