Expert answer:Evaluate Performance Metrics
Solved by verified expert:Week 7 – Assignment: Evaluate Performance Metrics Instructions In this assignment, assess the performance metrics that can be used to evaluate the success of innovation and marketing. The assessment must include: Discuss the importance of metrics Discuss/assess at least five metrics to measure innovation Discuss/assess at least five metrics to measure marketing strategy Recommend the appropriate metrics to use for your company Support your paper with a minimum of three (3) peer reviewed articles published in the last five years. In addition to these specified resources, other appropriate scholarly resources, including older articles, may be included. Length: 3-5 pages not including title page and references Your response should demonstrate thoughtful consideration of the ideas and concepts presented in the course and provide new thoughts and insights relating directly to this topic. Your response should reflect scholarly writing and current APA standards. Upload your document and click the Submit to Dropbox button. Criteria Content (8 points) Points 1 Discusses the importance of metrics 1.5 2 Discusses/assesses at least five metrics to measure innovation 2.5 3 Discusses/assesses at least five metrics to measure marketing strategy 2.5 4 Recommends the appropriate metrics for your company 1.5 Organization (2 points) 1 Paper is 3-5 pages (organized and presented in a clear manner) with correct spelling, grammar, and sentence structure. Included a minimum of three scholarly references published in the last five years, with appropriate APA formatting applied to paper and to citations and paraphrasing, 2 Total 10
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Week 7 – Assignment: Evaluate Performance Metrics
Week 7 – Assignment: Evaluate Performance Metrics
Instructions
In this assignment, assess the performance metrics that can be used to evaluate the success of
innovation and marketing. The assessment must include:
Discuss the importance of metrics
Discuss/assess at least five metrics to measure innovation
Discuss/assess at least five metrics to measure marketing strategy
Recommend the appropriate metrics to use for your company
Support your paper with a minimum of three (3) peer reviewed articles published in the last five
years. In addition to these specified resources, other appropriate scholarly resources, including
older articles, may be included.
Length: 3-5 pages not including title page and references
Your response should demonstrate thoughtful consideration of the ideas and concepts presented
in the course and provide new thoughts and insights relating directly to this topic. Your response
should reflect scholarly writing and current APA standards.
Upload your document and click the Submit to Dropbox button.
Criteria
Content (8 points)
1
Discusses the importance of metrics
2
Discusses/assesses at least five metrics to measure innovation
3
Discusses/assesses at least five metrics to measure marketing strategy
4
Recommends the appropriate metrics for your company
Organization (2 points)
Paper is 3-5 pages (organized and presented in a clear manner) with correct
spelling, grammar, and sentence structure. Included a minimum of three
1
scholarly references published in the last five years, with appropriate APA
formatting applied to paper and to citations and paraphrasing,
Total
Points
1.5
2.5
2.5
1.5
2
10
http://www.innovationpoint.com/innovationmetrics.htm
The Complete Guide to Innovation Metrics –
How to Measure Innovation for Business
Growth
Measuring Innovation to Drive Business Growth
By Soren Kaplan, Founder of InnovationPoint; Writer for FastCompany
How do you measure innovation? One of the reasons that only about 1/3 of all Fortune
1000 companies have formal innovation metrics is because this simple question does not
have a simple answer.
Metrics can be important levers of innovation – for driving behavior, as well as evaluating the
results of specific initiatives. Companies like 3M and Google have had innovation metrics for
years – the most noteworthy that 10% of employees’ time is dedicated for experimentation with
new opportunities. Some companies like 3M have tried to mandate that 35% of the corporations’
revenues should come from products introduced within the past four years.
Defining the right metrics for your business can be tricky. There’s generally no one right answer
and agreeing on what to measure can feel more like art than science.
The Problem: Old Metrics in a New Environment
The heart of the problem is that today’s competitive environment is radically different from the
industrial environment in which traditional innovation metrics were born. Because most metrics
programs begin with benchmarks of established companies that have been successful with new
products (like 3M or Google), metrics tend to revert back to traditional measures of R&D or
technology investment and effectiveness. Across the Fortune 1000 that do possess innovation
metrics, for example, the most prevalent metrics include:
▪
▪
▪
▪
▪
▪
Annual R&D budget as a percentage of annual sales
Number of patents filed in the past year
Total R&D headcount or budget as a percentage of sales
Number of active projects
Number of ideas submitted by employees
Percentage of sales from products introduced in the past X year(s)
While some of these metrics are valuable for driving investment in innovation and evaluating
results, they provide a limited view. In today’s environment in which “open innovation”
(sourcing ideas and technology from outside the company) can create differentiation and
competitive advantage, for example, some of these metrics actually inhibit strategic innovation.
