Performance and Innovation Management
Innovation performance management
A company needs to have an innovation strategy, making a clear distinction between the strategic objectives for product development and those for new business creation. Creating new (disruptive) business within a large company will only be successful if it is clear, internally as well as externally, why the company is doing it. Although new business creation is essential for long-term financial growth and competitive advantage of the company, the ability of start-ups/ventures to demonstrate strategic value, return and impact, remains a barrier as the company patience is often between one and a half and three years, but the first positive financial results of start-ups/ ventures are only visible after five to seven years.
Therefore, it is important to demonstrate and communicate not only the financial but also the strategic value of new business creation. This requires the definition of business metrics that can be quantified and communicated in terms relevant to the company and to partners.
Performance indicators for existing businesses are turnover and profit. Large companies also frequently apply the same performance indicators to ventures. However, these two financial indicators are not the right incentives for new business creation projects, especially in the early stage.
Ventures should be managed on cash. Focusing too soon on sales often leads to loss of focus since all deals closed will be accepted without considering the question of what would thereby be contributed to the learning process. The focus of a venture should be on the underlying mechanisms driving revenue and cost. The focus should be on the leading performance indicators and not on the ones that are lagging.
As established businesses are more or less predictable, managers focus on expected returns, whereas ventures focus on affordable loss as they have to deal with uncertainty.
We support you in defining the required performance indicators for each of the individual innovation members as well as performance indicator for the whole innovation family.