It is a question that boardrooms in cities around the world have been trying to answer.
Certain companies invest billions of dollars in innovation, and this has increased the need for an accurate method to measure it.
No consensus, however, has been reached. This, in some respect, is due the varying nature of innovation, and the different business areas it can affect. For example, Google’s innovation strategy isn’t to improve its core products, but instead those which could have a wider social impact - represented by its ‘Moonshots’.
As a topic of real relevance, we sat down with Mark Bigham, Chief Innovation Officer at Raytheon to discuss it further. Operating in the defense sector, Raytheon is a technology company founded in Cambridge, Massachusetts and is now the world’s largest producer of guided missiles.
The industry brings additional pressures, many linked to cybercrime and counter-terrorism, which don’t exist in a traditional commercial setting. This increases the need for Raytheon’s innovation initiatives to succeed. Measurement, therefore, takes on added importance, as failing strategies must be dropped more readily if they’re not meeting the public’s demands.
When asked how Raytheon does this, Mark says: ‘the way we measure ROI on innovation at Raytheon is really in two ways - one is financial, looking at investment and the potential return, and the second is strategically, the technology that we’re investing in - do we think that it’s going to position us strategically in the market?’
While this seems like a simple strategy, Mark’s keen to accentuate that the measurement of ROI differs considerably from project to project. Raytheon operate in a vast array of domains, including space and online, and due to this, ROI has to be viewed differently. Mark says, ‘there’s a big change in ROI from project to project, and depending on your area of focus, you will measure your ROI differently, but we do separate them slightly from traditional R&D projects.’ In terms of ROI, Mark states that it’s about ‘driving game-changers’ and making sure that the ROI is as large as possible for each initiative.
The subject divides opinion. Not just from company to company, but internally as well, and at the Chief Innovation Summit in London we will be discussing ROI further, with the event playing host to many senior executives .
The metrics used to measure innovation will clearly change depending on an organization’s goals, and depending on their position within their own lifecycle. But with so many theories to draw on, it’s a debate which is likely to continue for some time.