The OSLO Model offers a structured way to assess and boost innovation maturity, driving growth and competitiveness.
OSLO Model: What It Is and How to Evaluate Innovation in Your Company
What Is the Oslo Manual?
The Oslo Manual is internationally recognized as an important reference for understanding and measuring innovation within organizations. Originally created in 1992 by the OECD (Organization for Economic Cooperation and Development), the document provides standardized methods for collecting and analyzing innovation data. Its main objective is to offer companies and governments a tool to monitor and improve their innovative practices.
The Manual identifies four major types of innovation:
- Product Innovation: New products or substantial improvements to existing products.
- Process Innovation: New methods or significant improvements in production or distribution processes.
- Marketing Innovation: New strategies in design, packaging, promotion, or pricing.
- Organizational Innovation: New internal practices, work methods, or external relationship models.
These categories enable organizations to clearly identify how they innovate and where improvements are needed.
How to Measure Innovation According to OSLO
To understand how an organization is innovating, the Oslo Manual suggests three types of indicators:
- Innovation Expenditures: Investments dedicated to developing innovative products, processes, or methods.
- Innovation Outcomes: The actual implementation of innovations.
- Innovation Impacts: The economic, social, or environmental results of the implemented innovations.
These indicators help organizations clearly evaluate the return on their innovation investments.
What Influences an Organization’s Ability to Innovate?
The Manual also defines key factors that directly affect a company’s innovative capacity:
- Internal Factors: Financial resources, technological infrastructure, organizational knowledge, and internal skills.
- External Factors: The regulatory environment, competition, market conditions, and partnerships with universities and research institutes.
In addition, the Manual emphasizes the importance of cooperation and innovation networks, suggesting that collaboration between companies, universities, governments, and other organizations greatly increases the chances of project success.
Innovation Policies and Government Support
Another important aspect addressed by OSLO is the role of public policies in fostering innovation. Recommended practices include:
- Fiscal and Financial Incentives (such as subsidies and special credit lines).
- Support for Research and Development (R&D): Clear strategies and dedicated investments.
- Regulations that Encourage Competition and Innovation.
Such public policies facilitate the emergence of new ideas, products, and services by reducing risks and costs.
Innovation Maturity Scale According to OSLO
To clearly understand and compare innovation maturity, the Manual suggests a scale with five distinct levels:
- Level 1 (Initial): Informal processes and isolated initiatives (10–20 points).
- Level 2 (Managed): Basic processes established but inconsistent (21–40 points).
- Level 3 (Defined): Standardized processes that are documented and regularly followed (41–70 points).
- Level 4 (Quantitatively Managed): Formally controlled processes managed through specific performance indicators (71–90 points).
- Level 5 (Optimized): Continuously improved processes using advanced metrics, ongoing feedback, and predictive analysis (91–100 points).
This scale helps organizations clearly determine their current level and identify areas for improvement.
How to Apply the OSLO Model in Your Company
The OSLO Model provides a structured methodology to evaluate innovation. Companies answer objective questions related to various themes, rating their innovation maturity. The main themes evaluated include:
- Product Innovation
- Process Innovation
- Marketing Innovation
- Organizational Innovation
- Innovation Expenditures
- Innovation Outcomes
- Innovation Impacts
- Internal Factors
- External Factors
- Innovation Cooperation and Networks
- Innovation Policies
- Innovation Capabilities
For each theme, five questions are answered with scores ranging from 0 to 1 (where 0 means no implementation and 1 means full implementation). The final score is calculated through three simple steps:
- Theme Score: The average score from the five questions.
- Domain Score: A weighted average of the theme scores according to predefined weights.
- Global Score: A weighted average of the domain scores.
This straightforward approach provides a clear view of the company’s innovation maturity.
Suggested Weight Distribution for Themes
Each theme is assigned a specific weight to balance the evaluation. Below is a recommended example based on the OSLO guidelines:
- Product Innovation: 7 points
- Process Innovation: 7 points
- Marketing Innovation: 7 points
- Organizational Innovation: 7 points
- Innovation Expenditures: 5 points
- Innovation Outcomes: 8 points
- Innovation Impacts: 8 points
- Internal Factors: 7 points
- External Factors: 6 points
- Innovation Cooperation and Networks: 7 points
- Innovation Policies (internal guidelines): 6 points
- Fiscal and Financial Incentives: 5 points
- R&D Support: 7 points
- Regulations Encouraging Innovation: 5 points
- Innovation Capabilities: 8 points
Adding up to 100 points, this distribution makes it easy to understand the overall innovation maturity score.
Why Use the OSLO Model?
Adopting the OSLO Model brings several benefits to organizations:
- Clear identification of strengths and areas needing improvement.
- The ability to compare results with other companies and industries.
- Better allocation of resources towards innovation.
- Continuous improvement based on real data and outcomes.
- Fostering a culture of innovation across the entire organization.
Investing in innovation with clarity and objectivity is essential for any company seeking to remain competitive and relevant in today’s market. The OSLO Model provides the necessary methodology to achieve this goal in a simple and effective way.