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A pragmatic case study for managers and executives
Redefining Corporate Innovation
Performance Measurement
2 accilium
Case study overview & table of contents
Redefining Corporate Innovation Performance Measurement
Table of Contents
Case study facts
Verticals such as automotive,
railroad transportation,
aviation, and energy
Only Managing Directors
as interviewees
Table of contents
Corporate Innovation Unit Archetypes
A taxonomy of the most frequently employed innovation unit archetypes
Corporate Venturing Performance Measurement Premises
Presumptions on performance measurement to optimize indicators
Multilevel Performance Measurement Framework
The structure for the assessment process divided into two separate levels
Corporate Venturing Unit Level
Input and output put into perspective on a global scale
Venture Level
A process for the holistic consideration of ventures as groundwork
Key Takeaways
The most important results of the study and benefits of a framework
implementation
COVID-19 Impact on Corporate Innovation
How the pandemic has influenced corporate innovation management
Abstract
Redefining Corporate Innovation Performance Measurement
The core of the case study ‘Redefining Corporate Innovation Performance
Measurement’ is a framework dedicated to the performance assessment of a
multitude of innovation unit archetypes. A set of premises, which replenish the
output evaluation method, precedes the framework. In the beginning, a
categorization of different corporate innovation unit archetypes introduces the
topic. In the end, an opinion on COVID-19’s impact on corporate innovation
rounds the case study off.
Interviews conducted
between Dec 2019 & Feb
2020
Eight different units
considered to confirm
viability of results
3 accilium
Currently employed corporate innovation unit archetypes
Redefining Corporate Innovation Performance Measurement
Corporate Innovation Unit Archetypes
Unit Archetypes for Corporate Innovation, Venturing & Start-up Engagement
Objectives
Residents/
Partners
Innovation
Hubs
Innovation
Labs
Incubators Accelerators
Company
Builders
Venture
Clients
Establishment
of innovation
ecosystem with
partners to
monitor trends
Promotion of
intrapreneur-
ship and
culture change
Validation and
development of
mostly early
stage ideas
and concepts
Enhancement
of business
models
through
structured
development
programmes
Business model
generation
from ideation
to scaling
Customer-
supplier
relationship
between
corporate and
start-up
Research
institutions &
external
start-ups
Mostly
intrapreneurs
Intrapreneurs
& external
start-ups
External
start-ups
External
start-ups
Intrapreneurs
& external
service
providers
Archetypes
4 accilium
Performance measurement premises to complement the framework
Redefining Corporate Innovation Performance Measurement
Performance Measurement Premises
Portfolio approach
Return on investment should be considered holistically by unit instead of on a
per-project basis – not every venture can be a success
Clear objectives
Without specific objectives corporate innovation units cannot be steered
adequately towards their attainment
Long-term consideration
Delayed (financial) impact of disruptive innovations makes short-term
assessment difficult if not impossible
New revenue & cost reduction
Other objectives (e.g. culture change) are not employed by the interviewed
corporate innovation units
Balanced indicators
Learning indicators are necessary as operational measures at the beginning of
the process, financial indicators become relevant at a later stage
Comparability & transparency
A performance measurement system is essential to justify investment and to
facilitate a comparison with other business units as well as among ventures
Ratio measures
The employment of ratio measures heightens the comparability of indicators
between units as well as individual ventures
Strategic considerations Quality assurance
5 accilium
Dividing the framework into multiple levels for a holistic approach
Redefining Corporate Innovation Performance Measurement
Performance Measurement Framework | Overview
Venture Level Framework – Phases
Discovery Validation Scaling
Unit Level Framework – Dimensions
Corporate Venturing Unit Level
Putting input and output into perspective in order
to facilitate transparency and comparability.
Venture Level
Implementing a process for the holistic
consideration of ventures and the groundwork for
suitable metrics underneath the unit level.
The throughput dimension is dedicated to the
ventures built in the unit. Their development is
reflected in the venture level framework.
