Business Development Metrics

Financial resources dedicated to innovation. Although in isolation this variable can be dangerous, innovation requires real resource commitment. However, apportioning a huge budget to innovation can lead to the “big bet” trap. In fact, limiting funding can be the right thing to do. Scarce resources force teams to zero in quickly on critical assumptions, find cheap ways to test those assumptions and develop lean, flexible structures. So start with “just enough” and add more.
Resources focused on innovation. This metric ensures that there is dedicated time for innovation activities. In many companies, the really scarce resource isn’t money, it’s time.

Ring-fenced resources for noncore innovations. The previous two metrics ensure that the company generally allocates resources to innovation. It’s important that some of those resources are specifically focused on non-core innovations, and that those resources are fiercely protected, even when times get bad. Kennametal, a $2.3 billion manufacturer of metal cutting tools and mining equipment, established a centralized breakthrough technology group to focus solely on long-term innovations. The group evaluates new technologies, new markets and ways the company can bring significant game-changing innovations to existing markets.

Senior management time invested in new growth innovation. Innovations that are markedly different from core initiatives require careful nurturing from senior leaders. For example, when Procter & Gamble is working on category-creating products, senior executives join in consumer observation sessions, go into the labs to review early prototypes and actively participate in day-long brainstorming sessions.

Number of patents filed. Again, this measure (or an equivalent for non technology companies) can be quite meaningless on its own. But combined with the other metrics, it can be an important interim measure that ensures a constant effort to develop new technology.

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