Case Study Description of Creating Better Innovation Measurement Practices
At most companies, innovation is a top managerial priority. Many managers look at successful innovators such as Apple Inc. and Google Inc. with envy, wishing that their companies could be half as innovative. To boost and benchmark innovation, managers often use quantitative performance indicators. Some measure innovation as results or outcomes, such as sales from new products; others measure innovation as a process, using metrics such as the number of innovation projects; some rely on input metrics; and still others focus on the innovation portfolio by looking at factors such as the percentage of investments in breakthrough projects versus line extensions. The key managerial challenge, the authors argue, does not lie in identifying metrics; there is no shortage to choose from. Rather, they say, it is understanding the problem that measurement should solve for the company and, based on that insight, designing and implementing a useful innovation measurement framework that is appropriate to the organization's needs. To do this, managers need to understand the innovation challenges the company faces, how innovation is currently measured, and the extent to which current measurement practices help or hinder efforts to achieve innovation goals. Only then will they be able to steer clear of common innovation measurement mistakes, such as placing too much value on data at the expense of meaning, or getting bogged down with too many measures that provide contradictory advice and incentivize employees to do the wrong things. The article contains a step-by-step framework that allows managers to identify whether their current innovation measurement practices need to change and, if so, how to go about measuring innovation more effectively. The framework is also aimed at companies that do not currently measure innovation but would like to start.
Authors :: Anders Richtnar, Anna Brattstram, Johan Frishammar, Jennie Bjark
Swot Analysis of "Creating Better Innovation Measurement Practices" written by Anders Richtnar, Anna Brattstram, Johan Frishammar, Jennie Bjark includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Innovation Measurement facing as an external strategic factors. Some of the topics covered in Creating Better Innovation Measurement Practices case study are - Strategic Management Strategies, and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Creating Better Innovation Measurement Practices casestudy better are - – increasing transportation and logistics costs, increasing energy prices, supply chains are disrupted by pandemic , there is backlash against globalization, wage bills are increasing, challanges to central banks by blockchain based private currencies, increasing commodity prices,
competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Creating Better Innovation Measurement Practices
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Creating Better Innovation Measurement Practices case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Innovation Measurement, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Innovation Measurement operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Creating Better Innovation Measurement Practices can be done for the following purposes –
1. Strategic planning using facts provided in Creating Better Innovation Measurement Practices case study
2. Improving business portfolio management of Innovation Measurement
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Innovation Measurement
Strengths Creating Better Innovation Measurement Practices | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Innovation Measurement in Creating Better Innovation Measurement Practices Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Innovation Measurement are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Learning organization
- Innovation Measurement is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Innovation Measurement is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Creating Better Innovation Measurement Practices Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Innovation Measurement digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Innovation Measurement has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– Innovation Measurement is present in almost all the verticals within the industry. This has provided firm in Creating Better Innovation Measurement Practices case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Strong track record of project management
– Innovation Measurement is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Creating Better Innovation Measurement Practices firm has clearly differentiated products in the market place. This has enabled Innovation Measurement to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Innovation Measurement to invest into research and development (R&D) and innovation.
Analytics focus
– Innovation Measurement is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Anders Richtnar, Anna Brattstram, Johan Frishammar, Jennie Bjark can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Superior customer experience
– The customer experience strategy of Innovation Measurement in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Innovation Measurement has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Creating Better Innovation Measurement Practices Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Highly skilled collaborators
– Innovation Measurement has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Creating Better Innovation Measurement Practices HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Innovation Measurement in the sector have low bargaining power. Creating Better Innovation Measurement Practices has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Innovation Measurement to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Innovation Measurement is one of the most innovative firm in sector. Manager in Creating Better Innovation Measurement Practices Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Creating Better Innovation Measurement Practices | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Creating Better Innovation Measurement Practices are -
Capital Spending Reduction
– Even during the low interest decade, Innovation Measurement has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High cash cycle compare to competitors
Innovation Measurement has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Innovation Measurement supply chain. Even after few cautionary changes mentioned in the HBR case study - Creating Better Innovation Measurement Practices, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Innovation Measurement vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Creating Better Innovation Measurement Practices has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Innovation Measurement 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Anders Richtnar, Anna Brattstram, Johan Frishammar, Jennie Bjark suggests that, Innovation Measurement is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Products dominated business model
– Even though Innovation Measurement has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Creating Better Innovation Measurement Practices should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Creating Better Innovation Measurement Practices HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Innovation Measurement has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Creating Better Innovation Measurement Practices HBR case study mentions - Innovation Measurement takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
No frontier risks strategy
– After analyzing the HBR case study Creating Better Innovation Measurement Practices, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Innovation Measurement is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Innovation Measurement needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Innovation Measurement to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Innovation Measurement has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities Creating Better Innovation Measurement Practices | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Creating Better Innovation Measurement Practices are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Innovation Measurement can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Innovation Measurement has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Creating Better Innovation Measurement Practices - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Innovation Measurement to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Innovation Measurement can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Innovation Measurement can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Innovation & Entrepreneurship segment.
Buying journey improvements
– Innovation Measurement can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Creating Better Innovation Measurement Practices suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Learning at scale
– Online learning technologies has now opened space for Innovation Measurement to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Loyalty marketing
– Innovation Measurement has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Innovation Measurement can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Innovation Measurement is facing challenges because of the dominance of functional experts in the organization. Creating Better Innovation Measurement Practices case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Innovation Measurement to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Innovation Measurement can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Creating Better Innovation Measurement Practices, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Innovation Measurement in the consumer business. Now Innovation Measurement can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Innovation Measurement has opened avenues for new revenue streams for the organization in the industry. This can help Innovation Measurement to build a more holistic ecosystem as suggested in the Creating Better Innovation Measurement Practices case study. Innovation Measurement can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Creating Better Innovation Measurement Practices External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Creating Better Innovation Measurement Practices are -
Increasing wage structure of Innovation Measurement
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Innovation Measurement.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Creating Better Innovation Measurement Practices, Innovation Measurement may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Innovation Measurement can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Creating Better Innovation Measurement Practices .
Shortening product life cycle
– it is one of the major threat that Innovation Measurement is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Innovation Measurement needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Innovation Measurement can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
High dependence on third party suppliers
– Innovation Measurement high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Innovation Measurement.
Regulatory challenges
– Innovation Measurement needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Innovation Measurement will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology acceleration in Forth Industrial Revolution
– Innovation Measurement has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Innovation Measurement needs to keep up with the evolution of technology in the Innovation & Entrepreneurship sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Innovation Measurement can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Innovation Measurement in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Consumer confidence and its impact on Innovation Measurement demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of Creating Better Innovation Measurement Practices Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Creating Better Innovation Measurement Practices needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Creating Better Innovation Measurement Practices is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Creating Better Innovation Measurement Practices is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Creating Better Innovation Measurement Practices is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Innovation Measurement needs to make to build a sustainable competitive advantage.