Unlike R&D performance measurements, innovation controlling deals with an integrated management of cross-departmental innovation activities and thereby serves as management support and communication medium for R&D. As illustrated below, innovation controlling contains besides operational elements also a strategic dimension in the early phase of the innovation process, including strategic technological reconnaissance, market analysis and project decisions.

Innovation Process (Enkel/Perez-Freije 2007; own translation)

As a recently published benchmarking study of University St. Gallen shows, a new product strategy reflected in spending decisions is clearly linked to positive performance. The role of innovation in achieving the overall business goals especially can be strengthened by a clear definition of strategic innovation goals and a roadmap for new products.

Target of innovation controlling is the problem-adequate planning and control of complex and long lasting innovation processes. The relevant innovation controlling instruments are designed to purposefully manage innovation processes. Continual project evaluation shall provide information in any innovation phase to decide whether the project will be continued or cancelled.  Thereby, improving effectiveness and efficiency of R&D is an important goal towards the valuation of costs, risks, resource allocation and future development.

“R&D currently needs to simultaneously excel in efficiency, quality, flexibility and innovativeness.” (Enkel/Perez-Freije)

Formerly, R&D controlling was limited to the ex-post examination of budget and time assignments. Nowadays, the provision of decisive information stands in the centre of innovation controlling, effectively supporting management in the development of successful innovations.

Weber/Vinkemeier (2007) thereby identify potential contribution of controlling to the future orientation of an organization by:

• “choice and monitoring of early warning indicators
• coordination and reporting of corporate intelligence providing the interface to other departments, for example cooperation with innovation management (data preparation and concentration)
• strategic controlling through planning, control of premises and processes.”

In many industries, innovations are the most important driver for economic success. Because of globalization and increasing competition, companies are forced to accelerate their innovation rates. Currently however, most innovations fail in the market as Berth/Kienbaum have shown within a study on innovation efficiency monitoring the output of 1919 ideas. Out of all ideas, 369 concrete projects arose, 176 became finished products and 52 of them were brought to market entry. 24 of these were total losses, 17 developed on average and only 11 provided real success.

It is highly paradox that innovations often seem to arise contrary to any rules and that higher expenditures for Research & Development do not always guarantee success. R&D-management therefore has to face the challenge to decide in which innovation projects to invest. Available resources have to be allocated efficiently throughout this process. Innovation controlling therefore gains importance and has a significant influence on the R&D-performance of a company.  An increasing part of innovations, how-ever, is descended from external sources, because in a world of widespread knowledge, companies cannot entirely rely on their own research in order to be innovative, but need to integrate external competencies where necessary. The concept of “Open Innovation”  therefore even constitutes a new challenge for the innovation controlling of cooperative networks or virtual organizations.

The main question is therefore whether you should be rather cooperative than controlling in regard to innovation, especially in virtual organizations. On the other hand, resources could be wasted if no one looks at their efficient assignment.