I’ve been inspired by Jeff Jarvis’ post in the HBP Davos Diary about Journalism’s Crisis to become a bigger pain in the butt. In his post, he argues that journalists failed to be persistent enough to get people to pay attention to the issues that led to the economic crisis, whether through their own reporting, or through curating the questions the experts were posing all along in their blogs. Whether or not you agree with his conclusion that this is a journalism issue, he makes a good point about not sitting on the sidelines when issues are known.
My post on measuring innovation highlights one of these issues. The post generated some great comments and interesting off-line discussions, and I’ve come away with a few general conclusions. First, it seems that the majority of people are falling I’ve been talking to are falling into two camps. There are those who feel that innovation can, and should be measured, and feel that the quantitative metrics currently at our disposal can be used to accomplish this. Then there are those who feel that when something new is developed that has no current benchmark, then measurement is irrelevant and intuitive judgment is best. I don’t fully agree with either, and think it is the responsibility of all of us who work in the field of innovation to help our clients to develop new metrics that appropriately blend the best of both perspectives.
I was happy to find a few people who agree with me, and who are also actively working to develop new ways to think about the value that is added to a company or market. David Hughes pointed to a resource from the UK that talks about measuring Value Added (VA) by businesses. What I found interesting is that they are taking a fairly straightforward, overall measure of how well a company is doing as compared to the previous year. To me, the point is that ultimately we should be looking for holistic business success, regardless of what we can or can’t measure individually.
Some other interesting points also came up in discussions. Can you quantitatively project the value of a human process or culture change, such as customer service focus, before you adopt that process? While a dollar value may not be appropriate in that case, a different assessment of the value could be developed. Was the value of the iPod and its associated services projected before they were launched? Maybe not, but it could have been; if not against the new category that was not yet created, then qualitatively against how well it satisfied consumer needs.
My point is that we need to start rethinking our current mental models for how we measure value. It’s not all quantitative, and it’s not all intuitive, and it’s up to us to prototype new methods and iterate them until they can be generalized and widely adopted. We can’t get there if we reject the possibility that they exist. Isn’t that what innovation is all about?
I absolutely agree you about the need for both quantitative qualitative approaches to understanding innovation. I suspect that the impact of incremental changes to a product or service can be captured using standard measurement schemes. The more radical or disruptive an innovation, the less effective these standard measures will be. The same can be said for projections. The more potentially disruptive the innovation, the less useful predictions are (this ties in with some of the thinking out of the complexity field and also the work of Philip Tetlock James Shanteau on expertise prediction).
Three tools that may be useful here:
– Value Network Analysis (which examines the exchanges of tangibles intangibles between roles in a network). Who is impacted by this new product or service? What existing relationships are threatened? What new opportunities are opened up?
– Most Significant Change. A narrative-based approach to assessing monitoring change that came out of the development sector. What impact are we having? How do we convey our goals to those involved in a powerful way?
– Cynefin Model. Is your situation Simple, Complicated, Complex or Chaotic? And then what do you need to do once you understand this?
The series of posts on measuring innovation have been a welcome breeze, Ellen.
To not measure something only because the existing metrics won’t apply is likely a) head-in-the-sane and b) disruptive to the very drivers behind the push for innovation.
If the goal is to innovate and not invent, then you nailed it with your we should be looking for holistic business success. ie: if the value we seek is not measurable, why are we seeking it?
Beware of the Cynefin model. Matt turned me onto that some months back and I can’t remember the month of October anymore. I’m pretty sure it’s related. 😉
@Matt – This is a great collection of tools. I think the connection to complexity theory is important. I’ve seen things similar to the Value Network Analysis, but less formally done. Thanks for the mention of this one.
@Sean – Yes, traditional measures of the holistic value will always be useful, if for no other reason, they are simple – are we doing better than we were before?
I’ll let the two of you duke out the Cynefin model. Let me know who wins…