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Hey there, innovation champions!
I recently found myself reflecting on a challenge I see across the tech world: we’re trying to measure 21st-century innovation with 20th-century metrics.
Innovation leaders often face the same frustrating question: “But how is this impacting our bottom line?”
It’s a fair question, but traditional financial metrics like ROI, revenue growth, and cost savings tell only a fraction of the innovation story. They’re like trying to judge an iceberg by the 10% you can see above water.
Today, I want to share some “below the waterline” metrics that tell a more complete story about innovation efforts – metrics that can transform how you understand, communicate, and accelerate innovation in your organization.
The Invisible Value of Innovation
When I talk with leaders about what they’re really trying to achieve through innovation, their answers rarely start with financial outcomes.
Instead, I hear things like:
- “We want to stay relevant in a rapidly changing market”
- “We need to attract and retain top talent”
- “We want to build capabilities that future-proof our organization”
- “We’re trying to foster a culture where people are energized and engaged”
These goals are crucial for long-term success, yet they don’t show up neatly on quarterly financial statements.
Let’s look at some alternative ways to measure innovation that capture this fuller picture of value, using my Create the Impossible™ framework as a guide.
Learning Velocity: The Speed of Knowledge Creation
The first element of my Create the Impossible™ framework is “Play Hard” – creating space for experimentation and discovery. But how do you measure the value of play?
One powerful metric is what I call “learning velocity” – the speed at which your team is generating new insights.
This isn’t about how many experiments you run, but about the rate at which you’re increasing your understanding of your customers, your market, and your capabilities.
Here’s how to measure it:
- Knowledge Assets: Track the creation of new insights, tools, or approaches. These might be documented in playbooks, design patterns, or capability models.
- Learning Reviews: After each project or sprint, document what the team learned. Over time, you can track how quickly your knowledge base is growing.
- Question Evolution: Notice how the questions your team is asking evolve over time. Are they becoming more sophisticated? Are you asking questions today that you couldn’t have formulated six months ago?
Relationship Resilience: The Strength of Your Connection Web
The second element in my framework is “Make Crap” – creating psychological safety for people to share imperfect work. This builds what I call “relationship resilience” – the strength of the human connections that enable innovation.
Here’s how you might measure it:
- Psychological Safety Metrics: Regular surveys assessing whether team members feel safe taking risks, sharing incomplete ideas, and making mistakes.
- Collaboration Networks: Using network analysis to map who’s working with whom across organizational boundaries. Are connections growing stronger and more diverse over time?
- Idea Transparency: Track how early in the development process ideas are shared. Earlier sharing indicates greater trust and potentially more diverse input.
Research consistently shows that teams with high psychological safety and diverse collaboration patterns tend to be more innovative. When people feel safe to share early-stage ideas and work across boundaries, breakthrough thinking becomes more likely.
Adaptation Capacity: Your Organization’s Flexibility
The third element of my framework, “Learn Fast,” is about building your organization’s capacity to adapt. This might be the most valuable outcome of innovation work, yet it’s often completely unmeasured.
Here’s how to capture it:
- Response Time: How quickly can your organization react to external changes? This might be measured by the time it takes to formulate a response to a competitor move or market shift.
- Experiment Cycle Time: How long does it take from identifying a need to running an experiment? How much has this time decreased?
- Pivot Capability: How effectively can teams change direction based on new information? Track instances where teams successfully adapted their approach based on feedback or changing conditions.
Organizations with high adaptation capacity can respond more quickly to threats and opportunities – a critical advantage in today’s rapidly changing environment.
The Ripple Effect: Innovation’s Broader Impact
Beyond these metrics that map to my Create the Impossible™ framework, there’s another set of measurements that capture innovation’s ripple effects throughout an organization:
- Talent Magnetism: Are you attracting and retaining creative talent? Tracking application rates for innovation-focused roles and retention rates of team members can reveal how your innovation culture strengthens your talent position.
- Decision Quality: Are you making better decisions faster? Innovation capabilities often improve an organization’s overall decision-making.
- Strategic Optionality: Has innovation increased your future options? Innovation often creates new strategic possibilities that weren’t previously available. Tracking your “option space” – the range of possible future moves – can quantify this value.
Putting It Into Practice: The Innovation Dashboard 2.0
So how do you actually implement these alternative metrics in your organization? Here’s a practical approach:
- Start with Purpose: Before choosing metrics, clarify what you’re really trying to achieve through innovation. Is it adaptability? Future-proofing? Cultural transformation? Then select metrics that align with these deeper purposes.
- Balance Leading and Lagging Indicators: Traditional financial metrics are lagging indicators – they tell you about past performance. The metrics I’ve described are leading indicators – they predict future success.
- Create a Multi-Dimensional Dashboard: Develop a dashboard that shows traditional metrics alongside these alternative measures, telling a more complete story of innovation’s value.
- Visualize the Connections: Help stakeholders see how these alternative metrics connect to financial outcomes over time. For example, show how increased learning velocity eventually translates to faster product development.
Your Innovation Measurement Challenge
So here’s your challenge for this week: Identify one “below the waterline” metric that would help tell a more complete story about the value your innovation efforts are creating.
Maybe it’s a measure of learning velocity. Perhaps it’s something that captures your growing relationship resilience. Or it could be an indicator of your organization’s adaptation capacity.
Whatever you choose, start tracking it alongside your traditional metrics. You might be surprised at the insights it reveals and the conversations it sparks.
Remember: What we measure shapes what we value and what we achieve. By expanding our innovation metrics beyond the bottom line, we open up new possibilities for creating the impossible.
Stay curious, stay playful, and keep creating the impossible!
I’d love to hear from you. What’s one alternative metric you’re using to measure innovation in your organization? Click here to share your story!
Senior Leaders: Ready to transform how your organization measures and communicates innovation value? Book a complimentary Innovation Strategy Session and let’s explore how to create a more complete picture of your innovation impact.