Input Throughput Output
6 accilium
Unit Level Framework – Dimensions
Considering innovation performance on a business unit level
Redefining Corporate Innovation Performance Measurement
Performance Measurement Framework | Unit Level
Corporate innovation unit budget
relative to corporate
revenue/sales/profit
› Amount of staff/salaries
› Funding for ventures (start-
ups/intrapreneurs)
› Real estate
› Corporate overhead
Project
quantity
› Number of projects handled
simultaneously per employee/in
relation to budget
Project
quality
› Average milestones achieved
(POC/MVP/transfer to business)
per project
› Critical insights generated
Throughput
time
› Time to POC/MVP/transfer to
business
Number of projects transferred to
business
› Spun into existing business unit
› Spun in as new business unit
› Spun out as corporate venture
Revenue generated through new
business in relation to corporate
innovation unit budget
Costs reduced in relation to
corporate innovation unit budget
Input Throughput Output
exemplary
indicators
7 accilium
Turning innovations from ideas into promising solution concepts
Redefining Corporate Innovation Performance Measurement
Performance Measurement Framework | Venture Level
Venture Level Framework – Phases
Discovery – Idea Generation & Selection Validation – Learning Scaling – Impact
Overarching Indicator: Percentage of PSF achieved
KPI: Average score on NPS scale
Innovation Stage: Idea
Problem Solution
Fit
Input Direction -
Problem <> Solution
Discovery – Idea Generation & Selection
KPI: Number of network partners (e.g. universities, start-ups)
KPI: Number of problems raised by corporate employees
KPI: Number of ideas produced in unit/by corporate employees
KPI: …
Developing a
solution for a
problem vs. finding a
use case for a
solution
Generating and
selecting promising
ideas for ventures
Indicator ultimately
judging the overall
performance of the
phase
Milestone at the end
of the phase –
problem solution fit
achieved
Innovation stage the
ventures are
currently in
Sample KPIs for the
discovery phase –
need to be adjusted
to innovation unit
objectives
8 accilium
Overarching Indicator: Percentage of PMF achieved
Validating the viability of innovations
Redefining Corporate Innovation Performance Measurement
Performance Measurement Framework | Venture Level
Validation – Learning
Product Market
Fit
Problem Solution
Fit
KPI: Knowledge-to-assumption ratio
KPI: Amount of critical insights generated (e.g. per technology)
KPI: Innovation readiness factor based on BMC
KPI: Validation velocity (e.g. build-measure-learn feedback
loop)
KPI: …
Venture Level Framework – Phases
Discovery – Idea Generation & Selection Validation – Learning Scaling – Impact
Entry point of
validation phase -
problem solution fit
was achieved in
discovery phase
Validating
assumptions about
the ventures –
learning as much as
possible
Indicator ultimately
judging the overall
performance of the
phase
Innovation Stage: Proof of Concept
Milestone at the end
of the phase –
problem solution fit
achieved
Innovation stage the
ventures are
currently in
Sample KPIs for the
validation phase –
need to be adjusted
to innovation unit
objectives
9 accilium
Overarching Indicator: Percentage of solutions transferred to business
Innovation Stage: Minimum Viable Product
Generating impact by implementing solutions in the business
Redefining Corporate Innovation Performance Measurement
Performance Measurement Framework | Venture Level
Transfer to
Business
Product Market
Fit
Scaling – Impact
KPI: Amount of (projected) revenue
KPI: Number of (projected) customers
KPI: Time to market
KPI: Percentage of customer satisfaction
KPI: …
Venture Level Framework – Phases
Discovery – Idea Generation & Selection Validation – Learning Scaling – Impact
Entry point of
scaling phase –
product market fit
was validated in
validation phase
Generating impact
by scaling ventures
to sizable
innovations
Indicator ultimately
judging the overall
performance of the
phase
Milestone at the end
of the phase –
problem solution fit
achieved
Innovation stage the
ventures are
currently in
Sample KPIs for the
scaling phase – need
to be adjusted to
innovation unit
objectives
10 accilium
What to take away for your innovation unit
Redefining Corporate Innovation Performance Measurement
Key Takeaways
Key takeaways
› Corporate innovation units are employed as means of generating disruptive innovation by all DAX30 companies
› More than 70% of the interviewed unit managers have no performance measurement system in place
› None of the interviewees pursue transformational goals with regards to the core corporation’s mindset and culture
› Comparability between corporate innovation and other business units needs to be established to justify (further) investment
Managerial implications
› An innovation performance measurement framework obligates management to systemize planning and steering of the corporate innovation unit
› The derived framework can aid defining the objective of the corporate venturing unit and streamline efforts towards it
› Certain premises need to be additionally taken into account when considering corporate venturing performance measurement
› A split of the measurement framework into unit and venture level was identified as promising
11 accilium
Corporate innovation units under pressure
Redefining Corporate Innovation Performance Measurement
COVID-19 Impact
Further questioning of an already tarnished reputation
Corporate innovation and especially corporate venturing units have already been under pressure even before the pandemic hit nearly all worldwide
economies, industries and initiatives. Although innovation nonetheless remains on top of executives’ agendas, leadership is seldom satisfied with
the results responsible managers and their teams achieve. Nearly all corporate innovation unit archetypes are criticized for a lack of contribution to
the parent company’s bottom line and therefore positioned as management toys which hold up the digital transformation façade. Still, even units
that have completely abandoned culture change objectives struggle to prove their worth. The reasons for this can be multifaceted, however,
whether impactful results are failed to be made visible adequately or simply not achieved does not really matter at first sight.
