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Featured image: The Complete Guide To Measuring Innovation Performance

The Complete Guide To Measuring Innovation Performance

Dan Toma, Author, innovation expert, and co-founder of OUTCOME

"Measuring innovation is not about finding one perfect metric; it's about understanding the broader impact on your organization."

In this enlightening episode of the Innovation Rockstars podcast, we welcome Dan Toma, acclaimed author, innovation expert, and co-founder of OUTCOME to demystify the complexities of measuring innovation performance. Dan, known for his entrepreneurial spirit and deep understanding of enterprise transformation, explores why traditional R&D metrics fall short and shares his unique perspectives on effective innovation measurement. Whether you're a startup enthusiast or a leader in a blue-chip company, this discussion will challenge your assumptions and offer new insights into fostering innovation effectively within your organization. Join us as we dive deep into the art and science of innovation measurement with one of the industry's thought leaders.

This episode is a treasure trove of insights for aspiring innovators and entrepreneurs seeking practical advice on navigating the complexities of global business and making impactful decisions.

Below you will find the full transcript for the episode.

Why Startups Outpace Corporates in Innovation

Chris: Measuring innovation has long been a challenge. In fact, it may be that you shouldn't be using a lot of indicators to measure it at all. At least not yet. Why this is the case and why R&D spending turns out not to be a good indicator of innovation performance is what Dan Thoma and I are going to talk about in this episode. Let's go. This is the Innovation Rockstars podcast, where we share unfiltered conversations about all things innovation with leading minds who are shaping innovation. My name is Chris Mühlroth and with me today, I have an individual who is shaping innovation quite a bit. It's Dan. Dan Thoma. Dan, you are a two-time award-winning author for your books, Innovation Accounting and the Corporate Startup. You've been featured on the Thinker's 50 Radar. You have an entrepreneurial background for sure, currently a consulting partner and co-founder at Outcome, where I guess you focus on blue chip organizations, and enterprise innovation-led transformation. I will get to that. You're a frequent speaker. You're on stages digitally and also physically around the world. And I assume you don't get bored very often. So thanks very much for joining me. It's a pleasure to have you, Dan.

Dan: Thank you very much for hosting me, Chris. Thank you.

Chris: More than welcome. Dan, for anyone tuning in to this episode with you, what do you want listeners to take away at the end of this episode?

Dan: Yeah, so there are obviously when you're tuning into this, when you're listening to this, you might be somewhere on the innovation journey if you want. So obviously some bits might speak more to you than others. which is totally fine, not everybody needs to get the same things out of an interview, out of a conference, out of a book even. What's important, I think, at the end of the conversation is to get more clarity on how you measure innovation and what steps you need to take to be able to measure innovation within your organization.

Chris: This is a very common and pressing problem because in many conversations we have or I have, it's actually quite unclear where you want to head. Like what, for example, the contribution to corporate strategy, to corporate goals, like in percent, in money. And at the same time, how do you measure you're on the right track? But we'll get to that. But very interesting. In one of your outlets, you asked the question, That's a really interesting question. Why are innovative products mostly launched by startups? And if you think about it, yeah, I mean, obviously blue chip organizations have responsibilities to shareholders, employees, and customers, and it requires a level of predictability and stability that might be compromised a little bit by a high-risk, high-reward, typical approach of startups. But that's an interesting question. Why do you think that we don't see more innovative products from the big companies?

