Business is about profit.
I define business as creating wealth through profitable transactions.
Indeed it’s the first duty of a CEO and board to work to the best interests of shareholders in providing a return on their investment.
Do you measure?
If you can’t measure it, don’t do it.
In many businesses precise metrics are employed to ensure people and departments are providing an adequate return on their costs, wages and the attendant overheads.
In production for example we measure process efficiency as output per unit time, divided by costs. We then work to maximise this, but we measure it.
In accounting, law and consulting practices, earned income compared with cost is measured. If you are not returning a profit on your time, than your career may indeed be short-lived.
In fact there is an old axiom in business, “if you can’t measure it, don’t do it”.
In the case of innovation and indeed complete innovation departments, the rationale behind the establishment of an innovation department is most often that “it’s the done thing - we need to be seen as innovative.”
But is this really working and, more to the point, are these people paying their way?
What’s the return on investment on your innovation initiative, do you measure it?
Where to Start?
Done properly innovation initiatives should be producing positive outcomes within 12 months at the most, if not, it’s time to question your approach.
There are two important points to be made in looking to measure innovation:
- Innovation is not research where the chance of a possible outcome is uncertain.
- Innovation is a systematic process that can be measured. Indeed metrics for innovation are not that difficult to establish. Metrics need to be in place before you even start.
Of all things, don’t be sucked in by the story that innovation is difficult, it takes time and so on.
Are new hires contributing to the business?
One great way to measure the overall effect of all staff, including the addition of people devoted to innovation and headcount in general, is to measure the company’s overall profit per head. This is a good indication of the overall effect of growing staff numbers.