Metrics are essential to understanding the current baseline performance of the technology organization and for setting realistic targets and goals to measure progress. Metrics need to be developed based on the priorities placed on the organization through the Business and Technology Strategic plans.
It is important to have a balance of both activity based in-process metrics (i.e. number of new ideas in the pipeline (good or bad)) and results or outcome oriented metrics (i.e. % revenue from new products based on those new ideas) to ensure that the proper behaviors result. Benchmarking competition or associated technology organizations using a pre-defined set of metrics is a good way to establish the relative effectiveness of the organization and establish goals and targets – while potentially learning new best practices and methods.
Whalen Management Group has developed a simple workflow and framework suitable for the definition and implementation of a metrics system to drive continuous improvement in innovation, development effectiveness and efficiency. The important metric of overall business effectiveness of the Technology Organization can be measured using a Vitality metric based on sales of new products launched within a rolling 2 or 3 year period. The key element of setting up successful metrics requires both umambiguous definitions as well as effective collection systems (including ownership and rigorous schedules).