Dan: It's paradoxical, right? If you come to think of it on the one hand, the large organizations do have the resources at their disposal. I'm not talking just about money here. I'm talking about reach. I'm talking about technology. I'm talking about marketing budgets. I'm talking about all these other things, right? However, most innovation that we are seeing, we're seeing it from the little guys that have no marketing, no development power. I don't even talk about budgets and stuff because they need to fundraise and they need to go to do all of those things. Obviously, I think there are many, many reasons for that, right? You mentioned one of them, right? They are accountable in front of shareholders, and they need to do a predictable business. When you start doing innovation, it's anything but predictable. Obviously, I don't think there is one reason. I think there is a cumulation of reasons if you want. So shareholder accountability is one. Another one can be connected with the short tenure of the leaders within these organizations, right? They are no longer in their position for more than probably three, or four years. So if they want to see results, you obviously double down on the core business. Another one can be the fact that the majority of large organizations are no longer founder-owned or family-owned. So, again, there is absolutely no incentive to some extent to be innovative, to ensure the future of the organization, because at the end of the day, it's not your organization. You're just there to milk the cow. It's not your cow, it's not your family's cow, so why care what's gonna happen in five years or 10 years down the road? That's the sad reality, but let's be honest, that's what's happening. So again, I think it's very difficult to put our finger on just one thing. But one thing is for sure when it comes to investing in innovation, I think this was the Gartner report back in 2018 or 2019 that stated that the reason why executives don't want to invest in innovation was primarily due to the lack or inability to measure innovation. I think they were scared that, oh, I'm throwing this money into a black hole, and I don't know if anything happens with those, and what's happening with those particular resources that I'm throwing. Why not double down on the core business, because I can manage the core business? I know if I put $1 in, I get $1.25 on the other end, or whatever the conversion rate is. But yeah, many reasons.

"When you start doing innovation, it's anything but predictable."

Chris: I think speaking the truth is the most sustainable thing to do. So I tend to agree, right? If it's not a family-owned business if it were simply for career purposes, well, there are fewer, you know, risk-taking avenues who can get and still make a career, for example, in a large organization. So I agree. What is your What is your why? I'm not looking for soul-searching things right now, but why do you focus on large blue-chip companies in your work? If it was for the act of innovation itself, you would probably focus more on working with start-ups or smaller companies, or maybe family-owned businesses, to build those innovative products. So why focus on blue-chip companies?

Dan: To some extent, it's basically based on the fact that it's a complex issue and I enjoy solving complex problems. I'm an engineer by trade, so the more complex the issue, the hairier the issue, the more I enjoy it, right? The other reason is that we live in a world where If we want to see change happening, it needs to come from these large organizations. Talk about the environment, talk about social justice, talk about all these other things. Yeah, you can do a lot with one startup or with your startup. But honestly, if somebody is to tackle the big issues, it needs to be a large organization. Think what can mean for the environment if all of a sudden Tesla has a technology to recycle batteries, right? What will that mean? Or Apple has that technology, right? What will happen in the environment? Think about how many Tesla cars are out there or iPhones or not even just iPhones, all the Apple products, right? If I'm a startup doing circular economy stuff, yeah, I might have a tiny, tiny amount of impact in my local geography or in my extended network. But if I want to solve the problem of the globe, if you want, right, of society at large, it needs the muscle of a large organization. So that's another reason. But to be honest with you, I'm very drawn to solving complex issues.

The Foundations of Innovation Strategy

Chris: Yeah, so it's both complex issues but also the impact. Very selfish, I would say. Maybe, which is again fine. I mean if it's contributing to some of the larger problems, being selfish is absolutely fine. There is one thing you said recently that drew my attention to it. You said, Or I read it somewhere, I don't know, but you said that the organizations that are doing innovation, or the innovations, the best, are actually the ones that talk less about it. That's I guess how you phrased it. So they're not throwing all these words, you know, innovation, and I'm not saying playing the innovation theatre, but it's a little bit playing the innovation theatre. So why do you think this is? Why do organizations that are innovating best actually talk less about it than others?

Dan: Probably they're busy doing it. That's the assumption. Probably they're busy doing it. You know how it is, right? With any activity that you do, with any sport that you do, activities would be a good definition. Once you start getting a hold of it, you're probably more interested in refining that art than talking about how you do that particular art. This is a problem with, for example, many artists. We're on a podcast that refers to the gender of music. So there are a lot of great artists out there that are unknown or semi-unknown. because they are just focused on refining their art. Unfortunately for them and the business model that they have, they will definitely need to get known if they want to make a living out of it. But in corporate innovation, that's not the case. You don't get to make more money if you have more followers. If you're good at innovation, if you have a good innovation practice and are able to churn year in, year out great products, You don't need LinkedIn to know about it, or Twitter to know about it, or YouTube to know about it, because the bank knows about it, right? Because you have great products that you launch every year, and I think that's enough. Society knows about it, and your clients know about it. That's enough. I've met organizations that were pretty good at innovation and they used their own terminology versus my terminology from the books. And it was totally fine because where we connected was basically what those terms mean and how they get applied. I don't care if you call it a thesis or a strategy or a strategic document or you call it a venture board, innovation board, or innovation committee, I don't really care about that. As long as you have those things in place and you're using them to their potential and you're seeing returns from those particular activities, it doesn't matter what you call them.

