Measuring Innovation: Beyond Revenue From New Products

OVERVIEW:Because innovation can be achieved in many ways, measuring innovativeness is difficult to do well with a single measure. One effective approach is to pair a “fixed” with a “variable” measure, that is, Revenue from New Products with Revenue from New Platforms. The former reveals much about the overall rate of change and the latter about the quality of “newness” of the shift in revenue. The former focuses on product and the latter on any kind of relevant platform that leads to advantage through innovation: product, technology, manufacturing, operational, or business. By considering the accounting-based new product measure in concert with the more flexible measure of new platforms, a company can explore meaningfully the quality of its innovation and how sustainable is its innovativeness.