Innovation evaluation: Should development look to the private sector?

With no streamlined model or standardized measures for assessing the results of innovation, it might be time for the public sector to take a harder look at how corporations evaluate innovation. And recent societal change is spurring the development sector to do just that, according to Greta Nasi, director of the public management and policy department at the SDA Bocconi School of Management. Development agencies are faced with new challenges in addressing globalization and internationalization of firms, rapid demographic and technological changes, societal and organizational fragmentation, a new institutional role of states and market revolution and the crisis of the representative democracy. Innovation — as well as the evaluation of such initiatives — is no longer just an option. “Innovation has always been a survival need for the private sector, while the public sector has managed without,” Nasi told Devex at the Career Development Roundtable in Oslo, Norway Thursday. Private and public sectors possess similar motivations to innovate, but the value of innovation differs. For example, input-output measures of performance — such as return on investment — are more difficult to identify outside of the for-profit world. But nonfinancial evaluation measures can still prove multiple factors important to the long-term perspective. When measuring the impact on society, for example, you have to identify the capacity to change a situation. “This happens already at the planning stage: What is the problem? What are our resources? What are the constraints?” Nasi asked. And innovation in development, though perhaps initially harder to translate to ROI, will still enhance the performance of the organization and improve competitiveness and quality of life for territories and individuals. Think of measuring the result as a tool for management of that innovation, Nasi suggested. “Measurement of innovation is as important as implementing great ideas,” she said. “It is the key to maximize the potential of success, identify strengths and weaknesses of the innovation for each stakeholder and to avoid future failure.” Society holds the private sector accountable for innovations that don’t result in enhanced quality of services or a higher rate of responsiveness. Public organizations, too, can benefit from adequate evaluation of their efficiency in saving time and reducing costs to enhance their performance. The main idea is to adapt the framework to the innovation you’re evaluating. From there, efficiency can be measured in terms of time and cost saving or reduction of administrative burden, while evaluation of services can be based on a customer satisfaction survey, or if internal, on an employees’ satisfaction survey. The key to successful evaluation of innovation performance, according to Nasi, is to accept first that it’s a complex and complicated matter. “There shouldn’t be only one roadmap for evaluating innovation,” she said. Join Devex, the largest online community for international development, to network with peers, discover talent and forge new partnerships — it’s free. Then sign up for the Devex Impact newsletter to receive cutting-edge news and analysis every month on the intersection of business and development.