In the past, competitive advantage rested on factors such as quality, productivity, access to low-cost resources, and customer service. Today, these factors have become threshold competencies-keenly important, but unlikely by themselves to provide sustainable competitive advantage. Yet many organizations still gauge overall performance by measuring these threshold factors.
Organizations that continue to rely on such traditional measures are locked into the old-and dangerous-paradigm that past success is the best indicator of future success. Today, of course, past success can actually be a hindrance to future success. Companies that focus exclusively on improving the things that made them successful in the past, rather than on developing the things that will make them successful in the future, will likely fall victim to obsolescence and commoditization.
Organizations can avoid this trap by including metrics specifically designed to gauge innovation performance as part of an overall suite of corporate performance indicators.
Authors: Darren Smith, John Collins
Source: Prism (Arthur D. Little)