Innovators love ideas, and Chief Financial Officers love metrics. But if you try to shrink-wrap your most promising ideas in a nice, tight layer of metrics too early, you’ll suffocate them. And the desire to apply the same metrics to fledgling products and cash cows often keeps organizations stuck in the status quo.
Don’t Let Financial Metrics Prematurely Stifle Innovation
In the early days of developing a new idea, the metrics that may be most germane are things like number of prototypes created and tested; number of customers interviewed; repeat users of a new software platform; number of parties that have been persuaded to participate in a new business ecosystem; or how efficiently you are shelving low-potential ideas in favor of those that resonate with customers or are feasible for your company to pursue (sometimes called “concept kill rate”.) But to build a durable engine of innovation inside your organization, you need a way of making the transition from those early activity metrics to a more defensible set of metrics demonstrating the impact and value you’re creating. That transition is a mix of engineering and gut feel — not unlike building an on-ramp and then using it to merge into zippy traffic.