Innovation Metrics essay
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The sustainable success of a company depends on the development of a superior and relevant implementation of this strategy to any organization. Business metrics and the overall performance of a company serve as an indicator of the performance of a business or a company in relation to other competitors. This objective materializes through the constant monitoring, evaluation and modification of the objectives, to attain the competitive advantage. Effective formulation of business strategies gives timely and accurate measurement of relevant business metrics. The significant contribution of monitoring, measurement and effective use of business metric is significant to any business organizations. Business metric plans allow the business managers to have a clear knowledge on business metrics and the market place. The authors of the article have focused on the development of a universal link between the business strategy, the processes and the consumer satisfaction needs. This is through the relevant business metrics. The seaming less look of the market place and the enterprise, as well as the market environment as a process, greatly improves the chances of success in the processes of development of the competitive advantage. Realization of this is through the alignment of the company’s strategies, as well as the business processes.
This article gives briefs on new developments of new innovation metrics, which replace the traditional metrics used before. The article has different information intended to discuss the factors to consider when coming up with new metrics for a firm. Based on metric used, company can end up with a biased conclusion about the efficacy of the strategy used. In addition, the paper also intends to give a summary of the several properties that are inherent in a suitable metric that has been for a long time identified through literature. The paper also discusses the managerial implications of business performance metrics, as well as the implications of the product life cycle. It also gives an overview of the implications of sales and marketing which affects the rapidly changing markets.
Analysis and Discussion
Invention machines for companies
In the process of dealing with new metrics, it is better to specify the property that is desirable for this specific metric, and after that define the new metric, for example, the link which exists between the general performance and the strategy of a business. In this case, the metrics used ultimately reflects the strength of choice of the strategy performance. However, different metrics reflect variable effects of the linkages. For instance, on a study carried out on the comparison between the quality and other aspects in a company indicated that, as the quality increases, the cost of operation also increases, and so are the sales. However, the cost of the products does not decrease. Thus, depending on the metric used an individual might end up with a biased summary, regarding to the strategies’ efficacy.
Good metric draws several properties. Good metrics give the increased accountability. Therefore, they require constant review based on standards of changing accountability. In addition, appropriate performance metrics need to reflect the progress of the company against the plan. This will give the metric an opportunity to exceed just a measure. This is because metrics that possess this characteristic are vehicles used to communicate by the organization, in case of the need of clarification and for management. Good metric closely reflects the long-term progress of a firm, and not just the financial gains of the company. Analysts go beyond the traditional financial measurements. They use a wide range of strategies, which act as the indicators, used to assess the long-term growth of an organization. This makes sense for the analysts to use this metric when analyzing the long-term gains of the organization. Furthermore, any reasonable metric should form the part of an integrated measuring system. Metrics in isolation can lead to problems, no matter how well defined they can be. It is essential to come up with metrics constructed through fragmenting the measuring systems.
In addition, excellent metric needs alignment, in accordance with the business strategy. Changing the business strategy, without updating the metric, leads to serious problems. If any of the business organization builds their metric based on the good choice of a suitable metric plan, it will help in the direction of a company towards enhancement of its competitive advantage.
Innovative drivers in metrics
Several factors affect innovative drivers during the design of new metric systems. For instance, Managers and senior executives of a company understand that the choice of the measurement system of an organization profoundly affects the performance and the behavior of employees. The disadvantages of the use of traditional metric are clear, when they come to measuring the different organizational functions. For example, there is a need to develop the non-financial measurement to use it in the performance evaluation in functions, such as manufacturing and information systems. The same non-financial measurements are significant in evaluating the performance of the other functions, such as sales and marketing, purchasing or any other organizational function that falls within this line. From this functional viewpoint, there are some managerial implications of using inadequate metric systems. Most of these inadequacies arise from inadequacies of the traditional metrics.
The key aspect to consider when designing a new business metric is the product cycle, the stage of production of products and the process as a whole. Different companies utilize various business strategies which are relevant to different stages of production within the product lifecycle. The process of product lifecycle is increasingly becoming the mainstream of the business strategy. Much of the organization’s decisions base on the product life cycle. For instance, resource allocation, creation of shareholder value, as well as the consumer satisfaction, lay on the issues of the product lifecycle. Product lifecycle is becoming shorter and more skewed to the left. In case of any changes in of the product, life cycle warrants for the immediate change of the business strategy. If the strategies which are not forth coming, the firm can be in crisis of the risk of failing to maintain the business success. Metrics play a crucial role in controlling the adjustments of the product lifecycle. Any organization with up-to-date metric plans is likely to make the right strategic modifications, which will sustain the proliferation of the business. In addition, lowering of the marketing time pays off significantly for more products lifecycles. It is clear that only the firms that monitor the time to market metric have an advantage in the case of shift of the product life cycle. They can be able to withstand the changes, as they are already aware through observation. Other firms that are less observant may continue to put emphasis more on traditional metrics, such as market share and manufacturing costs, which will eventually lead to misdirected strategies. For instance, the manufacturers of electronics face the adverse product life cycle effects. This is because they deal with products that are not fast moving. The designs of different electronics change constantly leading to the development of new products. These companies, therefore, need to develop strategies to deal effectively with compressed lifecycle.