In times of crisis, leadership’s focus lies on reducing cost to a minimum in order to accumulating resources for functions and positions relevant for
the firm’s short-term survival. As the output of innovation is per se directed at future revenue and cost reduction, this almost automatically leads to
a reduction of innovation spending. Since the production and especially scaling of disruptive innovation oftentimes requires (substantial) financial
investment, the situation additionally complicates corporate innovation units’ standing.
1McKinsey study | 2accilium study
84%
of executives consider innovation important for their growth strategy1
6%
of executives are
satisfied with their
innovation
performance1 0%
of interviewees
pursue
transformational
goals2
12 accilium
Employing innovators according to their strengths
Redefining Corporate Innovation Performance Measurement
COVID-19 Impact
Leveraging corporate venturing units’ assets for crisis management and opportunity creation
Although COVID-19 means cutting back for corporate innovation units, the pandemic offers an opportunity to the units because of their structures
and working methods. Resulting from the work with start-ups and early-stage products or business models, the staff is more than used to
operating under circumstances of high uncertainty. Consequently, delivering countable results (e.g. prototypes) for promising ideas quickly should
play right into the units’ hands. These methodological competencies enable corporate innovation units to build bridges to other business units and
reduce scepticism within the own corporation towards the innovation units’ impact. As crises always accelerate societal transitions and change
(disruption) as well as the acceptance of nonconformist ideas, now is exactly the time to showcase their talent under terms of competition.
Time to shine (light on performance)
As companies which focus on innovation also during emergency situations significantly outperform their peers post-crisis, the topic is possibly
more important than ever. If there is no measurement system in place, however, it is difficult to attribute results to the relevant parties and
conditions. Although most corporate innovation initiatives are still quite young, their contribution to the firm’s performance needs to be made
visible from the beginning. The results presented in this study offer a framework and process to track investment and measures on all relevant
levels.
30%
Companies that invest in innovation through
a crisis outperform peers during recovery
by1
21%
of executives feel prepared to
capture new growth
opportunities1
75%
of interviewees have no performance measurement system
in place2
1McKinsey study | 2accilium study
13 accilium
Feel free to give us a shout
Managing Partner
Alexander Hotowy
Associate
Christopher Waidelich
+43 699 11 93 37 39
alexander.hotowy@accilium.com
+49 162 690 82 02
christopher.waidelich@accilium.com
accilium
14

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Redefining Corporate Innovation Performance Measurement Framework

  • 1. accilium 1 A pragmatic case study for managers and executives Redefining Corporate Innovation Performance Measurement
  • 2. 2 accilium Case study overview & table of contents Redefining Corporate Innovation Performance Measurement Table of Contents Case study facts Verticals such as automotive, railroad transportation, aviation, and energy Only Managing Directors as interviewees Table of contents Corporate Innovation Unit Archetypes A taxonomy of the most frequently employed innovation unit archetypes Corporate Venturing Performance Measurement Premises Presumptions on performance measurement to optimize indicators Multilevel Performance Measurement Framework The structure for the assessment process divided into two separate levels Corporate Venturing Unit Level Input and output put into perspective on a global scale Venture Level A process for the holistic consideration of ventures as groundwork Key Takeaways The most important results of the study and benefits of a framework implementation COVID-19 Impact on Corporate Innovation How the pandemic has influenced corporate innovation management Abstract Redefining Corporate Innovation Performance Measurement The core of the case study ‘Redefining Corporate Innovation Performance Measurement’ is a framework dedicated to the performance assessment of a multitude of innovation unit archetypes. A set of premises, which replenish the output evaluation method, precedes the framework. In the beginning, a categorization of different corporate innovation unit archetypes introduces the topic. In the end, an opinion on COVID-19’s impact on corporate innovation rounds the case study off. Interviews conducted between Dec 2019 & Feb 2020 Eight different units considered to confirm viability of results
  • 3. 3 accilium Currently employed corporate innovation unit archetypes Redefining Corporate Innovation Performance Measurement Corporate Innovation Unit Archetypes Unit Archetypes for Corporate Innovation, Venturing & Start-up Engagement Objectives Residents/ Partners Innovation Hubs Innovation Labs Incubators Accelerators Company Builders Venture Clients Establishment of innovation ecosystem with partners to monitor trends Promotion of intrapreneur- ship and culture change Validation and development of mostly early stage ideas and concepts Enhancement of business models through structured development programmes Business model generation from ideation to scaling Customer- supplier relationship between corporate and start-up Research institutions & external start-ups Mostly intrapreneurs Intrapreneurs & external start-ups External start-ups External start-ups Intrapreneurs & external service providers Archetypes
