Innovation objectives are aims to significantly improve something through the use of experimentation, risk-taking, and creativity. These goals tend to involve a higher degree of uncertainty than traditional business objectives, which typically aim for more predictable and easily achievable improvements. Innovation objectives often require more innovative approaches to problem-solving, as they seek to make significant and transformative changes. The following are common types of innovation objectives.

Time

Making things faster, or potentially slower if that has value. For example, a manufacturer of high speed trains with a goal to make trains faster than flying for major domestic routes including the time to get to an airport.

Productivity

Getting more output for an hour worked. For example, a team of 5 software developers who want to optimize their architecture, designs, work processes and toolset to out-code a competitor with 1000+ developers.

Efficiency

Getting more output for a unit of input. For example, an architect with an objective to use passive design to produce buildings that consume 80% less energy for heating, cooling and ventilation.

Convenience

Making things easier for customers. For example, a nation aims to produce a simplified tax code that is fair, progressive and stimulative that requires less than 2 hours a year of administrative work from the average small business owner.

Quality

Transforming quality such as inline skate wheels that last 30x longer than current products on the market.

Customer Needs

Solving an unsolved problem such as curing a disease.

Customer Experience

Customer experiences that represent a leap forward such as an amusement park attraction that provides a new level of realism.

Risk

Dramatically reducing a risk. For example, a mode of transport that is an order of magnitude safer than alternatives.

Performance

Performance targets such as the speed of an algorithm.

Competitive

A competitive advantage such as an automation that reduces the cycle time of an order fulfillment process by 90%.

Knowledge

Developing superior know-how and valuable intellectual property.

Sustainability

Transforming a process that isn’t likely to end well to one that has a bright future. For example, an energy source that has a very small environmental footprint that can be scaled to meet global needs.

Quality of Life

Innovation objectives that aim to make life better such as an urban design that transforms a neighborhood.

Moonshot

A moonshot is a significant innovation that takes an extended period of time to achieve.

Innovation metrics are tools used to assess the innovation efforts of a company. It can be challenging to accurately measure innovation, as it is often intertwined with more routine activities such as continuous improvement. The objective of innovation is to create significantly superior techniques and products compared to competitors. Therefore, metrics for early stage innovation may aim to verify that ideas and experiments are bold enough. This requires specialized metrics, as traditional business metrics are typically geared towards evaluating end results like revenue and risk reduction, rather than risk-taking.

Cost Improvement Rate

In many industries, innovation is focused on reducing a particular cost. For example, in the solar energy industry a low cost per watt is a valuable competitive advantage. A new cost rate represents the annualized reduction in a critical cost.

Development Pipeline

The number of innovations at each stage in an innovation pipeline.

Experiment Cycle Time

The average time from initial acceptance of an idea to its ultimate rejection. A short experiment cycle time indicates that ideas are quickly being validated and tested. Successful ideas are measured with the length of full innovation cycles such as time to market.

Experiments

The number of experiments conducted per month or quarter and their success rate.

Growth Gap

The gap between your target and actual growth rate. Revenue growth is often the primary goal of innovation.

Idea Breadth

The number of unique categories of innovation ideas. May highlight problems such as an innovation program that is over focused on releasing a particular category of product.

Idea Depth

The number of unique sources for ideas. Measures how well your innovation program capture ideas from your employees, partners and customers as opposed to resulting from two people brainstorming in a room.

Idea Generation

The total number of ideas that you’re considering per month or quarter.

Idea Selection

The percentage of ideas that are being accepted for experimentation.

Innovation Compensation

The percentage of your performance based compensation that can is directly tied to successful innovation.

Innovation Overhead

Your total innovation spend as a percentage of revenue. Can be used to benchmark against an industry or competitor.

New Patents

The number of new patents is amongst the oldest ways to measure innovation. Patents can be dangerous as a primary goal because they aren’t necessarily valuable to your business. It is common for leading companies by number of patents to be large, well established firms that have moderate revenue growth. In some cases, such firms are perceived as lacking in innovation despite impressive patent numbers.

