value insights

Improving Innovation Efficiency- Valutrics

Innovation and efficiency sometimes clash, especially when innovative moves spark big changes and uncertainty.

There are several tips  for leaders to find the perfect balance between efficiency and innovation:

Top-down focus

The first factor is a strong focus on innovation from the top of the organization. Reinforce this with stated goals that are consistently measured. It’s at the top that decisions are made about allocating capital and meeting financial targets, and senior managers must take the lead.

“The emphasis on innovation therefore must be at least as large as the emphasis on efficiency and effectiveness, and that emphasis must be constantly reinforced, through strategy, communications, executive action, and cultural and operating model change,” Mr. Phillips writes.

Optimise the Process

The objective of innovation managers should be to adopt processes, metrics and ways of working that only get in the way of project progress as much as necessary and no more. There should be active efforts to come up with new ways to streamline things. Senior management should not be too controlling or directive. Stage Gate processes should not be too onerous.

Yes, those elements of a process that have been shown to add value every time should be repeated in every project. For example, consumer goods projects should always validate ideas and concepts with the type of consumer who they expect to buy the resulting product. Clear, simple and coherent project plans align resources. I’m sure you can come up with plenty of examples of repeatable parts of innovation management, none of which need a Six Sigma approach.

Optimise the Portfolio

It’s also important to distinguish between running a project well; and efficiently managing an innovation portfolio. Applying resource where it gives the greatest output can dramatically improve the total efficiency of innovation. It’s important to have the right balance over timeframes, geography, business groups etc. The appropriate criteria for prioritization and alignment around decisions not only ensure the right projects are done, but also avoid redundant effort and managerial misalignment, both of which lead to inefficiency.

The Right Metrics

If you don’t measure the key parameters of efficiency, it’s tough to improve it. My favourites include the projected value of the pipeline which, together with the total resource applied, can give you a crude but simple overall measure. It also drives the company to do whatever it can to improve the output while optimizing the allocation of the input.

Which teams are the most efficient? Would moving resource to them increase your overall output? If you start to measure it, you might find out.

Open Innovation

It takes a long time to build a particular technical competence from scratch, and a lot of investment. Working in collaboration with a partner who already has that strength, in a mutually beneficial relationship, not only gets the innovation to market faster, it can have a really positive impact on innovation efficiency. The counter argument is this creates a weaker position in IP; but if you’re starting way behind those already in the game, you’ll have that anyway.

Treat Efficiency like an Innovation Project

You use creativity techniques to generate new ideas, right? You prioritise, test and validate them? Then why not use the same techniques for the improvement of innovation efficiency? Freeing up resource, eliminating activity that doesn’t add value or even inhibits progress; and finding ways to increase output are all great contributors to enhanced efficiency.


Be open to new tools, methods

You won’t succeed if you try to seed innovation in only one business area or product line. Even worse, he says, is trying to lock the innovation team into one method or approach for innovation, using a single time horizon. You need lots of tools and methods, a variety of time lines, and middle managers across the organization primed for innovation.

Stress the real goal

Treat innovation as a revenue opportunity, not a cost structure. “Innovation won’t be successful until the team understands that the ultimate goal of the effort is to create revenue, growth, and opportunity,” he stresses.

Become more ‘plastic’

Brain scientists talk about plasticity – the advantages of being open, flexible and nimble. The same holds for innovation. Innovators must steer clear of “silos” within your organization, or even being restrained to sharing ideas only within its walls. They must build broad, horizontal networks.

Keep experimenting

In many companies, experiments are carefully designed and developed over a long period of time to validate a hunch or a theory. Wrong! Try lots of experiments and prototyping. Consider the effort as being as much about discovery and new insights as it is about validating internal perspectives and theories.


Plan a Cortez moment

When Spanish explorer Hernando Cortez landed in the New World, he scuttled his ships so his conquistadors knew there was no turning back. You may need a similarly dramatic moment when you spell out management’s commitment to innovation and the targets you have developed.


Innovation efficiency is all about more output from the resource you have, improving your innovation performance and enhancing your competitiveness. It’s worth your time and attention.