Rethinking Innovation Value: Measuring Impact and Securing Executive Buy-in

Why Traditional Metrics Fail to Capture Innovation’s True Value

Proving the value of innovation can be tricky in an environment dominated by short-term metrics and incremental returns.

Most organizations still rely on traditional financial metrics like ROI (Return on Investment) and NPV (Net Present Value) as success metrics. While these data work well for stable, predictable business models, they are fundamentally flawed when applied to innovation.

Explorative innovation teams, therefore, need to establish a nuanced balance between showing immediate impact and achieving long-term strategic gains.

Rita points out that many Fortune 500 companies stagnate or decline because they fail to effectively measure and invest in future growth.

“The big reality is that, in any short period of measurement, companies built to be resilient for the really long term will slightly financially underperform companies built to capitalize on a particular moment. And that is the crux of the measurement issue we grapple with as innovators.”

She argues that the problem isn’t that innovation doesn’t create value; most companies aren’t measuring the right things.

Tyler agrees: “Where we see innovation going wrong is when innovators don’t actually define what value they’re creating for those companies. Bottom-up innovation is really, really hard because a lot of the time you’re trying to design that value and gain executive buy-in along the way to prove a case for why that value matters.”

“Companies that are focused on the short term always look like they’re creating a lot of value because they become successful in that short term, but that may not last over the long term,” Tendayi notes. “When we evaluate the innovation programs companies run, we actually evaluate on both dimensions.”

Meaningful innovation plays a critical role in helping companies renew their competitive advantage for long-term survival. The problem, therefore, is how to prove its value to leadership in ways that resonate with shorter-term outlooks.

Innovation should not be judged solely by immediate revenue impact. Instead, organizations should view it as a tool for competitive renewal—the ability to replace outdated advantages with new opportunities before competitors do.

One of the most effective ways to reframe innovation’s value is through option value. Just as financial options provide companies with the right (but not obligation) to act on future opportunities, innovation investments create strategic choices for the future.

Rita highlights how this principle is often misunderstood in corporate decision-making. “At a human level, this is an entirely intuitive concept. We send our kids to college, invest in education, and plant seeds for the future without expecting an immediate return. Yet, when it comes to corporate decision-making, leaders suddenly demand precise short-term financials for long-term innovation investments. That’s a fundamental disconnect.”

Sustainable innovation is about building both economic value and innovation capability, explains Tendayi. “If companies only focus on short-term economic returns, they can create value today but fail to build the internal capabilities that allow them to do it repeatedly over time. That’s why the organizations that thrive are the ones that balance both.”

Measuring Innovation Impact

Instead of evaluating each innovation initiative in isolation, organizations should apply a stage-gated portfolio approach that measures projects based on their maturity level.

• Early-stage projects: Innovation initiatives at this discovery and experimentation stage should be assessed through learning metrics, such as validated customer insights and problem-solution fit.
• Mid-stage projects: Once innovations are ready for market validation and scaling, they should be measured by engagement levels, adoption rates, and early revenue signals.
• Late-stage projects: When ripe for commercialization and growth, revenue contribution, cost savings, or strategic advantage are appropriate measures.

Tyler stresses that innovation teams often set themselves up for failure by expecting significant results too early. He argues that the key is to show evidence of progress through small but meaningful wins that build toward a more considerable business impact.

“If you expect commercialization metrics too early, you will be disappointed. The most successful innovation teams define leading and lagging indicators that provide clear progress at every stage.”

He cites an example of a client who structured their portfolio in a way that allowed them to generate US$1 million in revenue within eight months, earning them executive trust to pursue more ambitious projects.

Many companies mistakenly focus only on individual project success without assessing their ability to innovate repeatedly. While many corporate innovators are great at navigating internal politics to push projects forward, if the system isn’t set up to support ongoing innovation, those wins are isolated. The goal should be to create an ecosystem where innovation can thrive continuously.

