One of the variables that differentiated “innovation-driven” companies from those who were “innovation-shy” in the Bloomberg Business Week study that we conducted at the Coles College of Business at Kennesaw State University was the presence of metrics used by innovation-driven companies and the absence of metrics among those who were innovation-shy.
In other words, innovation-driven were serious in achieving their vision for innovation and they had measurements in place. Please see,
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The study revealed that innovators keep track of progress made good towards goals.
But what kind of metrics should be used? Might they be sales, revenues or new products introduced to the market?
The link between an idea and the business model it will serve and the target market is the acceptance with which it will be received.
WHAT IS ACCEPTANCE
Acceptance is the measurement of the level of interest the market will show for the new idea.
Take for example the introduction of the iPod.
The big innovation was iTunes, a service that allowed consumers to buy music one song at a time and select exactly what they liked.
It was a great offering because now when a consumer spent $14 to buy 14 songs they were all his/her selections instead of buying a CD with 14 songs out of which he/she might like only one.
Similarly, all new ideas that end up being great innovations meet with acceptance that is measured in some way.
The best metrics to use need to be related to the level of acceptance by the target market and be guided by the vision of the company.
HOW IS ACCEPTANCE MEASURED?
Is acceptance always measured in terms of sales? Not necessarily. There might be other benefits. For instance a new idea that improves customer convenience might increase customer loyalty. The measurement here is customer longevity and cross selling as might be the case with a department store. Or an idea that reduces wait time might increase repeat business and so on.
Consider the next example. In South Korea a supermarket chain invented a way to place huge photos of the shelves of their supermarket in metro stations so that potential customers could scan the bar codes of items they wished to buy and through an interesting logistics system the groceries were delivered to their address at the time they wanted to have them. Sales more than tripled in less than two months! Think of the needs and the problems your target audience wants to address.
Acceptance delivers a benefit to the customer and the organization benefits in turn. It is best defined by those closer to the particular market, internal or external, that enjoys the benefit your innovation might deliver. Look at the business model and see what part of it is affected by the new idea. Acceptance is best decided by those who are closer to the part of the Business Model (Marketing, Logistics, Supply chain etc.) that is affected AND also by those close to the end user.
Another important point: The benefits the new idea and the innovation, deliver should be independent of any other interventions. For example, if the measurement concerns sales be sure that you are not launching a new advertising campaign that might affect sales because that would muddy the water and give you false readings. Keep the readings clean during testing in order to avoid costly investments later on.
THE TEST
During testing of the new idea we have observed that in the scale that you use to measure acceptance whether it is a 5, 6, or 10 point scale at least two thirds (66%) of the responses should be in the top two boxes. So, if the scale is 1 to 10, two thirds of the responses should be 9’s and 10’s with 10 being the top end of the scale. This might sound too strict but again it can save you money later.
One additional criterion for the metrics that could be used: Find a measurement that can be used to measure acceptance during future continuous improvements you might want to add to your idea. This will ensure that during the improvements as well as in the final stage when the idea hits the market you will have a reliable measurement.
METRICS
What are some examples of good metrics measurements?
Use market language to measure the results e.g.
· “I need to have it” or “that is for me” or will the new segment we are going after be “interested to buy the product/service?”
· “How reliable is the new channel of distribution”?
· Are the new materials we are considering as “good or better” as what we have been using?
· “Will it fly”?
· “How critical is the problem that it solves for the end user”?
Let’s tie this together now.
1. Start with a vision for innovation.
2. Establish metrics so that the employees, we are always talking about your people being the best innovators for your business, will know how their ideas will be measured for success.
Next comes the question “What’s in it for them?” and that is the subject for rewards that we will discuss in the next post.
Best of luck and here is a quick exercise to help you decide the best metrics:
FREE GIVEAWAY– Collect information from your target market by asking these three simple questions:
· What is important to you about…? (what the new idea addresses)
· What problem do you have in that area?
· If you could (do) it or (have) it the way you want how would it be?
Collect the information from as many people as possible, cluster the responses and see what these clusters tell you. When done, you should know what metrics you can use from the answers you receive.