Innovation in the UK Retail Sector - Nesta

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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 Page 52
Innovation in the UK Retail Sector financial measures. Corporate level measures may assess, for instance, the overall input of financial of non-financial resources in new initiatives such as the development of new ranges of product, new retail formats or the impact of moving into new markets. 7.15 Overall product-related innovation measures appear most developed and most commonly used. In general most retail measures are non-specific, adapted to measure innovation or mostly its ‘hard’ benefits - for instance in areas like NPD, where the innovation process resembles the linearity characteristic to the patterns of innovation found in manufacturing. Much less susceptible to measurement are the process, wider service innovations and organisational innovations undertaken by retailers - those associated with change, process design, marketing or training and development. According to some of our interviewees, these innovations are not sufficiently understood, nor are they sufficiently measured. In terms of timescale most of the discussed measures of innovation are relatively short-term, often following the retailers’ planning cycles and frequently do not account for the longer term effects or commercial benefits of innovation like learning or new competence building (Hristov, 2007). Page 53
Page 1 and 2: Report for NESTA December 2007 Inno
Page 3 and 4: Contents Innovation in the UK Retai
Page 5 and 6: Innovation in the UK Retail Sector
Page 9 and 10: 2. The nature and contribution of r
Page 23 and 24: v. Retailers’ reverse innovation
Page 41 and 42: Vignette 5.3: Currys customer recyc
Page 43 and 44: 6. What are the barriers to retail
Page 47 and 48: 7. What are the measures of retail
Page 49 and 50: . Types of Measures Innovation in t
Page 51: Innovation in the UK Retail Sector
Page 65 and 66: . Promoting innovation in sustainab
Page 69 and 70: Conclusion/Next Steps: Innovation i
Page 73 and 74: Recommendation 4: Innovation in the
Page 77 and 78: Appendix 1 Research Methodology 350

Innovation in the UK Retail Sector - Nesta

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