And in an environment in which disruptive innovation and cannibalization must be
wholeheartedly embraced as a core strategy, fundamentally new types of behaviors are required,
and subsequently new structures and related metrics to drive these behaviors.
Another challenge experienced by business leaders interested in defining metrics is “metrics
overload”. A Business Week article recently noted that “many companies have too many metrics
and try to measure everything with different criteria.” This overload causes executives to view
their metrics as missing “the heart of the matter” and are dissatisfied with their existing approach
to measuring innovation. What gets measured drives behavior. Too many metrics leads to
excessive activities that provide little value and often drive conflicting behaviors.
The Metrics Imperative
Because innovation is now a widely recognized critical requirement for virtually all companies
across all industries, the metrics imperative is here. Leaders must establish a new breed of
metrics that move beyond conventional measures and that:
▪
▪
▪
▪
Create an organizational culture that supports and drives strategic innovation
Establish critical capabilities tuned to the evolving competitive business landscape
Evaluate innovation efforts to ensure both return on investment and support feedback
loops of learning and improvement
Drive profitable growth
A Framework for Innovation Metrics
The best solutions create simplicity from complexity. Assuming that successful innovation
results from the synergies between complementary success factors, it is important to address
these by:
▪
▪
Creating a “family of metrics” for ensuring a well-rounded portfolio of measures
Including both “input metrics” and “output metrics” to ensure measures that drive
resource allocation and capability building, as well as return on investment
A “family of metrics” ensures a portfolio of measures that cover the most important innovation
drivers. The following are the three categories to consider for any metrics portfolio:
Return on Investment Metrics
ROI metrics address two measures: resource investments and financial returns. ROI metrics give
innovation management fiscal discipline and help justify and recognize the value of strategic
initiatives, programs and the overall investment in innovation.
Organizational Capability Metrics
Organizational capability metrics focus on the infrastructure and process of innovation.
Capability measures provide focus for initiatives geared toward building repeatable and
sustainable approaches to invention and re-invention.
Leadership Metrics
Leadership metrics address the behaviors that senior managers and leaders must exhibit to
support a culture of innovation within the organization, including the support of specific growth
initiatives.
Within each of these categories, there are “input metrics” and “output metrics”. Input metrics are
the investments, resources and behaviors that are necessary to drive results. Output metrics
represent the desired results for the metric category.
Procter & Gamble, for example, uses an organizational capability input metric focused on “the
percentage of external sourcing of ideas and technology” as a way to drive its Connect and
Develop strategy for open innovation. In 2000, 10% of the company’s R&D was outsourced –
today, 50% of all ideas and technology come from the outside.
Track Strategy & Innovation Metrics with Collaborative Dashboards
upBOARD is the world’s first collaborative dashboard software platform for business
strategy and innovation management. Learn more at www.upboard.io
Key Input & Output Metrics
The following are the key input and output metrics for each category. These illustrations are not
meant to be exhaustive but rather provide an initial list of options for those looking to instill
metrics within their own organizations.
Return on Investment Metrics
Input Metrics
▪
▪
▪
% of capital invested in innovation activities such as submitting and reviewing ideas for
new products and services and developing ideas through an innovation pipeline
Percentage of “outside” vs. “inside” inputs to the innovation process (open innovation)
Number of new products, services, and businesses launched in new markets in the past
year
Output Metrics
▪
▪
▪
Actual vs. targeted breakeven time (BET)
% of revenue/profit from products or services introduced in the past X years
Royalty and licensing income from patents/intellectual property
Organizational Capability Metrics
Input Metrics
▪
▪
▪
% of employees who have received training and tools for innovation – e.g., instruction in
estimating market potential of an idea
Existence of formal structures & processes that support innovation
Number of new competencies (distinctive skills and knowledge domains that spawn
innovation)
Output Metrics
▪
▪
Number of innovations that significantly advance existing businesses
Number of new-to-company opportunities in new markets
Leadership Metrics
Input Metrics
▪
▪
▪
% of executives’ time spent on strategic innovation versus day-to-day operations
% of managers with training in the concepts and tools of innovation
% of product/service or strategic innovation projects with assigned executive sponsors
Output Metrics
▪
Number of managers that become leaders of new category businesses
Driving Innovation Metrics
Creating and driving the effective use of innovation metrics goes beyond simply defining and
communicating new measures. Creating innovation metrics requires a strategic and disciplined
approach that starts with the enterprise growth strategy and cascades throughout each business
unit, division and group structure. By establishing a “family of metrics” that support the
collective innovation imperatives of firm, business leaders can drive return on investment,
organizational capability and leadership behavior at multiple levels of the organization.
