Measuring Innovation in the 21st Century

By David Bruggeman
February 22, 2007

That is the name of an advisory committee to the Secretary of Commerce. Its objective is to make recommendations for new and revised metrics to better capture innovative activity. We posted about this group in December, shortly after it was formed. They held their first meeting February 22 in Washington, D.C. The agenda, members, and other documents related to the committee and their first meeting can be found online.

As we noted in that earlier post, the group is focused on business and economic measures, as befits a Department of Commerce work. The Committee Chair is Carl Schramm, President and CEO of the Ewing Marion Kauffman Foundation, a foundation focused on economic research and entrepreneurship. Secretary of Commerce Gutierrez attended the meeting, but let the committee direct the discussion.

This was the group’s first public meeting. They have met before, through a series of visists to the companies of several of the members. The group met earlier that day in private, and may do so again on the 23rd. Even so, much of the meeting was thinking out loud, working out what exactly they were going to develop.

After discussion encompassing the different kinds of innovation, as well as the different ways companies measure that innovation, the group came to some preliminary points of consensus. To wit:

  • Since only simple tasks can be effectively captured with a single metric, the committee will develop a group of metrics.
  • A core part of these metrics will be productivity. This would not be the output per hour measurement more commonly publicized, but total factor productivity measurement – total output per unit of total input.
  • The best measures will do more than simply observe economic activity, they will be able to spot emerging trends, firms and industries.
  • To avoid creating a whole system from scratch, the committee will examine changes to the system of national accounts – the series of economic statistics gathered by several different agencies. This follows a recommendation from a National Academies report released today and co-authored by one of the committee members, Dale Jorgenson.
  • Measures will cover the different kinds of innovation: user centered, firm focused, incremental, radical, process, product, etc.

The committee is just starting its work, and according to comments made this afternoon, is authorized for a 2 year period. We will keep track of their work, and post updates as they are warranted.