Innovation in the UK Retail Sector - Nesta

Figure 7.3. Key non-financial measures of innovation
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
65%
Source: Hristov, 2007
c. Levels of application
59%
Overall non-financial Number (or %) of new
products
Innovation in the UK Retail Sector
7.11 Finally, retailers measure the benefits of innovation at different levels. The interview
responses we analysed pointed towards three main levels of measures: (1) project specific
measures (KPIs), (2) functional level measures (function-specific KPIs), and (3) corporate
level measures (corporate performance measures).
7.12 Project metrics are most bespoke and detailed. They are designed with specific project
outcomes in mind and measure the extent to which the project objectives are met in
terms of inputs, outputs, timescales for product development, budget limits, perceived
risks and the amount of management time involved. Senior managers saw the projects at
functional level as the responsibility of the functional budget holders: i.e., heads of
functional areas or departments. The metrics are drawn from within those departments
with input from management accounting. For projects at a corporate level in some
retailers, the practice is that project specific measures will emerge through a consultation
process or will be produced by cross-disciplinary teams from the departments involved in
the project. In other retailers, the CFOs and their teams will be responsible for setting the
KPIs alone or together with business development departments who are often
responsible for the planning and delivery of the project.
7.13 Functional measures are designed to reflect levels of innovation input and output within
individual functional areas. For instance NPD departments will have a clear set of
measures in terms of profitability, cost benefit, time management and a range of
reflecting technology and operational processes. These metrics are designed to measure
newness “with functional flavour” as well as the functional contribution to innovation
and present a mix of financial and non-financial measures of performance. Innovation in
functional areas may be managed as part of the core business activities or as separate
projects as described above.
7.14 Corporate measures track the incremental contribution of innovation to the business as a
whole and may comprise input and output measures, as well as financial and non-
35%
24%
Customer insights Time Measures
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