Using metrics to drive and assess growth is not a one time exercise. As an ongoing tool for
innovation management, the approach involves:
Planning: Involving key stakeholders in the identification of metrics to insure the assumptions
about the sources of value are explicit and clear, and metrics align to the firm’s strategy.
Monitoring: A way to track metrics against goals to gauge progress and define necessary
adjustments to measures & strategies.
Learning: A continuous feedback loop that assesses progress, engages key stakeholders in
identifying implications and new opportunities to support the firm’s metrics-driven goals.
The specific process for establishing innovation metrics can include the following steps:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Clarify enterprise strategic business objectives
Define innovation goals to support growth objectives
Identify required innovation capabilities for the future
Identify desired innovation-related leadership behaviors
Identify organizational processes and models required to drive incremental and disruptive
innovation
Create a family of metrics that support the enterprise innovation strategy of the company
Create cascading metrics that align business units, divisions, groups and lateral process
capabilities
Diffuse metrics to drive innovation culture via leadership communication and
storytelling, training & development, innovation jams, & social networks
Revisit and recalibrate strategies and metrics on an ongoing basis
Whatever the process used, it is critical to engage key stakeholders in defining your metrics that
will guide the organization into the future. Learning loops that capture insights gleaned from
successes and failures must be integrated into the approach and valued as an ongoing process.
And finally, metrics shouldn’t be viewed as an end in themselves but rather an indicator of the
types of strategic capabilities and behavior required of each and every employee to ensure long
term success and business growth.
For more on innovation metrics, check out our video that makes the case for building a
culture of innovation. Use it to kick off your strategy sessions and leadership development
programs:
Learn more about how to drive innovation, strategy, and business growth from Soren
Kaplan’s 3 minute keynote video presentations:
For another article on innovation metrics, see Soren’s recent piece on How to Measure
Innovation in FastCompany:
About the author
Soren Kaplan is the author of the award winning and bestselling books
Leapfrogging and The Invisible Advantage, and a contributing writer for FastCompany and Inc.
Magazine. As the Founder of InnovationPoint, he works with organizations including Disney,
Kimberly-Clark, Colgate-Palmolive, Medtronic, Philips, Red Bull, and numerous other global
firms. Soren previously led the internal strategy and innovation group at Hewlett-Packard (HP)
during the roaring 1990’s in Silicon Valley and was a co-founder of iCohere, one of the first web
collaboration platforms for online learning and communities of practice. He is an Adjunct
Professor within the Imagineering Academy at NHTV Breda University of Applied Sciences in
The Netherlands and sits on the advisory boards of several start-ups. He has been quoted,
published, and interviewed by FastCompany, Forbes, CNBC, National Public Radio, the
American Management Association, USA Today, Strategy & Leadership, and The International
Handbook on Innovation, among many others. He holds Master’s and Ph.D. degrees in
Organizational Psychology and resides in the San Francisco Bay Area with his wife, two
daughters, and hypo-allergenic cat. For more information about Soren including his recent
articles, blog posts, and keynote speaking schedule, visit www.leapfrogging.com.
Ofer Mintz & Imran S. Currim
What Drives Managerial Use of
Marketing and Financial Metrics and
Does Metric Use Affect Performance
of Marketing-Mix Activities?
To increase marketing’s accountability, Journal of Marketing, Marketing Science Institute, and the Institute for the
Study of Business Markets have advocated development of marketing metrics and linking marketing-mix activities
with financial metrics. Although the marketing field has made progress, researchers have paid less attention to what
drives managerial use of marketing and financial metrics and whether metric use is associated with marketing-mix
performance. The authors propose a conceptual model that links firm strategy, metric orientation, type of
marketing-mix activity, and managerial, firm, and environmental characteristics to marketing and financial metric
use, which in turn are linked to performance of marketing-mix activities. An analysis of 1287 marketing-mix activities
reported by 439 U.S. managers reveals that firm strategy, metric orientation, type of marketing-mix activity, and firm
and environmental characteristics are more useful than managerial characteristics in explaining use of marketing
and financial metrics and that use of metrics is positively associated with marketing-mix performance. The results
help identify conditions under which managers use fewer metrics and how metric use can be increased to improve
marketing-mix performance.
