Abstract
To date, measuring innovation has not been an exact science. As in many areas of organizational life, errors in measuring innovation are a recurring fact. Innovation researchers and practitioners alike have become increasingly interested in understanding the occurrence of organizational errors and how these errors affect innovation and its measurement. This empirical study aims to address this under-explored area by utilizing a qualitative in-depth case study at the innovation department of an organization with production sites and sales organizations worldwide. A total of 28 semi-structured interviews at several organizational levels were conducted, with innovation managers, project managers, senior managers, and staff. Based on the findings in this case study, three explanations are presented on how organizational errors occur when using innovation KPIs (key performance indicators). The first explanation can be connected to the increasing complexity of innovation and its intangible nature. Another explanation can be traced to the difference between innovation strategy and innovation KPIs. Lastly, room for organizational errors can be related to the multitude of individuals and organizational levels involved in innovation and its measurement. The implications for practitioners are that innovation KPIs are not precise metrics but should be seen as estimates with organizational errors. Whether or not these innovation KPIs can be used as tools to turn innovation into competitive advantages largely depends on whether wrong is right. Future research should focus on the metrics that are implemented and actually in use, as this future path would highlight the function and dysfunction that organizational errors in innovation KPIs can have.
Highlights
In response to a complex and dynamic business environment, organizations try to improve their performance and become more competitive (Alfaro García et al 2015; Okwir et al 2018)
Concerning the room for error that can appear between strategic and operational levels, the findings show that the innovation strategy at the strategic level cascaded down to those in the organization using innovation key performance indicators (KPIs)
The findings indicate that innovation KPIs still are not dynamic and resilient to changes in the internal and external environment of the firm (Melnyk et al 2014; Nudurupati et al 2011; Okwir et al 2018)
Summary
In response to a complex and dynamic business environment, organizations try to improve their performance and become more competitive (Alfaro García et al 2015; Okwir et al 2018). In this context, innovation is seen as an important source of competitive advantage for companies (Porter 1990) and significant for the survival of the organization (Dziallas and Blind 2019; Ortt and van der Duin 2008). To track progress in innovation, organizations usually implement metrics such as key performance indicators (KPIs) (Richtnér et al 2017). KPIs play a central role in enabling managers to fulfil the primary purpose of innovation, to create new opportunities, or to exploit existing ones (Brattström et al 2018; Damanpour and Wischnevsky 2006; Drucker 1998)
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