There’s a great deal that is been written on metrics for business. The intent of this section is not to review such material. Instead this section has some unique collections of metrics it provides insight into managing innovation and intellectual property.
In the “Business Logistics Model” figure performance indicators for various industries are shown. Of interest from a technology management standpoint is the mention of “suggestions per employee” in the Assembling Cell B4. Otherwise new product development is pretty much absent from the chart. Thus for most industries, short-term performance indicators are not driven by innovation. For intellectual property Duplicating Cell F2 about “brand awareness”, but again there is no mention of patents being a primary driver of business performance. Again this underscores that the lack of innovation or proper intellectual property protection is only a cause for very poor business performance, but the presence of innovation and intellectual property is rarely a key performance indicator on the plus side.
Somewhat in contrast to the above view, the “Business Valuation Multipliers” figure shows at that higher multipliers are affected by intellectual property positions. The highest valuations are usually retailers and manufacturers who get the maximum benefit from significant capital investment, being in a stable industry, large growth opportunities, and intellectual property.
In the “Patent Effectiveness Scores” figure the benefit manufacturers get from specifically patents to prevent duplication by others is shown in the first column labeled “Yale”. The range of the scale is from 1 to 7. In the second column labeled CMU, the percentage of product innovations for which patents are considered effective in protecting competitive advantage is listed.
Contrasting these three various viewpoints it is clear that intellectual property and innovation are important attributes of the successful businesses, but their contribution is mostly in preventing surprises and loss of current business position. They are not key performance indicators of executive short-term performance of most interest to stockholders.