Observe and Measure – Fueling Continuous Improvement

Of the Ten imperatives of Robert’s Rules of Innovation, Observe and Measure is the step that fuels continuous improvement within your organization.  Without tangible metrics, innovation may not be recognized as successful or overlooked when failing.

These metrics allow your company to track your progress and success during each step of the process.  It is critical that your organization’s actions produce ongoing improvement.

Plan. Do. Check. Act.



New Product Development should be observed and measured at the beginning of the process to establish a baseline for measuring facts.  To optimize the measurement of improvement, there are two indicators (metrics) that are critical to establish:  leading indicators and lagging indicators. Most companies and analysts just look at lagging indicators, it is key to identify and monitor leading indicators.

After a product is launched, it is imperative to continue to observe and measure your product development.  In a survey of 200 companies that design and develop new products, they shared these key performance indicators.

  1. Direct Expenses – Measure the amount of spending expenses incurred for Research and Development
  2. Patents – How many patents were filed, pending awarded or rejected?
  3. Time – Track the amount of time spent for Research and Development.  Also consider the number of people involved and amount of days used.
  4. Sales of New Products – Calculate sales for new products released in the past year, past three years and past five years as a percentage of total sales
  5. Quantity – How many new products have been released?

These metrics can create a basis for comparison and can be used to set target goals for the development of your next new product.  Examine these after each cycle of New Product Development to clarify your expenses and Return on Investment (ROI) for each product.  Spend time looking at each step and the time spent to move forward to the next step.  By looking at opportunities in the New Product Development process to increase ROI, companies are able to improve performance and ultimately, increase shareholder value.

Beyond the Tangibles

In addition to metrics, many companies observe and measure their organization’s success with a number of intangible factors.  Stefan Lindegaard, of 15inno.com reminds us that many business metrics are not black and white and are often subject to fast changes:

“We also need to remind ourselves that innovation has lots of unknowns and intangibles and you cannot afford to lose the needed flexibility in order to meet some specific metric parameters.”

Furthermore, it also takes getting enough data to show trends and patterns. In these times of fast change, there is a good chance that the processes you set out to measure will change significantly over time making it more difficult to actually use this input for measuring purposes.”

Lindegaard’s sentiment is echoed by Apple’s CEO, Tim Cook.  In the fiscal first quarter of 2013, Cook reported record earnings for iPhone and iPad sales.  In addition to the numbers, Cook observes and measures success with additional intangible components:

“You’re going to hear a lot of impressive numbers during this call, but they’re not the only way that we measure success at Apple. The most important thing to us is that our customers love our product, not just buy them, but love them. Everyone here is laser focused on creating an unprecedented customer experience.”

Continuous improvement is possible when you observe and measure the development process before, during and after product launch.  Develop a firm grasp of your product’s leading and lagging indicators.  Examine and track every step of your development process, but first establish the baseline before new product development begins.  Observe and measure to set target goals for future product development, to improve performance and ultimately, increase shareholder value for your organization.

Innovate and Thrive.