  • 4. 4 accilium Performance measurement premises to complement the framework Redefining Corporate Innovation Performance Measurement Performance Measurement Premises Portfolio approach Return on investment should be considered holistically by unit instead of on a per-project basis – not every venture can be a success Clear objectives Without specific objectives corporate innovation units cannot be steered adequately towards their attainment Long-term consideration Delayed (financial) impact of disruptive innovations makes short-term assessment difficult if not impossible New revenue & cost reduction Other objectives (e.g. culture change) are not employed by the interviewed corporate innovation units Balanced indicators Learning indicators are necessary as operational measures at the beginning of the process, financial indicators become relevant at a later stage Comparability & transparency A performance measurement system is essential to justify investment and to facilitate a comparison with other business units as well as among ventures Ratio measures The employment of ratio measures heightens the comparability of indicators between units as well as individual ventures Strategic considerations Quality assurance
  • 5. 5 accilium Dividing the framework into multiple levels for a holistic approach Redefining Corporate Innovation Performance Measurement Performance Measurement Framework | Overview Venture Level Framework – Phases Discovery Validation Scaling Unit Level Framework – Dimensions Corporate Venturing Unit Level Putting input and output into perspective in order to facilitate transparency and comparability. Venture Level Implementing a process for the holistic consideration of ventures and the groundwork for suitable metrics underneath the unit level. The throughput dimension is dedicated to the ventures built in the unit. Their development is reflected in the venture level framework. Input Throughput Output
  • 6. 6 accilium Unit Level Framework – Dimensions Considering innovation performance on a business unit level Redefining Corporate Innovation Performance Measurement Performance Measurement Framework | Unit Level Corporate innovation unit budget relative to corporate revenue/sales/profit › Amount of staff/salaries › Funding for ventures (start- ups/intrapreneurs) › Real estate › Corporate overhead Project quantity › Number of projects handled simultaneously per employee/in relation to budget Project quality › Average milestones achieved (POC/MVP/transfer to business) per project › Critical insights generated Throughput time › Time to POC/MVP/transfer to business Number of projects transferred to business › Spun into existing business unit › Spun in as new business unit › Spun out as corporate venture Revenue generated through new business in relation to corporate innovation unit budget Costs reduced in relation to corporate innovation unit budget Input Throughput Output exemplary indicators
  • 7. 7 accilium Turning innovations from ideas into promising solution concepts Redefining Corporate Innovation Performance Measurement Performance Measurement Framework | Venture Level Venture Level Framework – Phases Discovery – Idea Generation & Selection Validation – Learning Scaling – Impact Overarching Indicator: Percentage of PSF achieved KPI: Average score on NPS scale Innovation Stage: Idea Problem Solution Fit Input Direction - Problem <> Solution Discovery – Idea Generation & Selection KPI: Number of network partners (e.g. universities, start-ups) KPI: Number of problems raised by corporate employees KPI: Number of ideas produced in unit/by corporate employees KPI: … Developing a solution for a problem vs. finding a use case for a solution Generating and selecting promising ideas for ventures Indicator ultimately judging the overall performance of the phase Milestone at the end of the phase – problem solution fit achieved Innovation stage the ventures are currently in Sample KPIs for the discovery phase – need to be adjusted to innovation unit objectives
  • 8. 8 accilium Overarching Indicator: Percentage of PMF achieved Validating the viability of innovations Redefining Corporate Innovation Performance Measurement Performance Measurement Framework | Venture Level Validation – Learning Product Market Fit Problem Solution Fit KPI: Knowledge-to-assumption ratio KPI: Amount of critical insights generated (e.g. per technology) KPI: Innovation readiness factor based on BMC KPI: Validation velocity (e.g. build-measure-learn feedback loop) KPI: … Venture Level Framework – Phases Discovery – Idea Generation & Selection Validation – Learning Scaling – Impact Entry point of validation phase - problem solution fit was achieved in discovery phase Validating assumptions about the ventures – learning as much as possible Indicator ultimately judging the overall performance of the phase Innovation Stage: Proof of Concept Milestone at the end of the phase – problem solution fit achieved Innovation stage the ventures are currently in Sample KPIs for the validation phase – need to be adjusted to innovation unit objectives
