Introduction MELF Equation Macro Metrics Micro Metrics Beyond GDP How To Access Acknowledgements About Us
Guarding against disruption by innovating in firms
Innovation in Industry
Innovation in firms is inadequately measured using indicators. % of current sales from products (or services) recently developed, market share growth, or patent counting don’t provide rigorous guidance. Exact enumeration provides what has previously been missing. 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. Charts of this innovation metric against development spending fall into pictorial types that emphasise how a firm is doing against competition, and provide senior management with an innovation rudder for steering their firm's efforts toward greater growth and profitability while avoiding disruption. Plus, 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.
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Micro Metrics