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Benchmarking Idea Management    [Date Added : 10/11/2004 ]
Imaginatik researchers in a recent issue of the Corporate Innovation Newsletter discuss how to benchmark idea management. Idea Management - the collection, development and evaluation of business-focused ideas that deliver value - is an emergent discipline. There are many pioneers working on Idea Management, across industries, business functions and regions. At this time, relatively few companies have a clear understanding of perhaps the most critical aspect of Idea Management: what determines success?

This paper explores the need for Idea Management benchmarking, and describes various methods used by the leading implementers. Idea Management is rapidly becoming the foundation of corporate innovation programs. Adoption is driven by the need for companies to deliver profitable growth through new products, services and processes. The most obvious way of achieving this is to formalize the innovation process, and tap into the almost limitless supply of ideas and insights from employees and select outsiders.

Idea Management is not a cost-free process. There are start-up and ongoing costs to cover internal and external resources, technology acquisition, and implementation expense (see the Imaginatik Research White Paper on The ROI of Idea Management for more information). The fact that there are costs usually indicates that an organization needs to measure the benefits, and typically compare internal performance with comparative firms. The goals of Idea Management Benchmarking therefore are to:

- justify and prioritize investment and resources
- validate and improve processes and methods
- incorporate industry best practice into internal methods
- drive performance by setting demanding targets

There have been several attempts in the past to define Idea Management metrics. Common metrics used by suggestion programs include the absolute number of ideas, and more sensibly, the number of ideas generated per 100 employees per year (it is easy to be fooled into thinking you are successful with 1,000 ideas until you realize that 1,000 ideas from 20,000 employees is a pretty poor result). Contribution rates are often also used to track how many people submit ideas - often there is a hard-core group of submitters who maintain volume, but mask the fact that few people are really using the program.

The problem with these metrics is that they present a simplistic view of an inherently complex human and management process. Often the focus on base statistics causes organizations to ignore more fundamental issues. For instance, overt encouragement of volume tends to yield too many low quality ideas, which clog up the management review process.

Some companies try to precisely track the results from implemented ideas, but it is hard to provide concrete links between an original idea and the end result. Implementation usually requires additional input and there are always time lags between idea generation and measurable returns.

Research has shown that failing Idea Management programs can cause significant damage to an organization, for executives, employees and the project team.

It is therefore wise to understand the key variables that drive program success, and to implement methods to track them in a systematic way. These metrics can then be incorporated into plans and performance measurement, and be used as a diagnostic tool to assist innovation experts in their work.

Imaginatik Research has studied the adoption of Idea Management processes worldwide and has concluded that, although the market is nearing mainstream adoption, the majority of companies are either at early stages of evaluation, or are just beginning their deployment. At the same time, the leading companies have surpassed traditional 'suggestion box' metrics fifty-fold and more. Therefore it is unfair and unproductive to directly compare a novice company to an experienced firm - the 'professional' benchmarks would be simply too high.

The most basic level of Idea Management Benchmarking is focused on the existence of a well-thought out program. This Early Stage Benchmark (freely available from Imaginatik Research) is developed using the basic elements of an initiative:

- Do you have a computerized system to collect ideas?

- Do you have a computerized system to share ideas and collect collaborative input?

- Do you have a computerized system to evaluate and report on ideas?

- Do you have dedicated staff to manage the Idea Management process?

- Do you have an internal marketing program?

- Do you have a reward program and how well is it really working?

- How many ideas have you collected in the last 12 months - and from how many employees?ยท What proportion of idea gathering is event-based compared to ongoing?

- What measurable results are there from ideas generated through the program?

- Do you have a target level of return (contribution to growth, profit, product pipeline, etc)?

Once companies have implemented their Idea Management platform, the measurement focus switches from program existence to program performance. The current consensus among Idea Management leaders is that companies should use a balanced set of metrics for the Advanced Benchmark. This benchmark is comprised of two types of metric:

- Process: the success of the process (how well Idea Management is working)

- Outcome: the results of the process (what happens to top concepts upon implementation)

Imaginatik Research is working with several large corporations to define appropriate measures that determine program performance.

The Advanced Benchmark is still under development. One practical issue we have experienced is that there is a significant difference in success rates between firms. The main factors influencing success appear to be leadership support, the support of a dedicated and trained staff, the use of a well-thought through process, a flexible software, and the level of ambition of the project team.

Benchmarking is a powerful tool to drive adoption of Idea Management and to encourage companies to be ambitious in their innovation goals. There are too many organizations that are satisfied with their internal performance, implementing programs that double their success year-on-year, and yet they should really be aiming at world-class performance which might be 50 times their current rate.

Any metric needs to be credible, easy to understand and easy to administer. Credibility is the most important concern - if the numbers or the method are not believable, it will have no impact. It is also important to remember that metrics and benchmarks can never
fully reflect the performance of an initiative. Idea Management is a complex, dynamic, human process, and as such, a purely metrics-based approach to measurement runs the risk of missing out on big picture benefits. For example, programs can boost employee morale, promote strategic alignment and support a problem-solving culture. The best companies understand this and use indicators as a way of determining whether a program is on track, and to provide direction on what to do next.

Imaginatik
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