  • 9. 9 accilium Overarching Indicator: Percentage of solutions transferred to business Innovation Stage: Minimum Viable Product Generating impact by implementing solutions in the business Redefining Corporate Innovation Performance Measurement Performance Measurement Framework | Venture Level Transfer to Business Product Market Fit Scaling – Impact KPI: Amount of (projected) revenue KPI: Number of (projected) customers KPI: Time to market KPI: Percentage of customer satisfaction KPI: … Venture Level Framework – Phases Discovery – Idea Generation & Selection Validation – Learning Scaling – Impact Entry point of scaling phase – product market fit was validated in validation phase Generating impact by scaling ventures to sizable innovations Indicator ultimately judging the overall performance of the phase Milestone at the end of the phase – problem solution fit achieved Innovation stage the ventures are currently in Sample KPIs for the scaling phase – need to be adjusted to innovation unit objectives
  • 10. 10 accilium What to take away for your innovation unit Redefining Corporate Innovation Performance Measurement Key Takeaways Key takeaways › Corporate innovation units are employed as means of generating disruptive innovation by all DAX30 companies › More than 70% of the interviewed unit managers have no performance measurement system in place › None of the interviewees pursue transformational goals with regards to the core corporation’s mindset and culture › Comparability between corporate innovation and other business units needs to be established to justify (further) investment Managerial implications › An innovation performance measurement framework obligates management to systemize planning and steering of the corporate innovation unit › The derived framework can aid defining the objective of the corporate venturing unit and streamline efforts towards it › Certain premises need to be additionally taken into account when considering corporate venturing performance measurement › A split of the measurement framework into unit and venture level was identified as promising
  • 11. 11 accilium Corporate innovation units under pressure Redefining Corporate Innovation Performance Measurement COVID-19 Impact Further questioning of an already tarnished reputation Corporate innovation and especially corporate venturing units have already been under pressure even before the pandemic hit nearly all worldwide economies, industries and initiatives. Although innovation nonetheless remains on top of executives’ agendas, leadership is seldom satisfied with the results responsible managers and their teams achieve. Nearly all corporate innovation unit archetypes are criticized for a lack of contribution to the parent company’s bottom line and therefore positioned as management toys which hold up the digital transformation façade. Still, even units that have completely abandoned culture change objectives struggle to prove their worth. The reasons for this can be multifaceted, however, whether impactful results are failed to be made visible adequately or simply not achieved does not really matter at first sight. In times of crisis, leadership’s focus lies on reducing cost to a minimum in order to accumulating resources for functions and positions relevant for the firm’s short-term survival. As the output of innovation is per se directed at future revenue and cost reduction, this almost automatically leads to a reduction of innovation spending. Since the production and especially scaling of disruptive innovation oftentimes requires (substantial) financial investment, the situation additionally complicates corporate innovation units’ standing. 1McKinsey study | 2accilium study 84% of executives consider innovation important for their growth strategy1 6% of executives are satisfied with their innovation performance1 0% of interviewees pursue transformational goals2
  • 12. 12 accilium Employing innovators according to their strengths Redefining Corporate Innovation Performance Measurement COVID-19 Impact Leveraging corporate venturing units’ assets for crisis management and opportunity creation Although COVID-19 means cutting back for corporate innovation units, the pandemic offers an opportunity to the units because of their structures and working methods. Resulting from the work with start-ups and early-stage products or business models, the staff is more than used to operating under circumstances of high uncertainty. Consequently, delivering countable results (e.g. prototypes) for promising ideas quickly should play right into the units’ hands. These methodological competencies enable corporate innovation units to build bridges to other business units and reduce scepticism within the own corporation towards the innovation units’ impact. As crises always accelerate societal transitions and change (disruption) as well as the acceptance of nonconformist ideas, now is exactly the time to showcase their talent under terms of competition. Time to shine (light on performance) As companies which focus on innovation also during emergency situations significantly outperform their peers post-crisis, the topic is possibly more important than ever. If there is no measurement system in place, however, it is difficult to attribute results to the relevant parties and conditions. Although most corporate innovation initiatives are still quite young, their contribution to the firm’s performance needs to be made visible from the beginning. The results presented in this study offer a framework and process to track investment and measures on all relevant levels. 30% Companies that invest in innovation through a crisis outperform peers during recovery by1 21% of executives feel prepared to capture new growth opportunities1 75% of interviewees have no performance measurement system in place2 1McKinsey study | 2accilium study
  • 13. 13 accilium Feel free to give us a shout Managing Partner Alexander Hotowy Associate Christopher Waidelich +43 699 11 93 37 39 alexander.hotowy@accilium.com +49 162 690 82 02 christopher.waidelich@accilium.com