 "If you're good at innovation, you don't need LinkedIn to know about it, because the bank knows about it."

Chris: Yeah, it needs to work. It needs to provide the impact that you're after, I 100% agree. You know, I think that's very true, because oftentimes we get a little bit lost in, I'm not saying defining things is a bad thing, but sometimes we can get very picky around this, right? So sure, probably everybody has a different, slightly different understanding of innovation. I mean, yeah, you know, for some organizations it might be the more incremental stuff. For some organizations, they want to clearly head for the bold bets. Sure. But at the end of the day, it serves a certain purpose. And you need to make sure you're, I don't know, contributing to the growth of the business or resilience to market changes or whatever it is. But it just needs to work. I totally agree. And I think it's interesting because one of your two books, Innovation Accounting, actually introduces a new paradigm for measuring innovation within companies. Can you take me through what are some of the fundamentals of an innovation accounting system?

Dan: Right. To be honest with you, that's the book I always wanted to write. I think I had to write a corporate startup in order to get to write innovation accounting for many reasons. One of them, I was not mature enough to understand how to measure innovation, but then other reasons as well. First and foremost, and again, this goes to the listeners who are just starting on the innovation journey. I think that if you are just starting up on your innovation journey and you don't have many things in place when it comes to your innovation system, measuring innovation, innovation accounting as we call it, it's probably the least of your problems. Like, don't start there. That's not a good way in. It's not like, okay, we don't have anything in place. Let's figure out how we're going to measure innovation. That's not the way to do it. That's probably the MBA's approach to building an innovation system, but that's not the right approach. Your approach should be starting with, let's do some innovation first and see what happens. And then in the years to come, we're going to figure out how we measure it. Now, to your question in terms of principles, if you want, of how you measure it, there are certain things that come to mind from the book. And I'm not going to cite from the book because I actually haven't opened an innovation accounting book in a long time. But yeah, exactly. But probably some of the core principles are the fact that you will have to have, to some extent, the product lifecycle framework implemented. You have to have a very clear idea of what are the stages ideas have to go through from the moment they are created, to the moment they are successful in the market or successfully integrated into an existing business or whatever it is. So you have to have that.

"Don't start with measuring innovation if you haven't started innovating yet. Let's do some innovation first and see what happens."

The other thing is that you should not try to boil down innovation to one single indicator. Whichever that indicator is, don't try to boil it down to one single indicator. In the book we actually talk about You know Game of Thrones, right? There's a ring to rule them all. Try not to go down the path of Lord of the Rings. You're not trying to find an indicator to rule them all. If you do that, and if you try to boil everything down to one indicator, you will probably be very disappointed on the one hand. On the other hand, you're going to find that it's very easy for the organization at large to gain that particular indicator. It's going to give you a false sense of security, a false sense of having achieved something, or vice versa, a false sense of, look, this is not working because we just boiled down everything to that one indicator, and that one indicator is not moving. Also, again, from experience, most people boil down everything to ROI. But it's just a very, very narrow view of what innovation can do for you. ROI is important, and don't get me wrong, I'm probably one of the people who is most interested in the ROI of innovation. But you can do innovation for the purpose of, for example, cutting down costs, right? Reducing costs. Or you might do innovation to reduce CO2 emissions in your organization. Or so many other reasons, right? ROI is important, but you should consider other ways of measuring it. Lastly, and probably One of the most important things connected with the fact that you should not have only one single indicator is that you have to have different indicators for different layers of the organization. The things that the CFO would be interested in are not something that your innovation coach would be interested in or your innovation team. They are connected. but they are not the same thing. The things that your innovation, the pool of innovation coaches, if you want, in your organization are interested in, is somewhat connected to what the CFO wants, but it's not the same thing. So if you talk with a CFO, you have to have different indicators. If you talk to a director of innovation, you have to have different indicators. If you're talking with a team, you have to have different indicators. The tricky bit is that these indicators need to be communicated.

