Do We Need To Justify Innovation?

As strange as it may seem, many businesses want or even need innovation, but are not willing to pony-up for the project or initiative. Why?
clipped from innovateonpurpose.blogspot.com

We were asked recently to consider speaking on the topic of justifying innovation. That’s a difficult topic but one that needs to be addressed, since many individuals are being asked to start an innovation initiative, but also justify the investment in resources and dollars, and the opportunity costs.
First question we ask when someone wants to “justify” innovation is: Innovation project or innovation program?
Next question – why do we need to justify innovation at all? No one would ever question the relative value of a purchasing team and process and software, or a sales team.
If the one key competitive advantage you have left is in creating new products and services faster and more effectively than your competition, do you need to justify the infrastructure to do that?
Next, what’s the value of one good idea? Do you think that Proctor&Gamble has recouped all of its innovation investments from the Swiffer alone?

Finally, the last thought around innovation. There are two metrics you can use to measure how well innovation is working. For the first year, most likely, you’ll need to use process based metrics. How many ideas did we create? How many ideas moved into new product or service development? You need to establish your goals and use these metrics early on because it takes time for ideas to prove their value. The second metric is what we call outcome based metrics. Over time as the ideas you generate have impact, you should be able to trace the revenues and margin back to your innovation team. Recognize that probably 85 to 90 percent of your original ideas may not provide a payback, but some will.

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