How to Measure Innovation?

I’ve just read a July 2008 report of a National Science Foundation conference, that brought together a panel of experts to try to figure out a way to measure innovation (click here for the full report).  They started with the observation that we don’t know very much about how to measure the outcomes of innovation, and we don’t know very much about what characteristics make the difference between a successful or failed innovation.

Briefly, they identified four areas that businesses and governments could measure.

  • Measure what innovation is. Determine the rates of return over a project’s lifecycle, and how this looks different for different kinds of innovation.
  • Study how and why innovation takes place, by examining the organizational structures and cultures of successful innovations (this is the focus of my own research).
  • Figure out how to capture the complete range of consequences of innovation, including the downsides of “creative destruction”– unemployment, regional winners and losers, and social responsibility.
  • We need a better understanding of the complete environment of innovation, from globalization to government IT law to tax policy to technological change, all is interconnected.

And then the panel had four recommendations:

  • Pursue new directions in data gathering measuring the net outcomes of innovation. This includes data on innovation processes within organizations.
  • Pursue new directions in measuring the net inputs (costs) associated with innovation.
  • Gather data on innovation processes that span across organizations.  (I like this one, because it acknowledges my claim about “collaborative webs”: that innovation is rarely bounded within the walls of one company.)
  • New information gathering and management techniques could allow us to confidentially aggregate data from many companies, and share it with everyone.

I looked at the list of participants and they all seem very qualified–with expertise focusing on economics, consulting, workforce and human resources, computer science, and business strategy. I didn’t see any of the top creativity or innovation experts, however, which was a bit puzzling. Innovation experts absolutely must be deeply involved in all of the steps recommended by this report, I’m not sure why they weren’t involved at this early stage.

Also see my post of March 4, 2008 about the www.innovationmetrics.gov panel of experts.