Two parts to this. Here is the first part.
We all know that innovation is hard to measure.
Assessing innovation capabilities can be particularly hard as they are made up of so many intangibles. We need to frame these capabilities in much better ways, as they mostly remain shrouded in mysteries to render it difficult to know what each business actually needs to invest in, to achieve their goals. Knowing what and where they need to improve their innovation capabilities becomes a critical need to know point for gaining unique competitive advantages.
So much of innovation activity is left to chance and it leaves all involved as vulnerable, open to being beaten to the next ‘big’ innovation breakthrough. I would strongly argue that organizations should build their innovation capabilities in systematic ways, yet few do, let alone understand what this truly means. We simply need too.
Understanding the ‘beating heart’ of organizations
One of the biggest gaps is trying to put a finger on the pulse of what makes up innovation. So much of the capabilities are intangible, locked up in those intellectual capitals of the organizations. Those that center on people, their networks and relationships, the make-up of the structures that support their activities or restrict them, the ability of applying good or bad practices, the every day routines of each of the individuals that work within the organization.
These touch the very nerve center of organizations; you are striking at the very core of organizations, those intellectual combinations they make up so much that determines organizational performance. They expose or they enhance organization performance.
To some degree management wants to be able to measure these intangibles but it also can provide some ‘chilling and damning’ evidence of inefficiencies and managements lack of ability to really improve internal performance, let alone market performance. It is usually the external factor, of poor market performance, kicking in that galvanize the need for internal change. This then becomes reactionary, often too late and market advantages can quickly dissolve.
Where the future beckons is that Knowledge-based capital needs fully capturing.
The critical need today is to capture the rise in the importance of all the knowledge-based capital aspects. Business organizations are recognizing knowledge-based capital.
Knowledge-based capital is critical. As shown above it is becoming more important than the product. Organizations are recognizing the value of knowledge. How do we capitalize on this grwoing recognition in ways that the management of organizations can relate?
Part two outlines one specific suggestion