Tuesday, January 23, 2007

Air Products, Part 3: Air Products, cont., How to use Metrics

The successful innovative environment at Air Products depends upon metrics and evaluations, and for the research project Demystifying the Link Between Innovation and Business Value, several key lessons were learned.

First, metrics are easier to devise for incremental innovation programs where one is working in a structured and well-defined space. Metrics to gauge radical innovation efforts are not easy to devise. New ideas need time and space to be developed so that applications can be fully understood. Moreover, the environments where such ideas might be deployed are also less understood than the traditional domains in which the company is operating in.

Second, metrics for innovation are normally calculated at the process level (e.g. efficiency values) or the output level (e.g. customer satisfaction, customer retention, etc).

Third, when allocating resources for innovation, most often organizations only hold managers’ responsible for spending their budgets. Instead, managers must be held accountable both for spending and returns and there must be systems in place to shape innovative ideas into useful business plans and projects.

Overall, Air Products is a model of an innovative culture created in an established industry. Their business process innovations have been dramatic and sweeping, and have created an organization with firm procedures and metrics around incremental innovation that contributes to their market success.

For more information, contact Kevin Desouza for the final report!

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