New Products

The number of new products launched in a quarter. The definition of new product is important here as a slight upgrade to a product is often considered new. The goal of product innovation is to create products that improve on the old by an order of magnitude. As such, only truly new products are typically counted for the purposes of innovation metrics.

New Revenue Rate

The percentage of your revenue that comes from products that didn’t exist 3 years ago.

Project Risk

The project risk related to late stage innovation initiatives. Innovation processes typically seek to shift risks to early stage lightweight experimentation. Late stage risks are often commercially relevant and are managed with standard risk management practices.

Return On Investment

Standard financial metrics such as return on investment are used to measure the returns of an innovation program as a whole with the understanding that innovation is a long term investment that is better measured over long periods such as 3 years as opposed to quarter over quarter.

Sustainability Metrics

Innovation may be geared towards an organization’s sustainability goals that are measured with metrics such as unit energy consumption or waste output.

Time To Market

The average cycle time from idea to launch.

Time To Volume

The average cycle time from idea to launch and achievement of commercial relevance as measured by business volumes such as service subscribers.

Experiment Cycle Time is a measure of how long it takes for an idea to go through the innovation process, from acceptance to rejection after testing. This metric is used to assess the efficiency of the process for quickly, cheaply, and safely determining which ideas are not viable. It is not typically used as a primary goal, but rather as a secondary metric to complement other measures such as time to market or time to volume, which are used to evaluate successful ideas.

Here are some examples of Experiment Cycle Time in action:

1. A company that develops new products has a process for evaluating and testing new ideas. They receive a suggestion for a new type of kitchen gadget and begin the innovation process. After conducting market research, prototyping, and testing the product, they determine that it is not viable due to low demand. The Experiment Cycle Time in this case would be the length of time it took to go through the entire process and make the decision to reject the idea.
2. A tech start-up has a process for rapidly prototyping and testing new software features. They receive a suggestion for a new feature and begin the innovation process. After conducting user testing and analyzing the results, they determine that the feature is not viable due to low adoption rates. The Experiment Cycle Time in this case would be the length of time it took to go through the entire process and make the decision to reject the idea.
3. A pharmaceutical company has a process for evaluating and testing new drug candidates. They receive a suggestion for a new medication and begin the innovation process. After conducting extensive clinical trials, they determine that the drug is not effective and decide to reject it. The Experiment Cycle Time in this case would be the length of time it took to go through the entire process and make the decision to reject the idea.

In all of these examples, Experiment Cycle Time measures the speed at which the innovation process can identify and reject ideas that are not viable, allowing the company to focus resources on more promising opportunities.

A distribution strategy outlines how a company plans to make its products or services available to customers. This includes not only the sale and delivery of the products, but also the overall customer experience, including customer service. Many companies use multiple distribution channels to reach customers in various ways and may tailor their distribution strategies to specific regions or markets. In some cases, a company may seek partnerships or utilize low-capital structures to reach international markets.

Some examples of disruption strategy include:

1. Introducing a new product or service that is significantly cheaper or more convenient than existing options, making it attractive to a wider market.
2. Using technology to streamline and automate processes, making it possible to offer products or services at a lower cost than competitors.
3. Leveraging a strong brand or reputation to gain a competitive advantage and win market share from established players.
4. Offering products or services that cater to underserved or underrepresented segments of the market, such as by targeting specific demographics or addressing specific needs or pain points.
5. Leveraging partnerships or strategic alliances to access new markets or resources, or to gain a competitive edge.
6. Focusing on customer experience and building a strong customer base through excellent customer service, loyalty programs, and other retention efforts.
7. Implementing agile and flexible business practices, such as using lean or agile methodologies, to quickly respond to changing market conditions and customer needs.

