Highlights (cont.)
Following the Money
26 percent! Over 1 in 4 companies in the All Respondent group are NOT tracking any financials? Then riddle me this, how in the world are you able to tell what is or is not working? How do you know when it’s time to write that next check, or cut funding because an idea – no matter how clever it sounded on paper – just isn’t working out?
That was disappointing to hear. I was also disappointed by the fact that just 1 in 3 of the Role Model companies are tracking the Internal Rate of Return on a project. Which means that, while 85% of the Role Models are tracking the money that the company is bringing in via their Innovative efforts, they are unable to tie that money to a specific project.
So, I ask again. How do you know when it’s time to write that next check or cut funding? Expect both of these findings to change over the coming years.
Following the (Non) Money
This was generally shocking to me. The employee participation rate for the All Respondents group (29.9%) was higher than the employee participation rate for the Role Models group (22.2%). The numbers I’ve tracked previously have always been the number of ideas generated – which is, in fact, higher for the Role Models than the All Respondents (44.4% to 41.1% respectively). So, the entire world hasn’t gone crazy. But I was still surprised at the employee participation finding and it is something I’ll keep an eye on in next year’s report. Maybe that percentage rate is skewed because of the relative size of the businesses? It remains unclear to me.
But there were a couple other good Non-Financial Metrics tracked. The All Respondents group actually launched more projects than the Role Models (50% to 44.4%). Yet somehow, the Role Models were able to test more hypotheses and file more patent applications.
I have a feeling the patent application number is another metric that is skewed. When you only look at 25 “role models,” and two of those are Google and Intel, my guess is they file enough patents alone to carry the day. But I’m intrigued by the hypotheses tested number. Maybe that is just another indicator of a more mature program?
KPMG also notes that the Role Models group is more focused on learnings and insights. And I’d like to spend a moment here to talk about why that’s important. Companies can get stagnant when they only play in one arena, only provide one set of solutions or focus on one set of customers. If done correct, Innovation Management allows you to build new skills and expertise in areas adjacent to your current core competencies. You leverage where you are strong today, to build a bridge to new opportunities. That’s what the Role Models “get” and that’s why they are so focused on the learnings and insights.
And with all due respect to Mr. Madra of Ford X, no, failure is not “…the best thing that can happen to you.” I understand that the learning the Role Models focus on comes from failure. But failure is never the goal. And the sooner that “innovators” stop saying such things and claiming that it is some kind of “wisdom,” the happier I’ll be.