"ROI is important, but you should consider other ways of measuring innovation, like cutting down costs or reducing CO2 emissions."

Implementing Practical Innovation Metrics

Chris: That's one thing. In your book, you clearly highlight the inadequacy of standard accounting methods. Standard things that a CFO, for example, or a director of finance typically uses for innovation purposes. Where do some of the traditional metrics, maybe SROI, but maybe also others, where do they fall short in capturing the value of innovation?

Dan: Right at the beginning. What do I mean by right at the beginning? We're trying to measure innovation with what we typically use for the core business. And it's absolutely impossible for, and again, probably this is no news for everybody that worked in startups. It's impossible to report on the same KPIs day one as the core business is doing. If you say, hey, we are a car manufacturing company. We've been building cars for 100 years. I don't wanna name the name of the company, but we know who's been building cars for 100 years, right? We've been building cars for 100 years. We know absolutely every single dollar that goes in, what's gonna happen with it, and how much we get back. If you start a business, even within that company or outside that company today, you won't be able to report on the same things. Other things might be more relevant for you in terms of accounting for your progress. And venture capital knows that very well. Investors know exactly what to look for and identify whether or not they are making progress without using financial KPIs. Obviously, as your business grows, you will start to need more financial accounting. But this is going to be a gradual process in which you dilute the innovation indicators and add more financial indicators up to a point where your business is huge and you can only manage it and you will only manage it through financial indicators. But early on, financial indicators won't do anything. And to give a more practical example here, Think about starting up a company now. If I would come to you and say, hey Chris, tell me what is your ROI, or tell me what is your return on net assets, or tell me what is, I don't know, any other financial indicator to be honest with you, customer lifetime value, and all these kind of things. You'll be like, dude, I just started my company last week, so I don't know. However, if I come to you and say, Chris, tell me how many customers have you spoken to in the past week since you started the business and have confirmed that they have this particular issue? This would be an indicator for which you're going to have very relevant data and very important data for me to make a decision about your business. If I want to invest in it, if I trust you're on the right track and so on and so forth. So you see, just the way we phrase the conversation and the indicators we tend to use is going to shape my perspective of your business. If I use financial indicators, I'm going to be super disappointed in your business. Look, you don't know what your customer's lifetime value is, and you don't have any ROI, what the hell, right? This is not a good business. But if I ask you how many customers have confirmed a problem in the past week since you started and you say, look, I send out a newsletter to 1,000 people, and out of those 1,000, 900 came back saying that they want to buy the product. All of a sudden, I believe that your business is definitely on the right track and you should continue investing or I should come in as an investor into your business.

Chris: Yeah, so it's the right indicators at the right time. They can be a key performance indicator. There can be some other indicators. So that's a good point. That's actually a good point. So let's think about innovation KPIs from the perspective of different levels of innovation maturity. as you mentioned before. Can we go through them step by step and simply define what level of innovation maturity, what kind of makes sense to measure, and at what stage for a comprehensive overview?

Dan: It is great that we're having this podcast interview because this is honestly my latest thinking on KPIs. If we had had this conversation a year ago, or just a couple of months back, I would have said something that I know to be true. You need a certain level of maturity to benefit from innovation accounting and to implement innovation accounting. I told you earlier that, yeah, you need to have, for example, a product lifecycle framework and so many other things in place in order to benefit and use innovation accounting and implement innovation accounting. However, over And by the way, I have data about that. I know exactly how mature an organization needs to be in order to benefit from innovation accounting and implement innovation accounting. However, my stance has changed over the past month or months, I would say. I think that it's, and why did it change? Because I believe that it's very difficult to set a line in the sand and say, after this particular line, I'm going to flip a switch called innovation accounting. and create a system with 29 indicators, because I think 29 is the number of indicators we suggest in the book, or probably 39, I don't remember. But anyway, more than 10. All of a sudden, my organization is going through a massive psychological trauma, in the sense that we haven't had anything measured innovation and all of a sudden we have more than 10 indicators. I don't think, exactly, that's way, way too much from a transformation perspective, from a change management perspective, it's just too much. So I think that my advice now would be to start dripping in indicators as you are maturing. So, To your question, I think if you're just starting on the innovation journey now, as I said earlier, just do some innovation. And I think if you want to measure something, try to measure how many ideas you have in the portfolio. Just a very, very simple indicator. Look, we have 10 ideas we're working on. Or five ideas or two ideas. Just be able to report on those. Then try to go into something a bit more Analytical. How many of those ideas are core? How many of those ideas are adjacent to innovation? How many of those ideas are transformational? If you don't use this language in your organization and you're just using strategy, just say, how many of these ideas are connected with strategic initiative one, strategic initiative two, or three? How many of them are connected with AI? How many of them are connected with decarbonization? How many of the things that might be relevant for your strategy? That would be a very good starting point. You can go a bit more, you know, detailed. You can be, if you have the product lifecycle implemented, you can say, okay, how many ideas are in stage one? How many are in stage two? How many are in stage three? And I think if you are able to have this data, I think that's more than enough for a novice organization. It's more than enough for an organization that, you know, is just starting. You're not fully professional when it comes to your innovation practice, but you want to become professional. I think that's very important.