A portfolio approach ensures that innovation is measured progressively, using the right indicators at each stage. This avoids the common mistake of judging early-stage projects with financial metrics only relevant in later stages. Rita explains, “If it’s very early, you want to use discovery-driven planning, and the metrics you’re using there are learning metrics. But if it’s closer to the market, you start introducing more conventional financial metrics.”

Overcoming Resistance and Building Credibility with Leadership

One of the biggest hurdles innovators face is securing executive commitment to long-term innovation investments. Many executives hesitate to invest because they don’t see a direct connection between innovation initiatives and business strategy. Others expect immediate financial returns, leading to underinvestment in future-focused projects.

To overcome this resistance, innovators must take a step-by-step approach to credibility-building. This means delivering quick wins to demonstrate early success, highlighting real customer insights, and framing innovation in a way that aligns with corporate priorities.

Tendayi explains how early wins help gain leadership trust. “The trick is to show some normative value, things people are used to seeing early on. This way, you buy the space to do the things you really want to do later. But the discipline you need is not getting too comfortable in those early wins and just focusing on that. You have to keep an eye on the long-term value you’re trying to create.”

Tyler stresses that innovation credibility is built incrementally. “If you expect leadership to trust your innovation efforts, you need to show tangible progress,” he says. “That could be early customer validation, traction in a pilot program, or a key technical breakthrough. You need something concrete that proves your work is leading toward impact.”

Governance also plays a crucial role in securing long-term leadership commitment. Rita outlines how many organizations fail to establish the proper oversight structures for innovation. “Most companies either have a completely missing or very inadequate innovation governance process,” she says. “You need a governance body—a Growth Board—that includes decision-makers with real power, not just delegates. These leaders should track innovation projects with metrics that match their stage of maturity, rather than forcing early-stage projects to deliver financial returns prematurely.”

Showcasing through Storytelling and Evidence-Based Influence

Data alone doesn’t convince decision-makers, but narratives do. Even when financial returns are not yet visible, innovation teams can gain support by framing their work in a compelling way.

“Many corporate innovators are gifted in navigating their projects through corporate landmines. But if the system isn’t set up to support ongoing innovation, those wins are isolated. The goal should be to create an ecosystem where innovation can thrive continuously,” explains Tendayi.

Many innovators fail to influence leadership because they rely too heavily on abstract concepts instead of practical business cases. “If you’re asking executives to fund an initiative with a three- to five-year horizon, you have to present evidence that builds their confidence along the way. That means structured updates, clear success metrics, and stories that resonate with the business’s priorities,” Tyler explains.

One way to do this is to link innovation efforts directly to business risk. Rita highlights that organizations should frame innovation as a safeguard against disruption rather than an optional expense. “Companies don’t realize they’re in trouble until it’s too late. They’re not thinking about the fact that their existing competitive advantage is being eroded,” she says. By showing how innovation mitigates long-term risks and positions the company for future success, innovation leaders can shift leadership’s perspective on why investing in uncertain projects is necessary.

Rita recommends identifying internal champions who can advocate for innovation at the leadership level to strengthen executive engagement further. “When innovations transition from the growth board to the core business, all the upside belongs to the business unit manager, while the risk is covered at the corporate level,” she explains. “This creates an incentive structure where business leaders want to pull innovation in, rather than resist it.” By designing the right internal incentives, companies can ensure that innovations don’t stall due to internal resistance.

Rita warns that organizations that neglect innovation risk becoming obsolete faster than expected. “We see across the economy, especially in digital sectors, that companies embedding trial-and-error learning into their processes are pulling ahead exponentially. Meanwhile, incumbents tend to think in linear terms and don’t realize the danger until the gap is too wide to close,” she says.

Tyler believes that the key to long-term success is consistently demonstrating progress. “You don’t need to have all the answers upfront, but you do need to show that innovation is moving in the right direction with clear evidence,” he says. “That’s how you gain executive trust and secure long-term investment.”