Performance Measurement Training

Innovation

The innovation measurements assess the improvements in provid­ing new products and product features into the marketplace.

1. Reduction in new product introduction lead time

The measurement indicates your ability to achieve and maintain a competitive advantage by introducing more new products, faster, at lower cost and more reliably than your competitors. It is calculated as the total elapsed time in weeks from concept to release for volume production. It should be measured by product in total as well as by individual phases of the process (Concept, Design, Proto­type, Pilot, Release to Volume Production).

   2. New product sales revenue as a percent of total sale revenue

Determine optimum levels of new product sales revenue required for your products and markets. Incorporate this information into your strategic plans and annual business plans and record performance utilizing trend charts.

3. Number of new patents granted

This measurement is a key indicator of the level of creativ­ity and innovation in the entire company. It pertains to older products, existing products (extending their life cycles through such things as addition of new features and options), and processes used to develop, produce, admin­ister, market and sell your products and services. It is measured quarterly and/or annually and depicted on trend charts.

Conclusion

It is important to remember how much and what kinds of improvement are being made by World Class companies. Con­ventional wisdom says 5-10 percent improvement in a process is certainly possible. But when we talk about a 5-10 percent improvement, how much change is required?

Our experience has been that a 5-10 percent change means fine tuning what a company has already doing.

The World Class companies are not settling for 5-10 percent improvement. The companies that we have seen are making 30-75 percent improvement in their processes.

How much change is required to get 30-75 percent improvement? Certainly not fine tuning what is already done. This level of improvement means fundamentally changing the way we do the work. Challenging the conventional wisdom and the way we do the work is management's job in those companies that want to be World Class!