"I think it's very difficult to set a line in the sand and say, after this particular line, I'm going to flip a switch called innovation accounting."

You want in the future to become professional. If you're moving up the ladder and you're becoming more versed when it comes to innovation, you're investing more, the CFO is definitely on board. There are other things you can add on top of what I just said, and that's the beauty actually of innovation accounting because metrics build on each other. You can look at, for example, what's your funnel conversion rate. So if I start 10 ideas today, how many of them will survive until they're implemented in the market? If you aren't be able to track how many are per stage, you won't be able to compute that. So the indicator that you are using at the novice level, you can use this for this more competent level. You can look at the average time it takes to put an idea in the market. Again, a great, great indicator. Average time to sustain, we mention it in the book. And then if you want to be friends with the CFO and friends with the finance department, you can use an indicator that's called NPVI. And this is a very old Very old indicator, I think it was created by 3M in the 80s, so this is nothing new. It's NPVI, meaning Net Product Vitality Index. So basically, how much of your revenue today comes from products you launched in the past three years, or five years? So again, really good indicator for an organization that's a tiny bit more competent. So you've been doing innovation for the past, let's say, five years, maybe seven years. You already have some data, so you can crunch that and you can present that to a finance director. Obviously, you can be a bit more detailed here. You can go into saying, okay, what's the cost of innovation? So how much are we actually paying to get a product to market? What is our cost of failure? And this is one of my favorite indicators. I actually wrote a blog post about it a week ago on the importance of cost of failure. How much are we paying for every failed product on average? And it's very important because it shows whether or not your innovation process and your governance works. So again, this will be something that you will do when you are a bit more competent. If you are now an organization that has all these indicators in place and you want to step up the game on innovation metrics, you can go in talking about what's your portfolio distribution, what's your efficiency of innovation investment. So basically for every single dollar of new revenue, how much have you been paying for that? Because yeah, you get now new revenue, you know how much it is, how much it is relative to the core business. Now, how much are you paying for that new revenue? You can look at the potential of your funnel. You can start doing some estimations. Look, my funnel is estimated at $10 billion. Obviously, this needs to be risk-adjusted and it's just an estimation, so take it with a pinch of salt. You can look at the learning velocities of different teams how fast they are moving and how fast they are learning. But this means that you are already an advanced organization. I think the last tier of maturity will be once you start using all this data, to set goals, for the future. You look at all the renovation accounting data and you can say, okay, I'm going to go to the CFO now and ask for 10 million euros in budget for this year because I know exactly that with 10, $10 million, I'm going to kick off. I know how many initiatives and these initiatives in three years, they will amount for this certain, you know, ballpark figure. How do I know that? Well, I know how many will survive. I know what's our expected return for every venture. I have all this data, so I can go into my CFO's office and say, give me this amount, and this is how much you can expect from the innovation department three or five years down the line. But that's holy grail, if you want the most advanced organizations to be there. And there are organizations that are there already. I'm not saying that this is something that hasn't been heard of before. It's just that the number of organizations that are at that level is very small.