Keywords: metrics, marketing–finance interface, marketing mix, managerial decision making
keting accountability as well: a 2007 Deloitte study indicates
that 83% of marketing managers are increasing their emphasis
on marketing metrics, and Lenskold Group/MarketSphere
(2009) report that 79% of managers indicate greater need
for employing financial metrics to assess marketing-mix
performance.
Marketing scholars have responded in three ways. First,
researchers have proposed a menu of marketing metrics,
defined as metrics that are based on a customer or marketing mind-set such as awareness, satisfaction, and market
share, for different marketing-mix activities such as advertising, price promotion, pricing, product management, and
so on (Ambler 2003; Farris et al. 2010; Lehmann and Reibstein 2006). Second, researchers have linked marketing-mix
efforts to financial metrics, defined as metrics that are monetarily based, based on financial ratios, or readily converted
to monetary outcomes such as net profit, return on investment (ROI), and target volume (for a review, see Srinivasan
and Hanssens 2009). Third, researchers have found that
metric-based information influences firm profits (Abramson, Currim, and Sarin 2005) and shareholder value
(Schulze, Skiera, and Wiesel 2012) and that the effect of
comprehensiveness of metric-based marketing performance
measurement systems on firm performance is mediated by
market alignment and knowledge (Homburg, Artz, and
Wieseke 2012). Although several advances have been made
in the development of marketing metrics, linking marketing
efforts to financial metrics, and linking metric use to firm
performance, to the best of our knowledge, there is little if
“We [marketers] don’t speak the same language as senior
management, so there is little trust and even less belief in
our capabilities. If we don’t find a better way to communicate the value of marketing and communication, none of
the other factors will matter.”
—An anonymous manager quoted in Institute for the
Study of Business Markets (2010) “B-to-B Marketing
Trends Report”
o increase marketing’s accountability, Journal of
Marketing (JM; 2004, 2009), Marketing Science
Institute (MSI; 1998, 2000, 2002, 2004, 2006, 2008)
and the Institute for the Study of Business Markets (ISBM;
2010) have continually advocated developing marketing
metrics and linking marketing-mix activities with financial
metrics. Practitioners have recognized the demands for mar-
T
Ofer Mintz is Assistant Professor of Marketing, E.J. Ourso College of
Business, Louisiana State University (e-mail: omintz@lsu.edu). Imran S.
Currim is Chancellor’s Professor, Paul Merage School of Business, University of California (e-mail: iscurrim@uci.edu). The authors thank Ofer
Mintz’s doctoral committee members Dominique M. Hanssens (University
of California, Los Angeles); Donna L. Hoffman (University of California,
Riverside); Ivan Jeliazkov, L. Robin Keller, and Cornelia (Connie) Pechmann (all of University of California, Irvine); and Rick Andrews (University
of Delaware), Philip Bromiley (University of California, Irvine), Donald C.
Hambrick (Pennsylvania State University), and Marvin Lieberman (University of California, Los Angeles) for their support and helpful guidance.
This research was supported by the Dean’s office of the Paul Merage
School of Business. John Hulland served as area editor for this article.
© 2013, American Marketing Association
ISSN: 0022-2429 (print), 1547-7185 (electronic)
17
Journal of Marketing
Volume 77 (March 2013), 17–40
any understanding of what drives the use of marketing or
financial metrics in a managerial marketing-mix decision
setting and whether metric use is associated with the performance of the marketing-mix decision (in contrast to firm
performance).
Thus, the primary objective and key theoretical contribution of the current study is to propose and test a conceptual
model of how factors such as firm strategy including market and strategic orientation and organizational involvement
in the marketing-mix decision, metric-based compensation
and training, the type of marketing-mix decision considered, and other characteristics of managers, firms, and the
environment drive use of marketing and financial metrics in
managerial marketing decisions. The main result is that it is
not managerial characteristics but rather the setting in
which the manager operates that drives metric use. The secondary objective is to link use of marketing and financial
metrics to perceived performance of the marketing-mix
activity. We find that increase in metric use is associated
with improved marketing-mix performance. The key managerial contribution of …
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