Measure Your Enterprise and Project Innovative Potential
The Enterprise Innovative Index is a way to measure your enterprise’s innovative potential. You can use the interactive spreadsheet here. Open it in a new window. Below is a second index to help you evaluate your team’s potential, the Project Innovative Index. Please share comments on what you discover.
The Enterprise Innovative Index consists of six major categories in red on the left of the figure, with a total of 18 subtopics in black. The objective is to rate your enterprise or team from 0 to 1.0 in all 18 subtopics. Several enterprises are shown scored on the right. Each major category score in red is the average of the subtopics below it. The final total percent score at the bottom is the product of the six major category scores. Thus total scores can vary from 0-100%.
Consider Apple. For the major category, Global Innovation Economy, it gets a 1.0 for both subtopics, so the category score is also 1.0, shown in red. As indicated, Apple’s total score is the product of 1.0 x 1.0 x 0.93 x 0.75 x 0.83 x 0.92 = 53%. Also shown is the score for a superb venture capital (VC) firm I know at 48%. SRI, where I was CEO for 16 years, is scored as 36%. The scores for Apple, VC, and SRI are all excellent, as demonstrated by their historical performance.
Next the overall innovative performances for a very good research university and a national laboratory are estimated. As expected, because they are not designed to create commercial value, their scores are poor. This doesn’t mean that exceptional professionals can’t be very successful. They can, but they are exceptions. Do not expect systematic success from these enterprises unless major actions are taken to address their shortcomings.
This analysis is most useful for stimulating discussions about a team’s or enterprise’s innovative status. The concepts and why they are fundamental are discussed in our book, Innovation: The Five Disciplines for Creating What Customers Want.
Note that the six major categories are multiplied, not added. One of the biggest mistakes we see otherwise excellent teams make is in thinking that they can get away with fair performance in one or more categories. They can’t. We have learned that if one of the six categories is missing, the chance for success rapidly goes to zero. Those failings need to be identified and addressed.
One obvious example is having an average innovation team. That is not good enough in the global innovation economy. Another example is being able to understand and execute the process of value creation. Major innovations do not pop up like mushrooms after a heavy rain. They are the result of a dedicated learning and knowledge-creation process, where unmet customer and market needs and information are brought together to form new sustainable knowledge – the new innovation. Developing a sustainable product and business model can take months to years. If an innovation team cannot rapidly and efficiently develop solid working hypothesis for both the solution and the business model and continue to adapt them once in the marketplace with real customers, it will fail.
Finally consider a team that is reasonably good in all categories, say 0.7. When all six categories are multiplied together the total score drops to only 12%. That is not nearly good enough. Sadly, in reviewing many hundreds of new ventures and innovations we have found that most are well below this level. And, of course, that is before entering the market with all its unknowns and risks. Teams must do everything they can to maximize their potential for success right from the start.
Clearly everyone will give different scores for different companies and teams, like those shown above. The Enterprise Innovative Index gives general guidance. But an organization scoring above 20% is likely very productive. One scoring below 10% is likely struggling. And when evaluating companies, none are uniformly excellent across all groups. For example, at SRI with 2,500 staff, it took constant effort to develop staff with these skills. Very few professionals came to SRI with all the skills required. It took several years and constant practice for them to develop these necessary skills.
The Project Innovative Index is for evaluating a team developing a potential new major innovation. The interactive spreadsheet is here. The structure and operation of the spreadsheet is the same as for the enterprise index. Again, the main purpose of this index is facilitate a productive team discussion about the importance and potential success of the initiative. As before, it is very hard to get a good score because the major topics in red are multiplied. But that is right — in the global innovation economy we are in an intensely competitive and challenging environment. It is like preparing for the Olympics. Being good enough in in your neighborhood will not make the grade anymore.
The Enterprise Innovative Index and the Project Innovative Index will help your enterprises and teams better understand what must be improved to increase their probability of innovative success. As Tom Friedman of the NY Times says, “Average is over. Be best at what you do or go home.” Do everything you can to be not just good, but exceptional. Is there really an alternative?