How to Measure Innovation

(page 2 of 2)

The European Union's European Innovation Scoreboard ranks the innovation of European nations (Finland and Sweden lead the way, Britain is sixth), while the Global Innovation Index, by the French business school INSEAD, puts Britain in third place behind the U.S. and Germany. Meanwhile, the FORA index, from a Danish public research agency, has Britain in sixth place worldwide for innovation.

This year, BusinessWeek joined forces with Standard & Poor's, the world's leading index provider, to create the Global Innovation Index (BusinessWeek.com, 5/1/08). Aimed at investors, this index tracks the performance of 25 of the world's most innovative public companies, from Apple to Wal-Mart (WMT). A survey, conducted in partnership with Boston Consulting Group, solicits opinions from top innovation executives. The ranking also considers earnings and sales growth and R&D as a percentage of sales.

Driving Economic Policy?

The NESTA index—financed by NESTA itself and also by Britain's Innovation, Universities & Skills Dept., which provided the mandate to start the project—will attempt to distinguish itself through a more complex methodology. Halkett believes it will be useful to both large and small businesses, universities, and skills providers, as well as government officials looking to formulate economic and tax policies. It can also be used internationally, as a basis of comparison with other countries.

For the most part, innovation policy still isn't closely linked with large-scale economic policy, because there hasn't been a clear connection between innovation and productivity (although the U.S is notable for efforts in this area (BusinessWeek, 1/17/08)). With the upcoming NESTA index, "We want [that connection] to drive economic policy decisions," Halkett says.

Ernest Beck spent almost a decade as a staff reporter for the Wall Street Journal in Budapest and London. After leaving the Journal in 2002, he became a freelance contributor to numerous publications including the New York Times, Metropolitan Home, and SmallBiz.