“If you cannot measure it, you cannot manage it” is an old management saying. On the national level, the existing sources of systematic information on innovation efforts and innovation performance typically rely on macroeconomic indicators (e.g., Global Innovation Index, Bloomberg Innovation Index) or self-reports by managers or experts (e.g., Community Innovation Survey, Fast Company World’s Most Innovative).

This top-down and inside-out perspective is undeniably valuable, but it neglects the experiences and opinions of innovation recipients, i.e. customers.

Ironically, innovation, by definition, requires the commercial application of a new idea, and being available on the market for customers is what distinguishes innovations from inventions.

Recognizing that it is customers’ adoption and usage decisions that determine the success of new products and, ultimately, of innovators themselves, a research team at NHH – Norwegian School of Economics has developed a novel, outside-in and bottom-up approach to evaluating innovation efforts – the Norwegian Innovation Index (NII).

NII is a theoretically derived measurement instrument that rests on two assumptions:

1. countries cannot be innovative—companies can; and
2. leaders and experts are not the final judges of innovations—customers are.

Through a carefully designed procedure, NII captures both firms’ innovations and customers’ perceptions of changes in value co-creation that result from these innovations. The main focus is on assessing perceived firm innovativeness and on examining the effects of perceived firm innovativeness on firms’ strategic positioning and customer loyalty.

The publicly available result is the annual rating and ranking of Norwegian firms across a variety of sectors based on their innovativeness, relative attractiveness, and customer loyalty. In addition, NII allows a fine-tuned analysis of customer reactions to particular firms’ innovation activities as well as a systemic analysis of innovation at the industry level.

NII and SII were developed by Professor Tor W Andreassen (NHH/CSI), Professor Line Lervik Olsen (BI/NHH) and postdoctoral researcher Seidali Kurtmollaiev (NHH/CSI).

See Tor W. Andreassens keynote speech to the Finnish Innovation Index - FII (youtube)