Innovation @ Merage - UCI Paul Merage School of Business : Measurement

Radical Innovation Across Nations: The Pre-eminence of Corporate Culture

admin — Thu, 11 Dec 2008 19:38:00 GMT

Abstract: Corporate culture is the strongest driver of radical innovation across nations according to a study published in the December issue of the Journal of Marketing. Authors Tellis, Prabul and Chandy found that an innovative culture consists of 3 attitudes and 3 practices. They also report that commercialization of radical innovation translates into a firm's financial performance and is a stronger predictor of financial performance than other popular measures such as patents.

Published:December 2008

Authors: Gerard J.Tellis, Prabul, Chandy

Link: Journal of Marketing

Assessing Innovation Metrics: McKinsey Global Survey Results

admin — Thu, 20 Nov 2008 17:43:00 GMT

Abstract: A recent McKinsey Global Survey shows that companies are satisfied, overall, with their use of metrics to assess innovation portfolios - though many findings suggest that they shouldn't be. The companies that get the highest returns from innovation do metrics well; these organizations tend to assess innovation more comprehensively than the others.

Published: November 2008

Authors: Vanessa Chan, Chris Musso, Vankatesh Shankar, with George Day and David J. Reibstein

Link: The McKinsey Quarterly

Flowers and Plants in the Workspace Promote Innovation, Ideas

admin — Mon, 28 Jul 2008 22:44:00 GMT

Key Findings Shed Light on Environmental Psychology of the Workplace

In today’s economy, it is more important than ever for businesses to gain the competitive edge. Constant fluctuations in unemployment, productivity, consumer confidence and other major economic factors make it imperative for businesses to implement the right strategies to stay ahead of their competition.

According to business experts, the key to gaining the competitive edge in the modern economy is easy to understand – a happy, productive workforce. And, while sometimes the easiest notions can be the most difficult to achieve, a recent scientific study conducted at Texas A&M University finds that nature can hold the secret to business success. The research demonstrates that workers’ idea generation, creative performance and problem solving skills improve substantially in workplace environments that include flowers and plants.

“Our research shows that a change as simple as adding flowers and plants can be important in the most meaningful way to businesses in the modern economy,” said Dr. Roger Ulrich, lead researcher on the project. “People’s productivity, in the form of innovation and creative problem solving, improved – which in certain circumstances could mean the difference between mild and great business success.”

Research Findings: Overall and Men vs. Women

In an eight-month study, the Texas A&M University research team explored the link between flowers and plants and workplace productivity. Participants performed creative problem solving tasks in a variety of common office environments, or conditions. The conditions included a workplace with flowers and plants, a setting with sculpture and an environment with no decorative embellishments.

During the study, both women and men demonstrated more innovative thinking, generating more ideas and original solutions to problems in the office environment that included flowers and plants. In these surroundings, men who participated in the study generated 15% more ideas. And, while males generated a greater abundance of ideas, females generated more creative, flexible solutions to problems when flowers and plants were present.

“We know the importance of learning, for example, how natural surroundings affect drivers, school children, and hospital patients,” said Ulrich, who has conducted extensive research on the effects of environments on psychological well-being, stress and health. “To businesses, it should be equally as important to understand what features can improve performance at work and make employees more productive.”

Background: Dr. Roger Ulrich

The Impact of Flowers and Plants on Workplace Productivity Study was conducted by Roger Ulrich, Ph.D., Behavioral Scientist, Director of the Center for Health Systems and Design, Texas A&M University in College Station, Texas. Dr. Ulrich is a professor of landscape architecture and is an internationally recognized expert on the influences of surroundings on human well-being and health. His interests concern applications of environment-behavior knowledge to healthcare buildings, landscape architecture and urban design.

For The Impact of Flowers and Plants on Workplace Productivity study, Dr. Ulrich worked in cooperation with Professor Dr. James Varni, who also is internationally recognized for his research in psychology and medicine. The research lends weight to growing scientific evidence that flowers and plants, as well
as other aspects of nature, have a beneficial impact on state of mind and emotions. The Society of American Florists worked in cooperation with the Texas A&M University research team, bringing an expertise of flowers and plants to the project.

The Impact of Flowers & Plants on Workplace Productivity: Methodology

Researchers at Texas A&M University recruited 101 participants to take part in The Impact of Flowers and Plants on Workplace Productivity study. During the eight-month scientific study, participants took part in emotional, creativity and attentional demand protocols, in conditions that were carefully controlled, yet were similar to those in many office workplaces. Subjects were asked to perform a series of tasks in one of three environmental office conditions, selected at random: with fresh flowers and plants; with abstract sculpture; or with no embellishments at all. Throughout each session, subjects self-rated their moods four times, executed two creativity tasks and completed one attentional demand test. Researchers measured the number of ideas participants generated, their ideas’ originality and flexibility, and other responses, using data extracted from the tests, which included Torrance Tests of the Creative Thinking and
Profile of Mood States.

