Measuring innovation

How do you measure the return on investment in innovation? Recently, there was a good discussion in the Leadership+Innovation community at LinkedIn comprised of people working on the intersection of leadership and innovation in large and established organizations.

I like the way Jeff Murphy, an Executive Director at Johnson & Johnson suggests how to manage expectations:

1) Initially, focus on engagement, training and participation of individuals.

2) Then, as you begin to build a critical mass of capable individuals, the focus shifts to your innovation pipeline (e.g., flow of projects through concept, development, launch, etc.) and early wins.

3) Finally, as your initiative begins to mature, your focus shifts to the end goals - return on investment, successful new programs launched, impact from new launches, etc.

Jeff Murphy says that if an organization gets ahead of itself in the metrics area, it can lead to unrealistic expectations during the early stages. On the other hand, if it gets behind on implementing the appropriate metrics, it leads to under performance.

I couldn't agree more. Everyone it seems is itchy to get to number three but struggles because the groundwork has not be laid.