Innovation audits are an idea that reveals

where innovation competence and innovation weakness shows up in a firm.

That's what we're going to look at, how innovation audits work.

So first was identify what it is.

An innovation audit is an in-depth analysis

of the firm's innovation capability and

the processes that get the innovation out the door and then at the market place.

And you look at key indicators, you look at strengths so

you look at weaknesses about the innovation process.

And the innovation results, the audit results should reveal barriers

to getting an innovation done and reveal potential improvements or

methods that can enhance innovation capabilities.

And so the innovation audit has a purpose and has a function and

helps reveal opportunities.

And identifies barriers to innovation.

So the three fundamental questions that an innovation audit addresses are,

what's the innovation track record for the firm?

How much has been done?

How much innovation has actually occurred over a period of time?

Could be a year, could be five years.

And how good is the fit between the firm's current business strategy and

the current innovation capability.

So sometimes, you don't get alignment between what

the firm is actually doing and the capability that it actually has.

Sometimes firms can be very innovative in some areas but

not be directed in their strategy direction in the same way

that is reinforced by their innovation capabilities.

And so, the third question here is, what innovation capacity does the firm need

to actually support its growth and competitive position in the marketplace?

So this is a benchmark.

If you can identify what your competitors are doing, and

what you need to do to remain competitive by being innovative,

that's what the innovation audit helps reveal.

So here's a picture of the main parts of an innovation audit.

And it really starts with inputs on the left-hand side and

has outputs on the right-hand side.

But you can see that one of the main components is an innovation strategy.

And on the bottom, you can see that the culture and structure,

and organization of the firm is another element.

And so in between you look at innovation processes and

roles, and how the innovation portfolio is actually managed.

And then you also look at how ideas and knowledge are managed?

And so these are the things that get analyze in an innovation audit

that have an affect on the outputs and the results of the innovation.

So we look at for instance, current innovation patterns.

What's the firm's history?

Has it got a track record of innovation and

has it done things that can be repeated?

And are those things that have been repeated always been successful?

Are there ways to improve that?

And are there actual formal innovation process steps in place?

And who is serving in these innovation roles?

So by identifying gaps in either role identity or

gaps in steps that might be missing in the innovation process.

You can begin to get at what could be a proof in the firm's innovation process.

Another point in the innovation audit is to look at the level of commitment

that a firm has to innovation.

Now it's one thing to say that like most firms do,

we're very innovative in what we do.

You have it in the mission statement.

But it's the result of what commitments they make to re-time and

resources that are devoted to innovation that reveal

what their commitment to innovation actually is.

And by looking at the amount of time and

resources that are devoted to innovation, you can also look at the business areas,

the functions that received innovation attention.

And so the resource allocation actually reveals the level of support for

innovation.

And so another point in the innovation audit is awareness of innovation.

And by awareness, we mean what does the firm know about what's going

on outside of it in the competitive environment that is operating in.

And so by doing that you need to look at and you need to audit.

What forms of environmental scanning do they have, and

how well equipped are the staff that is doing this environmental scanning, and

how aware are they of what the innovation activity is in other

industry sectors that are related to the competitors in their market.

And finally, how well informed is the firm about

business intelligence of its competitors' innovation activity.

How well do people know in the firm what competitors are doing that's innovative?

And unless you know that, you don't know how well you can keep in pace and

keep in step with your competitors.

Idea generation capacity is another main function that innovative firms do

and is there a formal process in place.

And does this formal process actually stimulate any new product or

service ideas?

You can measure that, you can track that.

And if you explore the potential application of new technologies

you can ask weather that's been done.

And you can identify potential cost saving methods.

An internal process efficiencies as well.

So ideas have results.

They result new products, new services, and

cost saving methods and process efficiencies.

And you can identify these things.

And once you know whether ideas are being generated.

Then you have to say if it's one thing to have a suggestion box full of ideas,

but it's quite another to be able to evaluate them and

to know where they might be applicable.

And so in idea evaluation, you ask how do ideas and proposals for

innovative initiatives get screened and evaluated.

Is there a process for that?

And if there is, how is it working?

How many ideas are actually getting screened and evaluated?

And is this a process actually supported with a staff and resources and

incentives for proposing new ideas.

Another point in the audit is to look at the level of innovative culture.

As we saw in that diagram,

an innovative culture is a very key element To being innovative in a firm.

And so you look at what are the indicators of support for

spawning innovative initiatives?

Are there informal networks of creative employees within the firm?

And are these informal networks really communicating with each other and

are they building a knowledge based that can help sponsor innovation.

And is there a community practice actually focused on innovative approaches?

Are there people whose jobs it is to look for

innovation opportunities specifically within the firm and outside the firm.

Opportunity finding and

tracking is another element that is examined in an innovation audit.

And you look at how active the firm is in spotting new opportunities for innovation.

And this relates to how it does in environmental scanning,

how well it actually filters that knowledge, and how well it translates

those opportunities into actual captured and

documented opportunities that lead to an innovation.

And you look at what forms of staff development and support are available for

opportunity finding.

Is there a staff that actually does this and

what kind of support is it being received.

And finally you look at the innovation track record.

How frequently does the firm actually apply innovative ideas to your products or

work processes?

Is there some acknowledgement of that?

And what proportion of these have actually be successfully innovated?

When there carried out and

implemented that is a measure of how successful that track record could be.

And then you can ask what effect has their implementation had

on the firm's core competencies?

If there has been a successful implementation or

even at there hasn't been a successful implementation

it would reveal what's missing in terms of the firms core competencies.

So here we have a process view of an innovation audit.

The elements on the left-hand side where there is

the force of environmental change, which is outside the firm, and

on the bottom you can see some force that is in internal proposal for

some form of innovation and there's some decision making process.

And the decision making process looks it how align

that idea is with the firm's mission and its purpose and its competition.

And then the larger box really goes through all of the elements that get

audit it.

And out of that audit, you look at whether or

not you need new competencies, whether or not you might have some new

innovation ideas that might fit into an innovation portfolio.

And then on the top, on the path toward results,

you look at whether or not you got the resources and the competencies, and

whether you're got the business savvy, they actually reach some solid results.

So some takeaways about an innovation audit is that an innovation audit's

actually help determine whether a firm is innovating a right areas and whether those

opportunities are ones that are being missed or being taken advantage of and

sometimes an innovation audit will reveal barriers to innovation.

And where they are identified,

how does the innovation competence that is missing actually show up?

And finally, having an over-all picture of a firm's innovation competence actually

enables a clearer alignment to it's innovation initiatives and

the way to get at that, is by doing an innovation audit in a firm.

How can an audit reveal innovation competence and weakness?

Crafting Strategies for Innovation Initiatives for Corporate Entrepreneurs

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