Is an "Innovation Index" even possible?

Mark Adkins at the Product Development & Management Association (PDMA) recently suggested creating an "innovation index" to catalog innovation stories and provide a benchmarking tool. The model it would be based on is the Purchasing Managers’ Index (PMI), which has been around some 60 years.

From the PDMI blog:

Let me propose that PDMA spearhead the design and launch of the Product & Service Index (PSI IndexTM) along the same lines as the PMI. In it we would survey a number of companies on a monthly basis, but rather than asking questions on production levels or new orders, we would probe the following five areas:

• Number of new projects initiated

• Number of active projects

• Number of projects terminated or halted

• Number of people employed on NPD teams

• Number of new product or services launched

The project could prove worthwhile, provided companies buy in - and they get the right people involved. Cutting-edge businesses know that true innovation is not the sole responsibility of R&D - it requires a culture change, and can include every level and department in an organization.

The PMI reports on data from a 40,000-member network of professionals engaged in the supply management and purchasing fields. It appears the PDMI plans to limit its report's scope to new product innovation, though that is a small element of what an enterprise innovation system can do for a business. It might be useful to broaden it out, but problems arise: How do you keep people accountable, especially if a business wants to keep its "smarts" secret to maintain competitive advantage/market share?

The index could be a good tool, provided the reporting's solid. But would such a tool be useful to companies who are using an innovation platform for more than new product development? Would they require a different reporting mechanism to benchmark themselves, and could such a tool exist?

An index is certainly needed.

An index is certainly needed. Something that allows a company to understand its performance or not would be critical. So often innovation reports cite patents, R&D spend as a proxy for an innovation index but they are too crude and narrow. Or we look to market perception for our measurements, which are highly subjective and based on the latest 'cool' - just ask yourself who are the 2 most innovative companies? I bet you one is a fruit and the other something to do with ogling!

So yes - we definitely need indexes and standards (btw) but they do need to be robust. I can already see how line-extension abuse could fudge the figures.

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