Published: October 2003

Surviving Change: Kodak's Instant Marketing Transformation

admin — Mon, 09 Jun 2008 23:36:00 GMT

Abstract: How did Kodak survive the digital transformation of the photography business that used to represent 70% of their business? By focusing on growth and including accountability as part of its innovation framework.

Published: May 14, 2008

Author: Peter Paul Roosen and Tatsuya Nakagawa

Link: IndustryWeek

Dollar may rebound in Q2

admin — Fri, 18 Apr 2008 18:58:00 GMT

There's a moderately amusing McDonald's commercial where office workers bemoan the moribund state of the dollar until they realize how much they can buy with a buck on Mickey D's dollar menu.

Source: CNN Money

Measuring the Performance You Want

admin — Wed, 19 Mar 2008 23:58:00 GMT

Measuring the Performance You Really Want

By Jone L. Pearce
Professor of Organization and Management

There is no doubt about the importance of accountability, but accountability for what, exactly?

The power of what is measured to drive performance is clear. The difficulty is not in understanding this but knowing how to set up job performance measures you really want. Perfect measurement of employee performance is very rare in practice. If it were possible, organizations could hire contractors rather than employees. This means the popular hope expressed in the box below is nearly always a false hope.

True or False?
We just need to design a better performance measurement system.

We have employees because we cannot precisely measure everything we might want from them in advance, and we will always depend on their willingness to exercise good judgment. But we still want employees to have clear expectations about what they should do and be accountable for their actions. This dilemma can be addressed in part by carefully avoiding the following impediments to measuring the employee performance we really want.

MEASURING QUALITY

The measurable actions and performance outcomes are not always the actions and performance outcomes most needed. A rigid adherence to what is most measurable can result in goal displacement: neglect of what you really want to achieve in favor of what is most easily measured. This can lead to serious problems for organizational performance.

One form of goal displacement is a sole focus on performance quantity because it is easily measured: sales volume, deadlines met, earnings targets exceeded, and the like. For most jobs, these outputs should be measured.

However, alone they are incomplete measures of most jobs because they say nothing about performance quality, something that usually requires someone’s subject judgment after the fact. Sales volume may be important, but not if it comes from front loading the orders and so robbing sales from the next reporting period. Deadlines must be met, but not by producing incomplete and thoughtless reports.

Furthermore, if good job performance is defined solely as numeric targets, no one should be surprised if employees produce quantity without helping customers and co-workers, problem-solving, and exercising good judgment. They are just doing what they have been told the organization really wants.

Goal displacement can be avoided by assessing performance quality and contextual performance along with quantity measures. For example, sales associates might also be judged on the number of calls to clients and client evaluations of the associates. Examples of good judgment and citizenship can be recorded and discussed during feedback sessions.

However, quality and behavioral assessments can rarely be specified with the same precision as performance quantity measures. Assessments of work quality and employee effort often rely on someone’s judgment, and so are subject to interpretation and dispute. Such measures will be contentious and never perfectly satisfactory to everyone. Recognizing the imperfection of job performance measurements is fundamental to managerial maturity.

MEASURING INNOVATION

Specific, difficult goals encourage employees to meet these goals, but because innovation is inherently unpredictable and unknowable, it cannot be subject to strict accountability for goals met. Such goal accountability can be interpreted as high evaluation pressure, leading to less experimentation and innovation. In practice, employees are admonished to innovate, but innovation is rarely measured.

Years ago a major bank established a program to promote innovations in new products and customer service. However, employees’ performance was still measured as meeting routine targets such as number of new customer accounts. There was little innovation. This bank’s attempt to encourage innovation is all too common: because innovation could not be defined in advance with specific goals and measures, it was left completely outside the performance management system. Organizations that say they want innovation, but hold employees accountable for what is most easily measured, will not get innovation from their employees.

Research indicates that having multiple performance measures, such as current job performance and innovation, does not impede experimentation as long as there is low evaluation pressure. Just because innovation must be assessed after the fact does not mean it cannot be assessed as part of expected job performance.

WHAT IS REALLY IMPORTANT WILL CHANGE

Change within organizations is inevitable. And change continuously undermines existing employee accountability systems.

All measurement systems decay over time, something that Marshall Meyer has called the performance paradox, showing that once a measure of performance is used to evaluate, those being evaluated will seek to improve their performance on that measure. Over time, they either learn how to perform better on that measure or are removed for poor performance and who are evaluated on that measure will do well on it. This inevitable process leads organizations to continuously add new measures that can better differentiate performance. But again, performance inevitably improves on the new measures, and so other measures should be added.

Performance paradox is why we often find very baroque measurement systems, as evaluators constantly seek to discover the better performers, and performers constantly seek to improve on their performance measures. Over time, measurement systems can become extremely elaborate and complex, with ever more time and resources devoted to maintaining them. The more performance measurement is used to differentiate employees, the more severe this decay will be.

