NESTA’s innovation metrics due in 2010
“Traditional methods of measuring innovation, such as the level of investment in research and development, don’t tell the entire story (…) NESTA, a nonprofit organization that promotes innovation, wants to create a new index, one that will be industry-specific (…) [the] new Innovation Index, due in 2010 (…) With greater insight into the main players and structure of the economy, these figures could use it as the basis for decisions that in turn might accelerate innovation in the private and public sectors.”
Read Ernest Beck’s article, “How To Measure Innovation,” on BusinessWeek.
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Measuring innovation means dealing with a basket of leading and lagging indicators, often looking to establish a clear cause and effect relationship to support investment decisions on new products and services. For instance, R&D investment levels can be correlated to the number of patents filed. Corporate strategists and planners single out growth rates and a variety of ratios factoring revenues and margins, then ranking and comparing new vs. mature products to address the product portfolio lifecycle.
It should be noted that there isn’t a reliable rule of thumb on what level of R&D expenditure delivers what specific income. As a matter of fact, each industry vertical and market segment might show fairly different behaviors. Innovation coming from units mostly dealing with professional services, such as custom software development and systems integration, could be underrepresented by the fact that quite a bit of the work they do would fall outside of accounting records for R&D. Moreover, studies and benchmarks just focusing on large and publicly traded corporations might miss key lessons on how successful start-ups address innovation and risk management.
I need to link this post to my recent blogging about innovation and the role of government as policy making requires reliable figures to work with. If you happen to be interested in this subject, I suggest downloading the E.U. published the European Innovation Scoreboard in 2007 as well as reading Businessweek’s A Better Way to Track the Numbers which discusses an initiative led by the U.S. Department of Commerce to come up with reliable innovation metrics. By the way, NESTA, the National Endowment for Science, Technology & the Arts, is a British organization.
Related posts:
- Innovators’ Dilemmas: To Innovate or Not To Innovate?
- The List of the Most Innovative Companies
- The Most Admired for Innovation
- S&P’s STARS Innovators
- The World’s Most Innovative Companies
- The 2008 Global Venture Capital Survey
- The Top 10 Best R&D Companies in the World
- Innovation Index Funds
| J. de Francisco |  |
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| Chicago, IL 18 July 08 |  |
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