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Measuring the Black Box

By Scott D. Anthony, Steven Fransblow, Steve Wunker

More than two decades ago, management guru Tom Peters penned an editorial titled "What Gets Measured Gets Done." Indeed, one of the findings from the research that Peters summarized in the 1982 business classic In Search of Excellence is that excellent firms use measurements and metrics to make sure people spend time on the things that really matter.

The theory is simple. A senior manager hoping to influence behavior has no stronger lever than his or her choice of measures. Measures serve as tangible guideposts that help middle and junior managers make the critical on-the-ground resource-allocation decisions that—more than any senior management fiat—ultimately determine a company's innovation strategy.

The challenge for companies seeking to improve their ability to create growth through innovation is that the metrics that many companies use to measure innovation run a high risk of actually leading companies in the wrong direction. Managers hoping to unleash their innovative potential need to be mindful of critical measurement traps, think about creating a widespread set of metrics, and ensure their executive dashboard constantly monitors the innovation metrics that matter most.

Measurement Traps

Putting metrics on innovation is difficult because innovation is a complicated, diffuse activity. Even a metric that seems to make all the sense in the world can actually lead to behavior antithetical to the long-term pursuit of profitable growth. Generally, there are three measurement traps companies should guard against.

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With the assistance of Innosight, Absa is revealing new insights and sparking new thinking as to the kinds of innovations that truly change the game and unlock whole new value horizons.

Tim Frost
Head of Retail Strategy and Innovation, Absa (member of the Barclays Group)

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