The link between the business goals and the business strategies changes regularly. Regular monitoring of the link through appropriate metrics is essential for the sustained success in any business. Most companies, dealing with electronics, have adopted the process of shrinking the product lifecycle through outsourcing the main portions of their business function. In addition, the brand proliferation and the building of brand loyalty are essential in business success. This is because these market characteristics were influenced by powerful business trends, such as growing consumer’s assertiveness as well as the increased competition. Advancing in the manufacturing technology fits in to the new metric plans suitably. The strategies deployed for product marketing vary within different stages of product development. Therefore, in every stage of technology product cycle, the existence of key metric measures is necessary to leverage the existing anti-metric factors.
Sales and Marketing Implications
In a dynamic market, place where customers’ expectations and preferences change rapidly, companies need to put measures in place to be able to correspond accordingly to these changes. If companies do not change their products to fit into the demand and the preferences of the customers then, they will lose bigger share of their customers. This eventually happens even if the company can recruit a bigger share of customers. Selling strategies as a clear indication of the customers purchasing strategies needs formulation. The knowledge of how customers purchase goods should be an indicator of how the firm sells their products. It is particularly critical, therefore, to observe and understand the way customers purchase goods and services. The metric and measures used to track this, need to be in conjunction with the changing dynamic market. They should not reflect the business contexts and outdated situations. Customer churn metric indicates the changes in the customer’s ways in dealing with businesses. It is necessary to ensure that the sales strategies employed in recruiting new customers should be up-to-date. An increased customer turn rate indicates the need for accompany to change the marketing strategy to ensure that most of the strategies are up to date. They should ensure that these marketing strategies fit into the current requirements of the company.
Most of the marketing executives track the relevant market share for their products, the sales volumes, as well as the contribution margins. These traditional, metric plans can be used to reformulate the marketing strategies. Marketing reformulations can involve changing of the market combination. For instance, firms can adopt changing the prices of commodities, advertisements and changes on the promotional tactics to maximize sales.
Most of the manufacturing strategies and driven by changes in technology and the goals of an organization. As the manufacturer moves from the process of cost cutting and the effective sales of the products, these changes accompany the relevant changes in metrics used to track the performance. The changes in manufactures’ goals should reflect in the changes, commodities and services offered to fit into the consumer market. There are several dangers met with false metric methods by the manufacturer. These false metric methods can affect the performance of an organization. For instance, the use of wrong factory metric efficiency ratio in the measuring the success of the business can be dangerous. The efficiency ratios compare to the number of labor hours to the machine hours. Emphasis on the use of this metric leads to higher levels of inventory, which do not reflect the customer’s needs. The significance of developing metrics in combination with strategies cannot be overemphasized. Quality management principles should be developed, in conjunction with the managerial performance, to evaluate the systems employed in appropriate manufacturing metrics.
Information system and innovation of new metrics
The impact of the information technology for a long time has been significant. However, the role of information technology within businesses is constantly undergoing many changes. In the recent years, the cost of the use of information technology was justified to cost cutting. Currently the use of information technology is essential in the reduction of labor, as well as increased productivity. Investing in information systems has led to the automation of many processes within an organization. The key element that is essential in this is the renovation of the old metrics used and the replacement of the new metrics used for the success of the business. Different businesses have different metrics used to evaluate the information system within an organization.
In conclusion, the major theme of this article is to discuss the importance of using timely and current metrics in evaluation businesses. The changes in different product lifecycles call for changes in the business metrics used. Poor metrics used can have adverse effects to the organization. In addition, active management of customers and customer retention through diversification can boost the success of businesses. The use of customer performance metric is essential in understanding the changes in the customer’s preferences and tastes. A company can only manage what it can measure. Therefore, development of new metric to fit into the changes within a market can substantially be of added advantage to the firm. Strategy formulations and their implementation are essential to the realization of superior organizational performance. Strategy is a process with which companies succeed or fail. In this case, most of the companies need to focus on the development of strategies that are long-term and are beneficial to the company. The strategies of developing metrics in conjunction with strategies cannot be overemphasized.