“If you don’t measure it, you can’t manage it”
“If you don’t measure it, you can’t improve it”
Depending on the business you are in and what drives it, innovation will be focused in many different areas and have different levels of priority. What remains a constant though is that innovation, at some level, will be necessary to keep your business viable, profitable and growing. This has become even more critical in the last couple of years.
So how do you decide what level of innovation is required for your business and how do you measure to ensure you are on track?
I suspect in most cases, innovation budgets will be determined by taking into account historical levels of investment and by looking at current needs and future strategic initiatives. Also at play here will be the speed at which innovation, through to completion, must be accomplished.
Once established, the necessity of tracking and managing come into play. Here are some examples of common metrics, by category, that are used to do that:
- Ratio of sales of new products to total sales
- Ratio of new products to R&D Expenditures
- Total R&D Spending vs budget
- ROI for new products and processes
- Number of New Products or New Processes
- Number of Continuous Improvement Projects
- Number of Patents
- Improvement % to Key Performance Indicators
- Time from conception to implemenation
Obviously, these are just a few but you get the idea.
Now switching to SR&ED/Grant Funding Success, what measures make sense for you?
Since this relates to getting funding to support your innovation activities, the funding dollars you can obtain are going to be influenced by many factors including your needs, grant types, eligibility, success in accessing the funds, etc. What’s important is getting the most out of the programs that you are eligible for and what makes the most sense for your business (and remember, “Cash is King”).
Here are just a few examples:
- Ratio of Government Funding received vs Total Innovation Expenditures
- Ratio of Government Funding received vs cost of resources to acquire Funding
- $$$ received vs $$$ applied for
- Time from Submission to Approval to $$ received.
- Year over year comparisons.
Again, these are just a few of what you might be using or would make sense for you to use.
If you have other suggestions for either Innovation or SR&ED/Grant Metrics, please feel free to share with others. Go ahead and leave a comment as to what is working for you.