Wisconsin-based Trek Bicycles is one of the top brands in the bike world, from your kid’s first set of wheels ($150) to high-end triathlon models that can top $10,000. The company, still privately-held, was founded in 1976, and today has about 1,750 employees and $800 million in annual revenue.
We talked to director of bicycle engineering Chad Manuell about how Trek designed its innovation scorecard, used to gauge what’s going on in each of the company’s business units.
“Rather than one centralized, stand-alone innovation team,” Manuell explains, “we have R&D resources within each business unit that work on future technologies and products.”
Here’s how Manuell and other Trek senior execs monitor what’s happening within the business units.
We spent a ton of time developing our set of ten questions that make up our innovation scorecard. We were not happy with the typical scorecard and metrics that many companies used. Most of these scorecards placed too much focus on past performance, were too complex to maintain, or painted too fuzzy of a picture of the health of an innovation team. Our innovation scorecard was the culmination of a lengthy research project that studied applying metrics to a product development team charged with creating a steady flow of innovative products.
Our scorecard focuses on how each development team sets itself up for future success. At Trek, our big business units are mountain bikes, road and triathlon bikes, town and kids bikes, and accessories. Each unit has a 5-year board, which is basically a great big bulletin board that serves as a road map for them. The things on year one are pretty solid, but years two through five can be flexible. So one of the scorecard’s questions is: “Is the Business Unit’s 5-year board up-to-date and being used to identify R&D opportunities?”
I noticed that a lot of innovation teams struggle with getting funding to develop their ideas. We’ve made that kind of funding available, and so we want to make sure that this is no longer an obstacle for our teams, so one of the questions is “Does the team understand funding is available for R&D projects?”
Other questions on the scorecard focus on the team’s capacity for learning, strategy, and the balance of active R&D projects. (In addition to the innovation scorecard, our development teams also have metrics for more traditional things like budgets, on-time delivery, and return on development expenses.)
Each question is rated on a scale from 1-3. The team’s innovation score is the average score of these 10 questions. The Engineering Manager for each business unit fills out the innovation scorecard. He or she gets input from their partners on the business unit’s core team. We go through the process once a quarter, and we’re trying to calibrate the scores across business units, so it’s meaningful. We want to look at the trend over time: are we getting healthier in different categories? (The scorecard process is still relatively new: we’re only on our second quarter of doing it.)
The key to the whole program is that our leadership team gets together quarterly to review each question on every scorecard. They ask, “Why did you grade yourself low on this, or high on this?” This is when lessons learned are transferred between business units.
I should also note that we will rotate questions out of the scorecard and replace them with new ones, once all groups are consistently getting the max score on any one question. When this happens, the question has done its job and it is time for a new question. This allows us to continually up our game.