What Is the Value Of An Idea?

EXECUTIVE SUMMARY

Innovation has become increasingly more important in recent years. This is especially true for innovation dependent industrial manufacturers. While the systems for fostering innovation often differ between companies, there are some similarities to be found. Optimally managing and evaluating these systems is crucial for a company’s success. This project therefore considers different approaches from practitioners and suggests optimal principles to evaluate and manage innovation activities effectively.

Goal

The goal of the project is to establish strategic recommendations on evaluating and reporting the company’s innovation activities. These recommendations relate to three respective categories, namely disruptive innovations, innovative partnerships, and innovation initiatives. The recommendations build upon the data gathered from practitioners to ensure applicability and usage of proven systems.

Methodology

The data is gathered through conducting qualitative expert interviews. The use of an interview guideline ensures uniform questioning and better comparability of the data gathered. Furthermore, in depth review of secondary research has been conducted to align the insights from practice with theoretical foundations. The interviewees consist of comparable companies from analogous industries and corporate venture builders. In addition, a best practice analysis was carried out to identify the most effective method of evaluation in each innovation category. This further allowed the identification of the most prominent Key Performance Indicators used in practice.

Results

Disruptive innovations are difficult to measure accurately in the first phase of the project. Relevant data is still missing and non-monetary monitoring categories such as gut feeling and strategic fit are most important. Once a project is established, one can measure its success also through data-driven indicators like the net present value or the gross profit. Regular monitoring of disruptive innovation projects is crucial for success and in case of an underperforming project, decision-makers need to be ready to divest from it.

Partnerships in practice are solely evaluated on a monetary basis. While practitioners argue that non-monetary performance indicators are highly relevant for functioning partnerships, they are neither actively tracked nor valorized. The strategic relevance is an exception, while considering non-monetary KPIs, it serves as a knockout criterion in advance. Partnerships should be rated on a yearly basis to also track already existing partnerships and get rid of unnecessary partnerships.

Initiatives are not widely implemented in practice with the idea management being the only example. For this initiative, the prime focus of evaluation lies on three non-monetary KPIs: Employee participation rate, number of ideas submitted, and number of actually implemented ideas are assessed every three months. Monetary evaluation is of subordinate importance and focuses only on projects or processes within the idea management. Therefore, the development of project-related indicators such as cost savings and increase in revenue is measured every six months. The results are then presented to the leadership level to emphasize active employee participation, positive development of projects, and the benefit of the idea management.

Cooperation Partner

• RHI Magnesita
  Kranichberggasse 6, 1120 Wien
  Austria
  rhimagnesita.com

Contact Person

• Juan Rosenzweig - juan.rosenzweig@rhimagnesita.com

Student Team

• Marcel Elsigan

• Matthäus Konradsheim

• Florian Mayr

• Marius Oberhauser

• Maximilian Schwarz

• Michael Skaropitsch

Project Manager

• Caroline Fabian, M.Sc., M.Sc.

• Melina Mazzucato, M.Sc., M.Sc.