While enterprise collaboration has become a significant factor to achieve business success, the distributed structure of virtual enterprise environments still carries new challenges towards successful operation of business processes within these networks. As one group of business process, innovation processes do challenge virtual enterprises to a much higher degree, because new products and services are target point. This paper discusses the utilization of key performance indicators to enable and to support the continuous flow of information between the collaborators. They are essential towards successful innovation processes and their usability in managing these processes. As the predicted impact and outcome are essential factors, the manageability of ongoing innovation processes decreases with its rising innovative potential and level of uncertainty. The performance indicators raised by each enterprise of the network are highly divertive. This presents another challenge to the management of these distributed innovation processes, which may be met by partial unification and ICT based communication platforms.
As one of the first researchers Josef Schumpeter described the innovation term by
discussing the impacts of newly combined processes and products on the balance of
the economic markets [
To meet current market needs, enterprises have to connect each other in networks.
This may provide single enterprises with the ability to extend their products, include
competencies of other enterprises or simply to expand their production volume.
Because these collaborations are constantly gaining importance, new challenges raise by
managing their distributed processes [
Combining these issues, the challenge of managing innovation processes within enterprise networks appears. Regarding this task, supporting communication flows and monitoring the performance of innovation processes gain significant value. A possible approach is the utilization of key performance indicators (KPIs) to measure the performance of systematic business innovation processes in virtual enterprise environments. Initial thoughts and results covering this approach are described within this paper. Section 2 introduces the concept of Virtual Enterprise Environments and the levels of uncertainty regarding innovation processes. Section 3 highlights the application of Key Performance Indicators on Innovation management. Finally a short discussion and conclusions summarizes the paper. 2 2.1
The idea of networking is based on the collaboration of independent enterprises
aiming at taking different advantages, while maintaining their individual independency
[
While business innovation itself is a widely used and fuzzy term [
One approach to categorize innovation activities is to apply different areas of
uncertainty (inspired by [
A broad range of approaches to evaluate process performances in general have been
developed, following the raising importance of VEEs. An overview on the evolution
of the main approaches is given in Fig. 4. It sorts them by their comprehensiveness
and time of development. Key performance indicators (KPIs) as tool to measure
process performance have gained massive attention during the last decade [
The selection of the right KPIs is an important issue regarding the comprehension of the needs and weak points of an organisation. The selection of which KPIs are important depends on the organisation and the branch or the market the organisation reaches for. Due to the importance of identifying the right KPIs, this selection process has to be supported. This happens usually by applying management tools, such as the balanced scorecard and is often related to business improvement processes. Following, we will discuss the concept of KPI and the applicability in the context of VEE. 3.2
The success of incremental innovations and business improvement processes can directly be measured by monitoring KPIs that represent the efficiency of the improved processes and the business itself. These KPIs vary regarding the subject of the process and their selection is a challenging task. Nevertheless their general attention and the success of concepts like continuous improvement processes (CIP) and its approaches to evaluate process performance show that measuring business improvement can already considered state of the art.
multiplied by the probability of commercial success minus the commercialization cost. This is multiplied by the probability of technical success minus the development costs Number of ideas/proposed products in the pipeline or the investigation stage (prior to formal approval).
UoM % % $ # # time Despite approaches to measure the quality or maturity level of ideas and knowledge (compare the MATURE1 project), no directly applicable tools to measure the performance of innovation processes could be identified. Regarding more uncertain types of innovation, the development of KPIs becomes significantly more difficult. This is caused by the huge impact of creativity and intuitive thinking, which can hardly be quantified by applying KPIs. Another barrier towards the application of KPIs is the previously described market or technical uncertainty influencing the ability to monitor innovation processes. Without an idea of the estimated outcome of the innovation process and its impact on the market, defining KPIs becomes rather difficult. Ho wever, some general KPIs provided by the value reference model (VRM) can be
adapted as initial step forward. A selection of the most suitable KPIs towards systematic business innovation is listed in Table 1. This list may be extended by KPIs measuring the estimated risk of the innovation due to technical and market uncertainty.
Due to the distributed structure of a VEE, the innovation processes of a VEE also differ from those within single enterprises. The ideas and information usually circulate between geographically distributed units. Since the VRM provides a framework for the management of value chains, it can partly be used for innovation management in VEEs. However, this adaptation requires elaboration that will be addressed in further research.
Since VEEs are comprised of diverging enterprises that house different processes and follow individual strategies and paradigms, the relevant KPIs to each enterprise will vary as well. This makes the management of the collaborative innovation processes a very demanding challenge. To overcome this challenge, complying with a set of core KPIs within the VEE may be necessary. Moreover, an ICT based platform needs to be applied, which enables and supports the communication within the VEE and monitors the KPIs of the distributed innovation processes.
To utilize a KPI for managing an innovation process, information about its subject and position within the process has to be provided. The information related to each KPI should be: Name, description, unit of measurement, calculation formula, information about relations (related innovation process and process owner) and Range of values (green zone, yellow zone, red zone). 4
The elaboration of KPIs for business innovation in VEEs is in its infancy. As already shown, the definition of KPIs is easier if the level of uncertainty is lower. Secondly the dynamic VEE makes it even more difficult to define KPIs. It is much easier if KPIs are defined for relatively stable business environments, as these environments allow a better understanding of the other enterprises. Nevertheless, complying with common core KPIs may be necessary. For proper management of the distributed innovation processes, an ICT based platform should be applied, which allows the monitoring of the relevant KPIs and supports the communication regarding the innovation process within the VEE.
Regarding the state of the art towards business innovation and business innovation it can be noticed, that key performance indicators (KPIs) are already utilized to manage and monitor business improvement processes. One important factor to consider is that different selections of KPIs may suit to each enterprise. It has to be pointed out that these KPIs can already differ significantly within enterprises of the same branch.
Nevertheless, the management of business innovation processes instead becomes a lot more difficult. Since key elements like creativity and innovative thinking can hardly be measured and quantified, alternative indicators have to be used. The value reference model (VRM) provides a broad basis to select possible KPIs regarding the systematic business innovation. A possible selection made out of these KPIs has been listed in Table 1.