Why You Need An Innovation Scorecard

Every year, innovation leaders should prepare a scorecard that summarizes their unit’s performance, impact and potential. While this seems obvious, many pass on the opportunity and this is a big mistake.

If your organization doesn’t know what your unit or program is capable of, it won’t know how to leverage your capability to strategically advance its business. Worse, you run the risk that your internal customers will begin to rely on your innovation capability for urgent basic work instead of high-impact, important value creation. Many business leaders confess that when they look elsewhere for business growth opportunities it is because they don’t understand how to fully leverage the mysterious black box called R&D. It is worrisome when business leaders begin to look outside the organization for something that can and should be done internally.

Your scorecard will double as an advertising campaign to create internal demand for your innovation capability. Your customers (business unit and functional leaders) don’t always know what they want until they see it. Your scorecard illustrating your performance, impact and potential can provide just enough of a story for leaders to proactively decide how to tap into your innovation program.

Building a Scorecard

Performance
Your scorecard should speak the language of business and of leaders – money! Illustrate how your innovation program grows top-line revenue and profit and how it improves margins for existing offerings. Many leaders want to know the approximate ROI for each type of innovation project they are considering (e.g. typical ROI for a new product versus an improvement or a breakthrough). This kind of information helps business leaders engage in innovation strategy and to set placeholders for revenue targets when planning.

Impact
Demonstrate how your innovation program enables strategic impact. Illustrate how your innovation projects build bridges to access new growth opportunities such as new markets, channels customers, partnerships, and geographies. Many might not be accessible without an innovation to lead with. Additionally, reveal the new capabilities that were developed through innovation projects, enabling the organization to expand the breadth and depth of its value creation for customers.

Potential
Share a glimpse of your innovation program’s future. Provide highlights of the value you are unlocking in your pipeline (your work in progress). Highlight how you will accelerate your pipeline performance by improving your innovation process, so it is faster and more effective than external R&D providers and competitors. Lastly, show your internal customers where you are heading: the new capabilities you are intending to build, the trends you are exploring, and the windows of opportunity you are opening. This proactive communication engages business leaders to better understand how to fully leverage the innovation program to advance their business strategies. At a minimum, it ignites a discussion with your internal customers, and this is exactly what you want.

 It’s easier than you think.

• Stick to a 1-pager. This guarantees that everyone will read it.
• Use few but meaningful metrics and visuals.
• Tell a story. People will remember the story even if they forget the numbers.

When Starbucks decided to expand into China, their innovation leader developed a new scorecard. Among some of the key metrics shared was the percentage of new product ideas and projects that were aimed at the Chinese market, their potential value, and expected cycle time through the pipeline. The scorecard immediately reminded everyone that innovations can play a crucial role in accelerating market entry. The scorecard served as a call to action and it improved organization-wide engagement, it increased the desired # of ideas and projects for the new market, and it helped to contribute to a more successful entry into China.

Need inspiration? Connect with us and explore some ideas.