How to increase your ROI

InnoTools – Measured and Managed Innovation in Companies A Nordic Innovation Center Project

Studies have shown that companies’ return on innovation (ROI) or hit rate is somewhere between 2-10%. That is another way of saying that around 90% of all innovation efforts are never commercialised or used in general. If Nordic companies could raise the ROI with just 10-20% this would give them a significant competitive advantage in global competition.

It seems that if companies start approaching innovation in a more systematic way they could increase their ROI at no or small additional costs.

It seems, however, that innovation is still in its infancy as a management discipline, and it seems that if companies start approaching innovation in a more systematic way – e.g. through the application of measured and managed innovation they could increase their ROI at no or small additional costs.

Two new tools pinpointed, namely the Innovation Radar and Five Disciplines of Innovation.

From  desk-research we singled out two tools, namely the Innovation Radar developed by (Mohanbir Sawhney, Robert C. Wolcott and Inigo Arroniz: ‘The 12 Different Ways for Companies to Innovate’, MIT Sloan Management Review – Spring 2006 Vol. 47 No 3) Kellogg School of Management and Five Disciplines of Innovation developed by (CEO Curtis Carlson) Stanford Research International.

Tool 1: The Innovation Radar

The Innovation Radar was partly chosen because it had already been tested and been statistically documented among 40 companies in the US. More importantly the Innovation Radar was chosen because it gives a holistic view of innovation, and it supports the empirical evidence of companies that take a business model perspective on innovation outperforms companies’ that focus more narrowly on only product or process innovation.

Finally the Innovation Radar provides a tool for measured and managed innovation, and it is easy for a company to answer the on-line questionnaire on which the profiling is based.

Benefits of using the Innovation Radar

  • Visualize and Brainstorm: Explore dimensions of innovation in a systematic and holistic manner
  • Diagnose: Identify the gaps in innovation performance of firms/business systems
  • Benchmark: Benchmark the innovative capabilities of firms within and across industries
  • Design New Ventures: Design and track the development of complete business systems
  • Manage across the Portfolio: Enable a holistic view across the firm’s innovation initiatives

(Source: Rob. C. Wolcott: Innovation Radar – Kellogg School of Management)

Tool 2: Five Disciplines of Innovation

The second tool selected for our pilot project InnoTools was SRI’s Five Disciplines of Innovation.

SRI’s Five Disciplines of Innovation was chosen for some of the same reasons as the Innovation Radar: i.e. it had been tested and proven successful in many projects and received international acclamations. But most importantly, the tool puts strong focus on the Needs of customers in the way it works with individual innovation projects.

Five Disciplines of Innovation shifts the traditional technical focus of innovation towards the business value proposition.

Many innovation projects are biased towards the technical attributes of a product or service. Yet, by forcing people, teams or companies to work with the customer NEED per se of a new product or service, and make them convincingly develop their value proposition in both qualitative and quantitative terms, the Five Disciplines of Innovation shifts the traditional technical focus of innovation towards the business value proposition. As such the Five Disciplines of Innovation ultimately forces innovation projects to ‘think more like a venture capitalist than an engineer’.

Source: Jørn Bang Andersen, senior advisor, NICe | Innovation Management | October 12, 2009