Canada’s capabilities for innovation are not being exploited by companies, according to the Conference Board of Canada. The reason? Poor or even lack of use of adequate indicators to measure and manage innovation.
Companies slow their own growth by not having effective indicators to measure and manage innovation. International comparative analyses show that the country is not improving its balance sheet and may even be deteriorating and consequently curbing its growth potential, the Conference Board of Canada warns on its site.
Indicators ignored or inappropriate
Close to 40% of Canadian companies do not measure the success of their innovation activities. Of the firms that do measure it, most use quantities and kinds of indicators that do not adequately apply to their net financial results. And only 8% of companies have a sufficient number of indicators and so get better performance than others.
Other facts noted by the Conference Board of Canada is that executives demonstrate a particularly marked disinterest, the market remains little known and the organizational culture dissociates risk management and innovation. These are all factors which have interfered with companies’ possibilities for innovation.
Advice on the indicators to use
A report drawn up by the Conference Board of Canada for the Centre for Business Innovation, “Metrics for Firm-Level Business Innovation in Canada” suggests the use of various indicators to allow companies to practically measure their innovation abilities. To be found out are the return on investment from innovation, product performance improvement and the rate of customer satisfaction for new products.
For indicators establishing a more exact correlation with overall financial results, the report mentions a higher degree of participation by upper management, a better understanding of the market and risk management related to innovation.
Finally, this report also indicates that the best results will be obtained by companies that make use of multiple indicators.