With the right metrics, innovation can happen anywhere. Companies like Apple, which invests a great deal in innovation governance, lead the way.- BY DANIEL PEREZ
Innovation is the gold standard every startup company seeks to attain. Companies don’t just want a successful product -- they want a product or service so innovative it massively disrupts existing sectors of other products. For instance, look at the rise of companies such as Uber and Lyft. Rather than following in the footsteps of others who had profited off the manufacture of cars, they developed an idea that disrupted the way the American population relates to cars in the first place, monetizing an asset the vast majority of Americans already own.
However, innovation is hard to conjure up on demand. It’s often seen as a product of genius, something that either one has or one does not. Still, there are some companies that prefer not to take their chances.
Innovation governance is a growing field of organizational practices in which businesses employ a variety of measurements and metrics to optimize the innovativeness of different projects, sectors of their organization, and even organizational leaders themselves. As with any process that relies upon measurement, the question of which metrics are really worth using comes to mind. In the paragraphs ahead, some of the effective metrics for innovation governance will be examined, followed by a deep dive into some innovation strategies used at Apple, a company virtually synonymous with the word “innovation.”
Any organization that tries to measure too many things at once is destined to fail. The massive amount of data flowing in from all those metrics drowns out the signal with noise, and doesn’t give one the right kind of precise information one needs in order to make organizational changes that drive innovation. So what’s worth measuring?
According to business blogger Julia Kylliainen, one should always prioritize the metric that is most closely aligned with one’s organizational values without restricting employee freedoms. This can sometimes be trickier than it initially seems. For instance, imagine one’s organization champions personal development. Using time spent on personal development activities as a metric might seem wise at first, but this could restrict the freedom of employees who might otherwise engage in innovative behavior. It would be far better, she suggests, to measure a comparison between a specific worker’s competencies at the beginning and the end of developmental projects, regardless of how much time has been spent on them. Likewise, a metric like “number of new products launched” loses the forest for the trees; the individual efficacy of each product is far more important than their quantity.
Innovation at Apple: A Deep Dive
Now, let’s take a look at Apple, a company known for its industry-disrupting innovations. When Steve Jobs returned to Apple in the late 90s, the company was worth some $7 billion and employed roughly 8000 people. By the time Jobs’ stewardship of the company ended with his death in 2019, the company had grown to a value of $260 billion and was home to some 137,000 employees. What made this growth possible was the company’s devotion to fostering—and measuring—innovation.
As noted in a 2020 write-up in the Harvard Business Review, the innovation Jobs brought to Apple started with the very organizational structure of the business itself. At that point in time, Apple was run like many other large corporations, with each different aspect of the business branched off into a different organization run by a general manager whose success or failure was determined on the basis of a quarterly analysis of profits and losses generated by the department. When Jobs returned to the company, however, he famously got rid of these departmental managers and brought all the departments in the organization under centralized leadership, abandoning the use of profits and losses as the end-all-be-all metric of success.
This isn’t to say, of course, that Apple doesn’t care about profits and losses. They wouldn’t be a successful business unless they did. However, Jobs knew that to be disruptive and innovative, the organization had to prioritize not just short-term gains, but a bones-deep cultural commitment to expertise. This is the thinking behind Apple firing most of its managers -- they were experts in the field of managing, but not in the specific technological fields they were overseeing.
This is, fundamentally, a matter of what was being measured. Previously, Apple had measured its managers by their managerial training and bona fides, and by the profit they brought to the company. By measuring expertise instead, Jobs knew he could create an environmental where technical know-how and on-the-job experience was absolutely unparalleled, a condition he felt necessary for innovation to take root. The key takeaway here is that rather than using metrics such as costs and profits as a way to guide the fundamental organizational decisions at the level of design, the company hired design experts and put its trust in them to eventually deliver profits in the long term through making the best products. It was a bet that clearly paid off.
Another example of an innovation metric employed by Apple not directly related to profits and losses is “user satisfaction.” Much has been written, for instance, about the company’s development of a portrait mode camera for the iPhone that would replicate the background blurring effects enabled by expensive stand-alone film and digital cameras. The project was delayed by several years because of the insistence of expertise-driven managers that the software replication of film camera techniques was working even in extremely unlikely scenarios. These delays might have scrapped the project at any other company, but because Apple foregrounded expertise as a measurement of innovation, they were able to create a device that is now the industry standard for mobile phone cameras.
In the end, Apple is an innovative company not because it hires a lot of geniuses and captures lightning in a bottle. Instead, it succeeds because it adopted an organizational structure designed around letting experts do what they do best: experiment, learn, iterate, and grow innovative products and services.