An article in Industrial Market Trends alerted me to the Goldense Group 2008 Product Development Metrics Survey of the top 10 R&D metrics used by industry:

• R&D spending as a percentage of sales (77 percent);
• Total patents filed/pending/awarded/rejected (61 percent);
• Total R&D headcount (59 percent)
• Current-year percentage sales due to new products released in the past six years (56 percent);
• Number of new products released (53 percent);
• Number of products/projects in active development (47 percent);
• Percentage resources/investment dedicated to new product development (41 percent);
• Number of products in defined/planning/estimation stages (35 percent);
• Average project return on investment or average projects payback (31 percent); and
• Percentage increase/decrease in R&D headcount (31 percent).

I’m not surprised, but nonetheless a little disappointed, that the vast majority of these are activity metrics as opposed to outcome metrics. The two exceptions are ‘current-year percentage sales due to new products released in the past six years’ and ‘average project return on investment or average projects payback’. As such, they are potential candidates to elevate from operational metrics on a dashboard to strategic KPIs on a scorecard.

Both of these metrics are lagging, rather than leading, indicators of innovation which means that they do a good job of tracking innovation after it happens but may not give us much insight into future innovation. If you were in charge of creating a leading KPI for innovation, what would you choose?

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