Too often, this ratings inflation is not correctly attributed to the external cause of the performance paradox, but is falsely attributed to soft-hearted performance raters. This mistaken internal attribution has led to attempts to force dispersion (i.e., must have high and low performers in a predetermined distribution) on a measure on which all employees are actually performing identically. Such strongarmed human resources policies are rightly decried as arbitrary and unfair by both the employees and the managers rating their performance.

These forced performance distributions are all too frequent, and as Marshall Meyer has persuasively demonstrated, based on an ignorance of the inevitable decay of all measures used to differentiate performers. It is fairer and more credible to add new measures than to force a distribution of ratings on a performance measure with no actual differences between high and low performers.

Inevitably, attempts to change and adapt organizations are undermined by existing employee measurement systems. The more detailed the performance management system, and the more specific the goals, the greater the likelihood that existing accountability systems will undermine change. The more sophisticated and elaborate the measurement system, the more resistant everyone is to changing it.

How exactly will employees need to allocate their efforts on these new initiatives? Employees worry about how they will fare under new systems. If the new performance measurement system is not calibrated correctly, will they still be judged fairly? Furthermore, change requires managers and employees to devote considerable time to redesigning performance measurement systems, and this takes time away from other job responsibilities.

Tips on Performance Quality:

• Approach performance measurement as you would diagnose any quality improvement effort: use process flow charts and cause-and-effect diagrams to identify wasteful practices, rework, sources of conflict, and opportunities for improvement.
• Performance problems should first be viewed for any possible problems in system design rather than rushing to blame individuals.
• Initiative, quality and innovation should be identified as necessary components of job performance, and examples of successful performance should be identified and discussed during performance reviews.
• Employees should be held accountable for quality improvement suggestions as well as for quantitative performance goals.

Are Patents the Measure of Innovation

admin — Fri, 07 Mar 2008 18:20:00 GMT

How do you measure a companies ability to innovate? Historically companies have used number of patents filed to measure innovation but research suggests patent citations may be a better metric.

Source: Jena McGregor
Link: http://www.businessweek.com/innovate/content/may2007/id20070504_323562.htm?chan=search

10 Challenging questions about innovation

admin — Fri, 07 Mar 2008 02:09:00 GMT

A snapshot of 10 questions a CEO should ask about innovation effectiveness

Source: Booz Allen Hamilton
Link: http://www.leading-innovations.com/media/file/lic_04-big.gif

Measuring the Black Box

admin — Fri, 07 Mar 2008 02:03:00 GMT

Managers leading innovation initiatives need metrics to measure the effectiveness of their organization. In this reprint of an article from Chief Executive Magazine, the authors detail the most common measurement traps while providing ideas on how to create winning metrics.

Source: Scott D. Anthony
Link: http://www.innosight.com/documents/Innovation_Metrics.pdf

BCG innovation survey

admin — Fri, 07 Mar 2008 00:19:00 GMT

A survery conducted by BCG in 2006 gives an insight into what Business leaders from all around the world are thinking about Innovation. How effective has the road to innovation been?

Source: BCG
Link: http://www.bcg.com/publications/files/2006_Innovation_Survey_report.pdf

Measuring Innovation Portfolio risk

admin — Thu, 06 Mar 2008 22:35:00 GMT

The risk of an innovation project in an organization is measurable. The concept of innovation portfolio, risk matrix and RWW are some of the effective ways to access the risk of an innovation project.

Source: George S Day
Link: Harvard Business Review; Dec2007, Vol. 85 Issue 12, p110-120, 11p

New Product Blockbusters: THE MAGIC AND SCIENCE OF PREDICTION MARKETS.

admin — Thu, 06 Mar 2008 22:23:00 GMT

A concept of testing the new product ideas and predicting the demands for the new product is presented in the article. The concept is called the Prediction Markets and it overcomes the shortcoming of survey and expert methods.

Source: Teck-Hua Ho; Kay-Yut Chen
Link: California Management Review

Measuring innovation and productivity in a knowledge-based service economy.

admin — Thu, 06 Mar 2008 22:08:00 GMT

This article provides a review of measurement conventions for the services sector and for investment in knowledge assets. It is widely argued that activity in modern-day economies is increasingly becoming concentrated in the services sector and in the form of spending on knowledge, assets like design software, training and research and development (R&D). The article summarises recent work and concludes that productivity measurement in the services sector is not as unreliable as some have said but more needs to be done to incorporate knowledge assessment into measurement.

Source: Haskel, Jonathan
Link: Economic & Labour Market Review

Measuring Innovation: Beyond revenue from new products

admin — Thu, 06 Mar 2008 22:05:00 GMT

Measuring innovation on a single variable may not provide the correct measure. Therefore its effective to use a fixed with a variable measure i.e. the revenue from new products with the revenue from new platforms. This paper discusses how these measures can make the innovation results more accurate.

Source: Amram R Shapiro
Link: Research Technology Management