Streamline Training & Documentation: Measuring Innovation

Saturday, January 19, 2008

Measuring Innovation

The US Department of Commerce has released a report (pdf) on measuring the impact of innovation on the US economy, an area of statistical work in which there is much room for improvement.

The report is the work of an advisory committee, which developed recommendations "for steps to be taken by the government, the business community, and government and private sector researchers to foster and improve the measurement of innovation in the economy."

The committee's definition of innovation is:

The design, invention, development and/or implementation of new or altered products, services, processes, systems, organizational structures, or business models for the purpose of creating new value for customers and financial returns for the firm.

The recommendations for steps the government should take are to:

Create a stronger framework for identifying and measuring innovation in the national economy. For example, improved measurement of services and intangibles is sorely needed, since these are sizeable components of the economy and are significant drivers of growth.

Better leverage existing data among the government statistical agencies to allow for the consistent estimation of the contributions of innovation in the GDP (measured by the Bureau of Economic Analysis) and productivity accounts (maintained by the Bureau of Labor Statistics) and to develop greater understanding of innovation.

Increase access to data in order to facilitate more robust innovation research.

Convene workshops or forums to discuss innovation drivers, impediments and enablers (an area that was not part of the advisory committee's charter).

Continue participation in the international dialogue related to measuring and analyzing innovation and ensure that U.S. efforts are internationally compatible to the extent possible.

Consider development of a national innovation index when more work has been done on both data collection and analysis of innovation drivers.

Support funding necessary to implement the above recommendations.

The recommendations for the business community are to:

Create, expand and assess firm and industry-level measures of innovation and develop best practices for innovation measurement.

Participate in research activities and, as appropriate, make innovation information available to researchers.

For researchers, the recommendations are for:

Identification and assessment of innovation outcome measures.

Identification of gaps in innovation data and how they might be filled.

Analysis of relationships between innovation activities and collaboration, innovation performance and firm performance.

This set of recommendations is important because getting a handle on innovation and the processes that promote and impede it is so important for understanding the processes behind economic growth. At the same time, implementing the recommendations will require commitment by an array of people from politicians, to bureaucrats, to businesspeople, to academics. It remains to be seen at what pace the implementation proceeds.

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Labels: Business acumen, Innovation

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