Myths and Realities of Innovation Measurement

Chris: I think it's a very good way to think of this in those four maturity levels. And no indicator is perfect, of course. They all have their meaning, and they all have their value. It's really interesting, for example, a new product vitality index, NPVI. Probably it's a very good indicator to look at if all the new revenue comes from innovation efforts. If not, I mean, probably there's going to be a little bit diluted here and there. Um... Same for the last one, like going to the CFO, asking for some budget because you can turn this back in three or five years with whatever million or billion as a ballpark new revenue. That requires a certain level of predictability. So you need quite a solid data track record. That's why it's the highest maturity level for sure. But they're actually very useful. And the core message is also very useful, which is to start making successes. bringing things to market, taking care of innovation accounting of course, but what do you want to measure if you have nothing to measure? Which means no projects, no innovations in the pipeline.

Dan: Yes, exactly. And that's why it's very important to start. That's why it's very, very important to start. And again, probably the MBA approach to this will be, no, let's figure out what are the indicators. And by the way, for the listeners, I have an MBA. So the typical MBA approach will be, yeah, I'm not going to bash people who have an MBA because I have an MBA. Yeah, the MBA approach would be, oh, let's figure out how we're going to measure all these things that we're going to do before we start doing them. And I think sometimes you have to - you have to be aggressive. You have to be aggressive and proactive about innovation. Start doing it. Start doing it. We're building the tracks while the train is rolling. And we'll solve the measurement problems later, but let's just start innovating, people.

Chris: I mean, there is, you know, knowledge you get from books and then there is, you know, street credibility and experience for sure. So both have their value in their place. Of course, I couldn't agree more.

Dan: But nothing beats real life experience. You can get five MBAs and two PhDs. and then you're going to realise that the kid that's been 18 and doing start-ups for the past 10 years, now 28, has so much more business knowledge than you do. That's the reality of the world we live in.

Chris: Stig Brodersen Dancing and TikTok and making millions. We've seen it all, so I agree. What are some of the myths that you encounter about measuring innovation? Demystify some of them for us.

Dan: There are so many of them and I think the list that we presented in one of the first chapters of the book is by no means complete because every time I go to a conference or I speak with a client, I learn about two more myths that are not there. That's on average by the way. Obviously, some of my favorites are around, oh, innovation can't be measured because, you know, it's more art than whatever. And this is something that you'll probably hear from organizations that are really engaged in innovation theater. I'm like, oh, no, let's not measure innovation because it's just it's just a matter of serendipity. And, you know, people people enjoying themselves. And it's all about culture. And, you know, culture can't be measured. Yeah. B.S. to that because it can be. Another one is that we're going to measure innovation by measuring R&D. And some organizations prefer to measure innovation just by the output of R&D, and some prefer to measure innovation by the input in R&D. So what's the R&D budget? And we know that for a fact that R&D expenditure doesn't necessarily equal innovation. And there are so many examples out there. explaining why R&D is not innovation. It's part of innovation, but it's not innovation. You can't have innovation without R&D, and R&D itself is not innovation. So again, I don't want to go into that whole debate. And there are organizations in Germany that are just measuring the output of R&D. Say, oh, we filed, and here I'm probably talking about engineering companies. I know a very well-respected engineering company in Germany that at one point was talking to me about measuring their R&D prowess slash innovation prowess by numbers of patents they were filing every year. Like awesome, so what do you do with all those patents? How are you converting those patents into money that you can deposit in the bank account? Because those patents themselves are not going to generate any revenue for you. You're not gonna be able to pay the light or the headcount using patents. So what why do you measure the performance of innovation with that indicator? That's surprising. And probably there's a couple of other myths that I've encountered, but these will be like the ones that are, first of all, the most frequent ones, and the ones that are probably the most detrimental, if you want, for the whole idea of measuring innovation.

"Innovation can't be measured because, you know, it's more art than whatever. And this is something that you'll probably hear from organizations that are really engaged in innovation theater."

Chris: So the list is probably too long to go through this, even in a couple of hours. But if you're interested, you obviously can have a look in your book, innovation accounting book, or scan through all your publications. But that's really interesting. And then, what didn't we talk about in this episode that you think is super important when measuring innovation and doing innovation accounting?

