The Next Buzzword: Challenges and Benefits of Defining and Measuring “Innovation”

June 10, 2011

The term “innovation” seems to be taking over for “green” as one of the most often cited and seldomly-defined terms in business lingo. Public, private and not-for-profit sectors across states and major cities are dedicating resources to not only define, but also measure and benchmark progress in the innovation sector.

World Business Chicago, in partnership with the Chicagoland Chamber of Commerce, the Illinois Science & Technology Coalition, and the Chicago Metropolitan Agency for Planning comprise a local working group that has, over the last eight months, been discussing best approaches to compiling, analyzing and dispersing a set of metrics including new business starts, R&D and venture capital activity, and size and growth of local startups to quantify, contextualize, and grow the conversation on innovation in Chicago across the city, the state, the region and beyond.

Benefits extend beyond educating, driving policy discussion and being engaged in innovation research; as Thomas Kuczmarski pointed out in his recent editorial in the Sun Times, “The energy building up here in Chicago will keep these young people home — not just for their first job but because they will see there is plenty of opportunity to create new businesses and jobs far into the future.”

Some of the challenges of this process have been identifying audience and purpose, and finding a way to share and benefit from common data resources while serving diverse geographies, choosing whether to look at trends internally, or to benchmark them externally to other metropolitan areas and states, and how we can best work within the limitations of available datasets to put numbers behind the story. For example, innovation indexes (CONNECT, Massachusetts, NYC, Kaufmann) reference patenting activity, but this measure can be criticized because it does not actually inform the value or level of commercialized R&D, or “tech transfer” activity. (Short of regularly surveying independent tech transfer offices and companies, there is not currently a readily available, accurate source for tech transfer information). Another widely-cited source is the PWC MoneyTree reports on venture capital (VC) deals and dollars; unfortunately, similar to patenting activity, this is far from a perfect source of information (but one of the few sources for comprehensive VC data). 

We are coming to terms with the fact that we’ve reached a point where we have to choose among the myriad approaches and datasets to move forward, and I hope that a few months from now, we’ll have contributed to a better informed and more widespread conversation on innovation in Chicago.

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Image CC By Vermin Inc from Flickr

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