Part 3 – Measure Twice, Cut Once – A Critical Principle of Innovation Management
 
 
It is often true that principles from one discipline can be applied across multiple areas.  Take for example, the carpenter’s rule of thumb, “measure twice; cut once.”  Because once cut, trying to undo the result will incur waste, additional costs, or more likely, both.   Successful innovation managers leverage this same principle and make sure that measurement is in the forefront of all innovation projects.
 
What is the Most Important Aspect of the Measurement Strategy?
The most important aspect of a measurement strategy is to have a documented plan.  This plan must identify at least one hypothesis, along with corresponding primary and secondary (or control metrics) hypotheses.  A hypothesis is a simple assertion statement such as:  “By doing (something), you will cause (something else) to happen.” 
 
The resulting “something else” should identify the primary metric(s).  Primary metrics are the pieces of information that enable you to prove or disprove the hypothesis.  Control metrics are things that shouldn’t be negatively impacted by the contemplated change.  For example, if your innovative idea involves the deployment of a new product, the primary metric will normally be the number of new products sold. 
 
Potentially, you may want two control metrics.  The first may be the number of other, or existing, product sales.  The second you may want to consider is customer wait time.  Introducing a new product is great for a company if it generates incremental income.  But, if the product simply redirects revenue that would have been captured by other existing products, it may not be a win for the company given the expense in the new product introduction.  If the sales process for the new product is so extended that it creates a significantly longer wait time for customers, this too, could be an overall negative impact that eliminates the revenue generated by the new product. 
 
The key to a measurement plan is to define the goals in the form of a hypothesis statement(s), and to correctly identify the metrics that will enable you to prove or disprove the hypothesis.   A hypothesis statement should be drafted as early as possible – even with an idea submission.  Early drafting assists in defining scope, giving focus, and can be modified throughout the innovation process.  Go or no-go decisions should always involve measurement plan review.  The plan defines the results you anticipate to justify the innovative change.
 
Who Should Measure?
Who should measure?  The short answer? (1) Those who are capable of measuring (2) have the knowledge and understand the goal of the tests and (3) have access to the metrics to make an objective evaluation.  
 
An independent measurement function is extremely important for innovation managers.  Too often, design roles and even change management functions become vested in an idea and can lose objectivity.  Since all ideas should contribute to the bottom line, having your finance partners involved in the process is always a wise strategy for the innovation manager.  If they don’t develop the measurement plan, having them review, give feedback, and eventually approve the measurement plan as a pre-implementation task saves effort in post implementation output review.  Your results WILL ALWAYS be questioned and/or challenged.  Having cross functional input, a measurement plan review, and approval by all stakeholders creates an easier path for post test review.
 
What Should be Measured, And When?
What should be measured?    The short answer again: You must have the metrics to support or disprove your hypothesis.  Avoid over simplification in the choice of metrics and the measurement period.  There are two techniques that can assist in building strong measurement foundations. 
 
First, establish baselines, and second, use control features.  To obtain a baseline measurement, collect the metrics in the same environment in which you will be introducing the change or innovative idea.  This baseline establishes a level playing field for your change.  Doing so, demonstrates that you have measured, defined, and understand your targeted environment.  While you gather the baseline, it is often necessary to identify control environments in which you can collect the same metrics.  The control environments must have similar attributes as your test environment.  Collecting metrics during the same time period assist in understanding results and eliminating any possible “artificial” results that could be driven by market changes and not necessarily by the innovative change. 
 
Remember, when instituting an innovative idea into a complex business environment, it can be a challenge to draw a direct correlation of the results and what caused those results.  For example, if a sales process change is focused on a particular credit product and the test evaluated the products sold in the test center, the fact that you increased product sales 150% may on its face look overwhelmingly successful.  If the control group, without any process change, also experienced a 100% increase in the same product sales, the results could be a product of market shifts that are totally independent of the innovative change introduced.  Leveraging baseline line periods and control group information is a foundational component of a strong measurement plan.
 
If You Don’t Measure, it Didn’t Happen!
If you don’t measure it, it didn’t happen.  Whether it is qualitative surveys or quantitative data, the availability of information is the key to sound decision making.  Any type of change must add value to justify the pain and expense of implementing it.  The most dreaded aspect of innovation management is usually trying to justify, defend, or “sell” an idea within an organization.  Successful innovation managers rely on accurately developed and pre-approved measurement plans to eliminate the frustration of being second-guessed and questioned in post test reviews.   Whether you have a stand alone innovation group or are pursuing innovative activities as a function of a business-as-usual role, bringing value to the organization will be the ultimate success criteria.  Proactive and detailed measurement strategy planning and consensus building is the key to winning and delivering value simultaneously. 
 
So as you plan your next innovative idea – remember measure twice, cut once – or at least gain consensus on what you will measure and avoid the hassles of “what if”. 
 
 
Al Groover, business consultant, joined the Brickstream^® October, 2004.  Prior to joining Brickstream, Al spent over 20 years in strategic and innovation project delivery for major American corporations.  Most recently, he served as senior vice president and design manager for Bank of America’s Innovation and Development Center.  His current role at Brickstream focuses on working with retail and banking clients in leveraging the data generated by BehaviorIQ™ to drive change within these organizations.