Dan: I think probably the one thing we haven't talked about is where do we start, right? We've heard a lot about how do we do it relative to our innovation maturity and what are some myths and so on and so forth, but I don't think we've left people with where do you start. We alluded to the fact that you have to start with innovation. Yeah, that's a good place to start. Start doing it and then things will come. But what exactly do you need to have in place? And I think there are two things you have to have in place, maybe three, but definitely two things. You have to have the product lifecycle framework. What are the stages that my ideas need to go through? And the other thing you've got to have in place is decision makers who are constantly making decisions about the portfolio. I think those are the two things. If you don't have a product lifecycle and if you don't have an innovation board, innovation committee, venture board, whatever you want to call it, it's very difficult for you to start measuring innovation. Now, the next layer would be to have a very clearly defined innovation process. Who's making decisions? How often are decisions made? And so on and so forth. How do we essentially implement the product life cycle? But that will probably be related to the fact that you have a product lifecycle and you have decision makers. That would be my suggestion. I see a lot of organizations, unfortunately, that come to us and say, hey, I want to implement innovation accounting. And then you look at what they have, and they don't even have a product lifecycle. How do we measure that? How do we measure it if we don't know the steps that have to be taken by somebody who has an idea all the way through to that particular idea being implemented in the marketplace. How in the world do we measure that? It's just like measuring performance in sports. What are the steps that a team has to take from the moment the team is formed to the moment they win the Champions League or the Stanley Cup or whatever it is, right? They have to have those milestones. Oh, they have to win like a regional, or they have to compete at a certain level, or they have to have certain things that are associated with that particular maturity. And those things are very, very important if you want to be able to track innovation progress over time.

Chris: So you need to have a certain amount and level of checks in place before it makes sense to proceed. Yeah, that's very important. And Dan, this has been a super insightful conversation, but before this conversation ends, we do have a new tradition on this podcast. Alright, so my previous guest leaves a question for my next guest without knowing who my next guest is and what we are going to talk about. So there was a question that's left for you by my previous guest and the question for you goes like this. How do you prepare As new technologies accelerate the pace of change and innovation, how do you prepare personally as being Dan?

Dan: I'm trying to use the latest technologies, even if it is just installing an app and deleting it two minutes later. At least I want to have it and try it out before deciding. Some of them stick with me, some of them don't. Listen, just now we're using an app called Riverside for this recording. To be honest, I had no clue that Riverside, Riverside, right? It's the, yeah. By the way, we're not promoting their product in any way. Just a disclaimer, none of us work at Riverside or have shares at Riverside. At least I don't. I don't know, Chris, I might have shares at Riverside. But listen, it's a great app and I honestly learned about it a few months ago when somebody said, hey, if you're doing podcasts, check it out. I installed it. I probably used it once. And just this morning before the recording, I said, oh, Christian wants to do it on Riverside. I know what Riverside is because I think I already have it installed on my iPad. So this is how I'm typically doing it. I'm just trying to install a lot of things and try them out myself before actually deciding whether or not they are useful to me or whether or not I see a use for these apps with my clients or in the work that I'm doing. That's the way I'm doing it. I don't know if this is the best way or it can be other ways. Obviously talking with friends about whatever it is that they're using helps and they recommend stuff. But you know how it is. Sometimes you end up in an echo chamber. Everybody's using the same thing. So it's very difficult to break through and see the other thing.

Chris: I think it's a very useful procedure, because as you know, things become more accelerated in terms of technology. So of course, I agree. Thanks for sharing. I really appreciate it. And that's it. That's it for the episode. Dan, thank you so much again for being my guest. It was really a pleasure. I learned a lot when listening to you. Thanks for being my guest.

Dan: My pleasure, Christian. Thank you very much for hosting.

Chris: And to our listeners, if you haven't subscribed to this podcast, please go ahead and do so. It's a small thing and it will help us continue to make the show better and better for you. So my promise to you is that we'll continue to do our best to deliver exceptional value at no cost to you. So if you're not already a subscriber, please go ahead and subscribe now. Thanks for listening. Take care and bye bye.

For further reading, check out Dan's publications:

About the authors

Dr. Christian Mühlroth is the host of the Innovation Rockstars podcast and CEO of ITONICS. Dan Toma is an acclaimed author, innovation expert, and co-founder of OUTCOME. 

The Innovation Rockstars podcast is a production of ITONICS, provider of the world’s leading Operating System for Innovation. Do you also have an inspiring story to tell about innovation, foresight, strategy, or growth? Then shoot us a note!



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