Introduction MELF Equation Macro Metrics Micro Metrics Beyond GDP How To Access Acknowledgements About Us
Business Application
Business Innovation Economics
Innovation in business firms is usually measured using indicators. But % of current sales from products (or services) recently developed, market share growth, or patent counting don’t provide rigorous guidance. The MELF does. To see how, and because no firm acts alone, the incorporation of innovation from suppliers must be subtracted. The appropriate metric for a firm is therefore (p-p')/c, where (p-p') is the difference in performance the firm creates for its goods or services over and above its suppliers (where p is the economist’s Q, and likewise determined from the MELF) while c is the unit cost of delivery. The shape of the line charting this innovation metric against development spending shows exactly how a firm is doing against competition and provides the kind of pictorials that senior management can believe in, and respond to, for steering their firm toward greater growth and profitability for the future. To policy makers, dissemination of this metric offers a leverage point for stimulating national economic growth from firm level. For investment banks it provides a means for selecting the most promising enterprises. And for management consultants it offers a new advice platform.
<Previous - Next>
Examples of these metrics applied to the brewing industry are available HERE
Micro Metrics