Measurement of innovation

Measurement of innovation
See also
Innovative research Functional strategy Added value chain Research and development definition Cost calculation Zero defects Methods of restructuring Spin-off Total quality control

Measurement of innovation is needed to make decisions to implement new solutions, product designs, processes, etc. Measurement can be made with regard to whole sector of economy, particular enterprises in the sector, but also may be related to territorial units (regions or countries). Measurement of innovation is a very important research task, which is, however, difficult due to the diversity of the definition of the concept of innovation and radically different approaches to its interpretation. That results in a large diversity in the selection of indicators of innovation.

Methods of analysis of innovation

When analyzing the measures of innovation in companies we can distinguish between two basic methods. The first is based on the number as well as the nature of innovation that actually exist within the enterprise. This method is rarely used because of the collection of information on the basis of specific statistical data with a source in the technical reports produced by the company. This method results in a great amount of information on individual innovation, and the less with respect to the total number of different innovations.

The second method of measuring innovation is economic method. It involves only those organizations that have introduced innovations. Research tool used in this method is a questionnaire concerning the various dimensions of innovation processes in industry or services and the amount of resources that have been allocated to innovation activities of the company. In addition this method analyzes growth factors causing or blocking innovation, sources of information used for innovation, innovation diffusion and its effects. Using this method innovation is measured in common context of economic variables, e.g. production volume, employment, profits, etc.

Enterprise innovation indicators

We can distinguish the following criteria and indicators for innovation within company:

• specific effects of innovation: the number of patents, scientific publications, knowledge generated by employees,
• number of new products - successful product innovations
• quality of operation - the study of consumer satisfaction
• strategic success- e.g. an increase in revenue

More specific criteria and indicators of innovation include:

• number of new products launched over the last three years
• sales volume
• profits
• number of new ideas in the company
• number of projects in the development stage
• costs of the product in relation to the current trends in individual sectors
• production capacity of specific units within company
• average time needed to process an innovative idea (generate new product)

Community Innovation Survey as a measure of innovation

Community Innovation Survey, abbreviated CIS, are statistics covering the field of science and technology, carried out by the European Union. The tests are carried out every two years, and their main objective is to obtain information on the innovative capacity of organizations, and the types of innovations occurring in selected sectors of economy. The research also apply to issues relating to the development of innovation. Aspects related to the development of innovation include: innovation objectives, sources of information about innovations, budgeting, innovation and expenses associated with them. The necessary data for the delineation of indicators of innovation in industrial companies are collected at national level by means of surveys which are constructed on the basis of a common methodology for all operators and definitions. The resulting indicators are assessing the aspects of innovation in the industry, as well as their means of financing.

Research in the framework of the Community Innovation Survey method is based on so-called "Oslo Manual." Frequently asked questions in the questionnaire survey include:

• general information on innovative business
• funds earmarked by the company for innovative activities: R & D, purchase of new technologies, investment in connection with the introduction of innovation, staff training
• impact of innovation on the company's results
• value of innovative new product sold
• sources of information for innovation
• designated objectives of innovation activity
• R&D cooperation with other companies, institutions, national or international
• methods of protection of innovation
• obstacles in implementation of innovation

Innovation measurement according to the Boston Consulting Group

To assess the innovative activities of the company can also use a balanced composition of meters localized in the following categories: inputs, processes and results. The first category includes, among other things: financial and human resources related to innovation activities, the time devoted by top management, the number of patent applications submitted.

For measures of processes is considered: the speed of the innovation process, horizontal approach to formulate ideas.

Results in the last category include the following measures: the number of new products or services, the share of new products as a percentage of revenues, the share of new customers in company profits expressed as a percentage.

References

• Adams, R., Bessant, J., & Phelps, R. (2006). Innovation management measurement: A review. International Journal of Management Reviews, 8(1), 21-47.
• Cormican, K., & O’Sullivan, D. (2004). Auditing best practice for effective product innovation management. Technovation, 24(10), 819-829.
• OECD (2005) Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data, 3rd Edition