It is the Center for Service Innovation (CSI) that has developed the Norwegian Innovation Index (NII).
In a number of international rankings of nations’ innovativeness, Norway lags far behind its neighbouring countries Sweden, Denmark and Finland. The general description of the situation is a low score and a negative trend. It may be that this description is right. But it may also be wrong. It may be a combination. One argument that the description is not accurate is how innovativeness is measured. An analysis of the most well-known surveys clearly indicate that the method can be improved.
At NHH’s Center for Service Innovation (CSI), researchers have worked on the issue since 2014 and developed a completely new approach based on two premises:
- Nations are not innovative. Companies are.
- Experts are not the best judges of innovations. Customers are.
On this basis, they have developed a measurement that uses the ‘bottom up’ perspective: existing customers’ perception and experience of the companies’ innovations over time.
Customers belong to three segments: young people in the start-up phase/education phase of life, people who have chaos in their lives (children and a mortgage), and people who have their lives back after the children have moved out. This approach makes it possible to aggregate up from the segments to the company and from companies in the same industry to the industry level. Finally, we can aggregate up from industries to the national level like an index that develops over time.
The Norwegian Innovation Index (NII) will give managers a better management tool they can use to see the effects of their innovations, industries can work to achieve framework conditions that strengthen the innovation experience, and politicians will have a better measurement of the effects of various policy decisions on enterprises and industries.
What NII measures
Perceived innovativeness (I): a subjective measurement of how customers perceive a change in the company’s market offering. Whatever the company has done, customers must be able to register it on a cognitive level. Whether the change is positive or negative in the customers’ eyes is identified by using a plus or a minus sign in front of the correlation coefficient.
Relative attractiveness (RA): a measurement of how attractive customers perceive the company in relation to other real alternatives. The idea is that customers are utility-maximising and, in effective markets with low or no switching costs, they will choose the company that best meets their preferences and wishes. Perceived innovativeness is an important variable in this assessment.
Customer loyalty (L): a measurement of assumed (not actual) behaviour, consisting of traditional loyalty measurements. In other words, customer loyalty is a proxy variable for behaviour, which thereby links the research model’s variables to finances through the customers’ purchases, repurchases or access to new customers through peer-to-peer recommendations and word of mouth. Relative attractiveness is an important factor in customer loyalty.
The Norwegian innovation index
- The Norwegian Innovation Index is a customer ranking of the innovative ability of Norwegian enterprises.
- About 20.000 customers took part in the survey, which was carried out throughout 2017
- A total of 79 companies from 20+ industries (following Statistics Norway’s industry categories) have been assessed by around 100 of their own customers.
- The scale goes to 100 and the average score for the assessed enterprises is 54.5 points, which is a fairly moderate score.
- The respondents are divided into three categories: ‘Young, free, no ties’, ‘Chaos in their lives’ and ‘Have their lives back’, representing young adults, families with children and adults whose children have moved out, respectively.