Too lenient
In too many organizations, the unpredictability of innovation process becomes an excuse for not providing structure, setting goals, or measuring performance. For example, in organization A, a few of the lesser performing divisions used innovation projects to give home to employees that were not productive and burning through their unbillable hours budget. It other words, the innovation budget was used to boost their billable hours metrics. As a result, with little to show for, while the overall productivity of the organization plummeted, this innovation budget got cut. With it, killing all of the organization's innovation activities.
Contrast that with organization B. They invest a significant sum of money in research and development. Yet, the value of the ongoing research and the outcomes of these projects have never been challenged. Researchers involved in projects that lead to commercial success are equally rewarded as their peers that produced no tangible results, even after 5+ years of trying. This organization is unnecessarily wasting a lot of valuable resources, which is unsustainable in a competitive market.
Too strict
Meantime, providing structure, metrics and setting goals is not easy. Commonly used stage gate processes quickly can become stifling.
Innovation does not benefit from a cookie cutter approach. That is, the use of standardized processes and the use of outcome metrics that are so commonly used on the operational side of the organization.
Organization C uses the predicted profitably and ease of implementation as approval criteria. While this may sound like a good idea, in practice it means only relatively certain innovation projects with a small scope obtain approval. No larger and more ambitious initiatives ever pass these initial gate criteria. As a result, the company has missed major opportunities and is losing profit.
The focus on outcome measures, as used in organization C, is nearly always detrimental, as the outcomes of innovation projects are notoriously difficult to predict. Small initiatives can lead to big things, large initiatives can lead to nothing. Outcome predictions are educated guesses at best.
The use of progress and output measures are therefore a better way to assess the potential of innovation projects and to manage your innovation pipeline.
