Companies hampering their growth
Link to publication: http://www.conferenceboard.ca/e-library/abstract.aspx?did=5884
OTTAWA, Feb. 10, 2014 /CNW/ - Canada underperforms on measures of
business innovation, and recent international comparisons indicate that
our record is getting worse, not better. One contributing factor to
this poor performance is that almost 40 per cent of Canadian companies
don't measure the success of their innovation activities at all.
"It is perhaps the worst-kept economic secret in the country—Canada does
not take advantage of its innovation capabilities, which is impeding
its growth potential. Failure to use the right performance metrics is a
big part of the problem," said Michael Bloom, Vice-President, Industry and Business Strategy, The Conference Board
The right metrics, properly managed, can improve innovation outcomes.
Innovation in firms is being hindered by a lack of strong executive
involvement, market understanding, and an organizational culture that
does not blend risk and innovation management.
Only eight per cent of surveyed firms said they have sufficient metrics
in place, but their financial performance far surpasses the average
About 53 per cent of firms surveyed said they were satisfied with their
innovation measurement; just 16 per cent indicated dissatisfaction.
A Conference Board of Canada report by the Centre Business Innovation
(CBI) found that measurement of innovation activities is inadequate. Of
those firms that measure innovation, most use both the number and kinds
of measures that don't actually link well to the organizations' bottom
line results, according to Metrics for Firm-Level Business Innovation in Canada.
The report introduces a "relative associated performance" (RAP) measure.
This measure helps firms to select metrics that identify how well a
company is performing by the relative value that it is receiving from
its innovation activities.
While choosing the right innovation measures is up to the individual
firm, many of the most widely-used innovation metrics — such as "return
on innovation investment" (profit minus costs), "product performance
improvement" and "customer satisfaction with new products"— actually
rank relatively low as reliable indicators of financial performance.
The closest co-relation to overall financial results came from measures
"executives' intensity involvement" (corporate time dedicated to
"market understanding" (the rate of new products that survive in the
"innovation risk management" (percentage of projects with risk
The group of companies using multiple metrics did much better than the
overall average of firms on all three measures of financial performance
used — five-year cumulative average growth rate (CAGR), earnings before
interest, taxes, depreciation, and amortization (EBITDA), and Market
This report is the latest in a series of reports on the findings of the 2012 CBI Survey on Innovation Metrics and Management. The online survey generated 628 responses from leaders in Canadian
firms. When measured by revenue, about 84 per cent of responding firms
were small and medium enterprises ($200 million or less in revenues)
while 16 per cent were large firms. Almost half the responding firms
were based in Ontario (48.6 per cent) followed by British Columbia
(14.9 per cent), Quebec (13.3 per cent) and Alberta (11 per cent).
About a quarter of respondents represented professional services firms;
the next-most frequent group of respondents came from information and
communications services, including software.
The CBI is a five-year initiative launched in 2012 to help bring about
major improvements in firm-level business innovation in Canada. On May
28 and 29, The Conference Board is hosting a major event, Business Innovation Summit 2014: Accelerating Corporate Innovation and
Commercialization, in Toronto.
SOURCE: Conference Board of Canada
For further information:
Yvonne Squires, Media Relations, Tel.: 613- 526-3090 ext. 221