Continuous improvement is a systematic approach to improving products, services, and processes over time. It involves a cycle of planning, implementing, measuring, and adjusting in order to achieve ongoing improvements. This process typically involves identifying areas for improvement, implementing changes or improvements, evaluating the results of these changes, and making any necessary adjustments to further improve performance. Continuous improvement is an ongoing process that seeks to identify and eliminate waste and inefficiencies in order to create value for customers and the organization. The following are illustrative examples of continuous improvement.

Product

An engineering team that continually finds ways to improve a figure of merit such as the energy conversion rate of solar panels.

Service

A retail banking website continually improves its infrastructure and service management processes to decrease its downtime and increase availability.

Experience

Improving the intangible elements of a service such as the taste of food on a flight. Typically measured with a process of quantification of customer surveys.

Environments

Improving physical environments such as buildings, interior design and landscapes. For example, a large restaurant chain that is continually experimenting with new interior concepts.

Processes

Improving processes by eliminating wasted effort or resources. For example, a farmer who bags fruit as opposed to spraying it with chemicals once a month.

Assets

Asset improvements such as upgrading a machine that is a bottleneck. For example, a rail line does an analysis and finds that a particular legacy model of signal equipment has caused an usual number of delays due to their high maintenance requirements. The signals are replaced with more reliable models.

Policy & Procedure

Identifying counterproductive or inefficient policies and replacing them. For example, a airline that chooses a passenger to be removed from an overbooked flight using a complex algorithm that can’t be explained to the passenger resulting in dissatisfied customers and potential public relations issues. A more efficient policy might be to incrementally increase compensation offers until a passenger volunteers.

Information

Improving communication and information. For example, if a customer service team gets the same question 200 times a day, they might contact a marketing team about updating product packaging to make things more clear.

Information Technology

Improving software and related machines such as robots. For example, a robot that sorts recycling has its error rate improved on a regular basis with tweaks to its machine learning algorithm.

Risk

Seeking ways to further reduce managed risks. For example, a farmer reduces risks related to the price fluctuations of commodities with incremental strategies to diversity and differentiate their crop.

Quality

Improving quality such as a manufacturer that investigates quality control defects to determine root cause and identify improvements to designs, parts, processes, materials, methods and controls.

Culture

Efforts to improve organizational culture on an ongoing basis using techniques such as sharing corporate stories to build a sense of team identity.

The Product-as-a-Service business model involves offering a service in areas that were traditionally sold as products. This model involves ongoing interaction with customers, including support, and may also allow for the exchange of a product for a newer model on a regular basis. This approach shifts the focus from selling products to providing ongoing value to customers through services.

The Product-as-a-Service model can provide a steady stream of income for producers through monthly subscription fees or usage-based charges. Customers may find this model appealing due to the flexibility, enhanced support, lower upfront costs, and reduced risk it offers. For instance, a customer who subscribes to a car sharing service does not have to worry about maintenance and incurs lower upfront costs compared to purchasing a car outright. This model can offer benefits to both producers and customers.

Examples of Product-as-a-Service include:

1. Software as a Service (SaaS): Customers pay a subscription fee to access and use software on a recurring basis, rather than purchasing it outright.
2. Cloud computing: Customers pay for computing resources on a pay-per-use basis, rather than buying and maintaining their own hardware and software.
3. Car sharing: Customers pay a subscription fee to access a fleet of vehicles on an as-needed basis, rather than owning a personal vehicle.
4. Subscription boxes: Customers pay a monthly fee to receive a curated selection of products, such as clothing, beauty products, or food items.
5. Furniture rental: Customers pay a monthly fee to rent furniture and appliances, rather than buying them outright.
6. Home cleaning and maintenance services: Customers pay a recurring fee to have their homes cleaned and maintained by a professional service.
7. Music and video streaming services: Customers pay a subscription fee to access a library of music or video content on a recurring basis, rather than purchasing individual songs or movies.
8. Fitness clubs and gym memberships: Customers pay a monthly fee to access fitness equipment and classes.
9. Professional services: Customers pay for professional services, such as legal or accounting services, on an as-needed basis rather than hiring a full-time employee.