This article was written by Jennifer Schwarz, MSc in Social Innovation and Entrepreneurship at the London School of Economics, and Project Manager at Ludic. Jennifer is a leadership development trainer with the MASA Leadership Center in Israel and currently works with the Ludic Group in the UK developing digital learning and engagement strategies for global organisations.

Measuring innovation performance can be challenging, complicated and time consuming, but it serves an extremely important function. It gives us the opportunity to explore the extent to which an organisation or team is nominally innovative, determine if the organisation is on the right track to achieve their objectives and identify areas for improvement.

Within the public sector specifically, measuring innovation performance is not a common practice, but it really should be.

Research in innovation reveals that in the innovation process, the main problem is not in generating new innovative ideas. Rather, the challenge is to successfully manage the process itself.

To determine whether you are managing the innovation process well, you need to make time during the process to measure or assess. By doing so, you create the opportunity to course correct if necessary and achieve better outcomes. So how might we begin to think about measurement?

How to measure innovation

As part of my master's course dissertation, I conducted a literature review on innovation performance measurement, which presents numerous approaches and metrics. As such, it is challenging to represent this diversity of approaches in a single synthesis of measurements. Measuring innovation performance differs based on the definition of innovation, the type of innovation (product, process, organisational or service), the type of organisation (for-profit, not-for-profit or public, private sector) and the intended outcome. In the same vein, measurements might focus on different aspects of innovation performance from innovation activities, capabilities, outcomes or the wider system or environment in which innovation occurs.

Within the public sector, innovations must have the end goal of delivering better outputs for the public good, which inevitably influences the measurement framework.

There is no unifying consensus on how to operationalise measurement according to these different components. However, The Oslo Manual, published by the OECD, attempts to create a universal standard for innovation measurement in the private sector by providing a universal definition of innovation with common metrics. The latest edition (2018) even touches upon measurement in the public sector. According to the OECD:

An innovation is a new or improved product or process (or a combination thereof) that differs significantly from the unit’s previous products or processes and that has been made available to potential users (product) or brought into use by the unit (process).

How is measurement in the context of the public sector any different? Within the public sector, innovations must have the end goal of delivering better outputs for the public good, which inevitably influences the measurement framework. Public sector measurement must be concerned with identifying how innovation helps to solve problems and improve outcomes for society. Because public sector innovation is less linear and operates at various administrative levels of government, measurement can get complicated.

Within the emerging field of public sector innovation, there is not a long history of measuring innovation. A few large-scale, quantitative-based surveys of public sector organisations have sought to create measurement frameworks building upon the Oslo Manual, such as the Nesta Innovation Index, Australian Public Sector Innovation Indicators (2011) framework, and the European Public Sector Innovation Scorecard (2013). However, these existing frameworks are too complex to quickly and easily replicate, as they rely on both quantitative plus qualitative surveys with a large sample size conducted over an extended period of time. Especially in the public sector, there is a need for further development of measurement systems. What is needed are simple, adoptable frameworks that can measure innovation at any level of government, from team to unit to department or agency.

The first step

So what specific indicators should be measured? If your team is seeking to quickly assess its innovation performance, start by looking at the key capabilities that enable your unit to be innovation-ready. A review of existing frameworks, looking at both the private and public sector, identified the most commonly stated management capabilities for innovation from an organisational perspective. Emergent themes of enablers most commonly assessed across different frameworks are:

  • Human resources: mobilising the capacities of individuals involved
  • Leadership: the vision, the shared values and the alignment of incentives
  • Organisational culture: includes trust, risk attitude for experimenting with new ideas, tolerance for failure, degree of diversity
  • Strategy: an understanding of the landscape of opportunities within the current organisational and political climate; and
  • Management: the quality of organisation and planning for innovation activities.

From these enablers, various sub-indicators can be established.

To kick-start your innovation measurement practice starts by carving out the time and intention of what innovation process or practice or behaviours you would like to assess. Invite a team of trusted and curious colleagues to join you. Together, identify which key innovation capabilities and subsequent indicators are relevant for you and your team to assess. As you identify the capabilities, consider ranking how well your unit is doing on each based on a 1-5 scale (1 = not good, 5 = excellent). This ranking scale can highlight more clearly areas of strength, weakness and potential improvement.

To further guide you, you might start by asking and discussing these five most basic questions as they relate to commonly found enablers of innovation:

  • Do we have the conditions for a positive organisational culture for innovation?
  • Do we have an innovation strategy that is aligned with the greater opportunities existing in the surrounding environment?
  • How are we utilising and mobilising our innovation resources (human, financial, tech etc.)?
  • How well is the leadership promoting innovation?
  • Are we engaging multiple stakeholders in the process?

These questions can and should spark the thinking and conversation on how to measure innovation performance in your unit, team, department or agency. The intention behind this discussion-based assessment is to adopt a measurement mindset which is tuned into asking the tough questions and looking at the appropriate targeted areas to strengthen innovation performance. To further develop your measurement mindset check out the Oslo Manual 2018: Guidelines for Collecting, Reporting and Using Data on Innovation which holistically discusses the internal and systemic factors that can influence innovation. And to directly dive into innovation measurement as it applies to the public sector, have a read of this article: Measuring innovation in the public sector.

Performance measurement is one of the most critical elements of success in innovation.

We need improved diagnostic frameworks that can quickly and easily be applied by teams, departments or agencies to consistently evaluate the process and adjust the trajectory as necessary. As presented, informal measurement systems do not have to be survey based. If we fail to frequently measure performance in innovation, we miss a great opportunity to draw out the needed lessons and best practices for how innovation occurs. With these learned best practices, innovation can be more frequently used to solve public problems and improve outcomes for the public good. 

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