How to Develop Innovation Metrics That Matter

There’s no denying the efficacy of Objectives and Key Results (OKRs) in driving alignment and focus within an organization. They've been a cornerstone in the strategic toolbox of many companies. However, when it comes to catalyzing innovation, OKRs can sometimes prove to be more of a straitjacket than a springboard. Here's why: 1️⃣ OKRs can stifle creativity: OKRs are typically tied to specific, measurable outcomes. While this works well for tracking progress, it can limit expansive, generative thinking. In an effort to 'meet targets', teams might be discouraged from exploring bold, disruptive ideas. 2️⃣ OKRs can create a tunnel vision: With a laser focus on the key results, organizations might overlook peripheral opportunities or 'happy accidents' that might have tremendous innovative potential. 3️⃣ OKRs may not adapt quickly: In the ever-changing landscape of innovation, the desired outcome can shift faster than the OKRs do. Rigidity can hamper adaptability, a core trait of any innovative organization. So, if not OKRs, then what? 💡 Enter Innovation Accounting: This is a way of evaluating progress when all the metrics typically used in an established company (like revenues and profits) are effectively zero. It involves creating a balanced scorecard that takes into account not just the financials, but also aspects like customer satisfaction, market validation, and process improvements. 💡 MVP and Iterative Experimentation: Instead of focusing solely on end-goals, the innovation process should be seen as a series of hypotheses that need to be tested. Develop minimum viable products, collect data, and learn. This allows you to adapt and evolve based on real-world feedback. 💡 Pulse Metrics: These are short-term, leading indicators of success that provide insight into whether you're on the right track. They're flexible, quickly adaptable, and keep a finger on the pulse of your innovation efforts. Innovation requires the courage to venture into the unknown and the wisdom to know "failure" isn’t a roadblock, but a stepping-stone. The right measurement framework can provide the freedom to experiment, iterate, and ultimately, innovate. #Innovation #OKRs #InnovationAccounting #MVP #PulseMetrics #BusinessStrategy

Behind every high-performing team is a thoughtful 𝘮𝘦𝘢𝘴𝘶𝘳𝘦𝘮𝘦𝘯𝘵 𝘴𝘺𝘴𝘵𝘦𝘮 focused on what actually drives success—not just what’s easy to count. In my research with teams, I’ve seen many leaders track the 𝘸𝘳𝘰𝘯𝘨 things: tallying meetings held, initiatives launched, or tasks completed, without ever asking if those activities are making a meaningful difference. The most 𝘁𝗿𝗮𝗻𝘀𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝘃𝗲 𝘁𝗲𝗮𝗺𝘀 use a different scorecard. One that balances three dimensions: 1️⃣ 𝗣𝗿𝗼𝗱𝘂𝗰𝘁: Are we creating something valuable? Is our work 𝘩𝘢𝘷𝘪𝘯𝘨 𝘵𝘩𝘦 𝘪𝘯𝘵𝘦𝘯𝘥𝘦𝘥 𝘪𝘮𝘱𝘢𝘤𝘵? 2️⃣ 𝗣𝗿𝗼𝗰𝗲𝘀𝘀: Are we getting 𝘣𝘦𝘵𝘵𝘦𝘳 at working together over time? 3️⃣ 𝗟𝗲𝗮𝗿𝗻𝗶𝗻𝗴: Are team members growing in capability, resilience, and confidence? When teams track 𝘱𝘳𝘰𝘤𝘦𝘴𝘴 and 𝘭𝘦𝘢𝘳𝘯𝘪𝘯𝘨 alongside 𝘱𝘳𝘰𝘥𝘶𝘤𝘵, behavior naturally shifts toward deeper collaboration, reflection, and continuous improvement. One leadership team I supported started measuring “𝗾𝘂𝗮𝗹𝗶𝘁𝘆 𝗼𝗳 𝗾𝘂𝗲𝘀𝘁𝗶𝗼𝗻𝘀 𝗮𝘀𝗸𝗲𝗱 𝗱𝘂𝗿𝗶𝗻𝗴 𝗱𝗲𝗰𝗶𝘀𝗶𝗼𝗻-𝗺𝗮𝗸𝗶𝗻𝗴” rather than just “𝘯𝘶𝘮𝘣𝘦𝘳 𝘰𝘧 𝘥𝘦𝘤𝘪𝘴𝘪𝘰𝘯𝘴 𝘮𝘢𝘥𝘦.” The result? Better decisions and better implementation. Because what gets 𝘮𝘦𝘢𝘴𝘶𝘳𝘦𝘥, gets 𝘮𝘢𝘯𝘢𝘨𝘦𝘥. And what we choose to track reveals what we truly 𝘷𝘢𝘭𝘶𝘦. 𝗪𝗵𝗮𝘁’𝘀 𝘁𝗵𝗲 𝗺𝗼𝘀𝘁 𝗺𝗲𝗮𝗻𝗶𝗻𝗴𝗳𝘂𝗹 𝗺𝗲𝘁𝗿𝗶𝗰 𝙮𝙤𝙪 𝘁𝗿𝗮𝗰𝗸 𝘄𝗶𝘁𝗵 𝘆𝗼𝘂𝗿 𝘁𝗲𝗮𝗺 — 𝗮𝗻𝗱 𝗵𝗼𝘄 𝗵𝗮𝘀 𝗶𝘁 𝘀𝗵𝗮𝗽𝗲𝗱 𝗯𝗲𝗵𝗮𝘃𝗶𝗼𝗿?👇 P.S. If you’re a leader, I recommend checking out my free challenge: The Resilient Leader: 28 Days to Thrive in Uncertainty  https://lnkd.in/gxBnKQ8n #Leadership #TeamDevelopment #HighPerformingTeams #MetricsThatMatter #ContinuousImprovement

Here's my best attempt so far at creating a repeatable map template for assessing the impact of your bets (initiatives, projects, experiments, etc.). It's my new default starting point with clients we work with. See attached screenshot or view the map in DoubleLoop: https://lnkd.in/gPb3jx-m The map is organized in three sections described below. Given how absurdly abstract this is, I plan to followup with examples. == Algebraic KPI tree == The root KPI is the metric that your team/initiative/company ultimately strives to impact. It's usually a revenue metric. The root KPI can be mathematically derived from its children with algebraic equations. Given the mathematical relationship between metrics, you can be confident that each KPI in this section has impact on the primary KPI. However, you can quantify the relative amount of leverage that each KPI has on the root KPI with methods like partial derivatives. == Movable metrics that matter == "Movable metrics that matter" are metrics that can be impacted with your bets. They may not have a direct relationship to the KPI tree, so you will need to assess how confident you can feel in their impact. You can rely on qualitative signal, or use statistical methods like correlations, regression analysis, or granger causality testing. == Bets == Bets are your initiatives, projects, or experiments to move metrics. Your aim is to understand which bets are having an impact (and which ones are not) so they can place better bets over time. By running multivariate experiments, you can establish a causal link between the client's bets and the metrics that matter. If you can't run experiments, you can build confidence as much as possible using qualitative signal or by looking at the before/after performance of the metric, accounting for factors like seasonality or other externalities.