Streamline Training & Documentation: Measuring Innovation

Sunday, June 24, 2007

Measuring Innovation

The Department of Commerce has embarked on an effort to improve its ability to measure innovation activity in the US and the impacts of innovation on the US economy.

As explained in the request for comments that was issued in April, there are four major catergories of data that the department's Measuring Innovation in the 21st Century Advisory Committee is developing recommendations for:

Improvement of the underlying architecture of the U.S. System of National Accounts to facilitate development of improved and more granular measures of innovation and productivity.

Identification of appropriate economy-wide and sector-specific statistical series or other indicators that could be used to quantify innovation and/or its impacts.

Identification of firm-specific data items that could enable comparisons and aggregation.

Identification of specific "holes" in the current data collection system that limit our ability to measure innovation.

The committee supplies detail for each category. The issues relating to the first category — national income accounting — are quite technical, but those for the other three categories provide useful food for thought for anyone with a practical interest in monitoring innovation.

The committee offers these points to ponder for category 2:

Are there measures that accommodate economy-wide (or macro-economic) and sector-specific notions of innovation?

What elements of innovation could serve as a foundation for statistical series?

To what extent would the collection of better data on service sector outputs and services inputs used by all firms improve innovation measurement?

Is market share growth a good indicator of innovation? If so, would estimates [of] the change in U.S. firms' shares of regional, national, and global markets be useful innovation measures?

Could/should collaborative connections between entities be captured?

Since a characteristic of markets is that the benefits of innovations flow, at least in part, to buyers, are there ways to identify the flow of innovations across firms and sectors?

For category 3, the committee's prompting questions include:

Current corporate innovation measurement appears to be done primarily on either a project or a portfolio basis. Are these measurement practices sufficiently widespread and uniform to make data collection on either of these bases practical?

Is it possible or necessary to collect information on company culture, incentive structures, and organizational change?

If customer satisfaction is an important measure of an innovative firm, how can that be captured?

How important is it to distinguish between types of innovation (i.e. radical versus incremental)?

What data would be needed to differentiate the characteristics of innovative firms within industry sectors from non-innovative firms?

What are the most important measures of the underlying process of how innovation and productivity advances are initiated or stimulated?

Could/should an understanding of innovation from the consumer perspective be developed?

Could data items from SEC filings be used to enhance understanding of innovation in public companies?

Are there proxies for relative innovative success (e.g. percent of total revenue attributable to new — or significantly improved to the point where they could be considered new — products, services, or processes introduced within the last two years into markets where a firm has a growing market share) that would provide insight into relative innovative strength? Is two years long enough?

Finally, for category 4, the committee notes, "Some specific types of data holes were identified during the meeting, including lack of data on firm formation, intellectual property licensing costs as a type of purchased input, and insufficient product detail." With this in mind, the committee suggests thinking about such questions as:

What should be the prioritized list of specific data items needed to fill the holes?

Are there cost-effective ways of building on existing data sets to develop more information on innovation drivers and their link to success?

How could data sharing and cooperation among federal agencies be improved insofar as such agencies maintain data series related to the measurement of innovation?

Could existing private and/or foreign data be combined with existing official statistical series in order to better measure innovation?

Are there changes that could be made to make such combinations possible or easier?

If you would like to browse through the comments the committee received, you can do so here.

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Labels: Innovation

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