🟢 Accounting for innovation ROI matters
Most innovation programs measure their own process, but rarely (if ever) their real output. Let's look at why innovation programs' ROI often goes untracked and what you can do about it.
Large European groups are mostly quite good at showcasing their innovation programs. Internally, they discuss budgets, team allocation, key projects, and often a sparkling new lab designed to impress visiting delegations. What's much less discussed is how much value all of this has actually produced. Accounting for innovation (ie., tracing what an innovation program really generates in money and in capabilities) remains rare in large corporations.
But after a few years, it's always the same story. A senior executive comes knocking, asks where the money went, and already plans for budget cuts.
Vague innovation mandates from the top
To be fair, most innovation programs start with a top-down problem. Executive committees tend to direct their innovation teams with a one-liner such as: 'be more customer-driven', or 'add value', not to forget the current 'be AI-first'. Each is a sensible intention that everyone scrambles to decode and interpret, asking what to do about it in practice. Good luck translating “more customer-driven” into actions that will eventually connect to a P&L.
And even if you do, how much of a successful AI exploration should be credited to the team that ran it, and how much to the business unit later deploying the result? Nobody settles these questions at the start, so the innovation team inherits an objective that, in practice, will never be checked against results.
This is the paradox at the center of the matter. The lack of accountability that executives later blame on their innovation department is, for the most part, the consequence of the accountability they never asked for.
A tunnel vision on the innovation process
When the output isn't defined, teams measure what they can control: the innovation process itself. This they directly control, and soon, dashboards fill up with leading KPIs: ideas collected, projects passing each gate, proofs of concept launched, time between gates and, above all, budget adherence. The annual review comes down to two questions: how many projects ran and whether the budget held, which is roughly how one would evaluate a facilities department.
These indicators are not useless. They tell you how smoothly the innovation engine is working as planned. But the lagging KPIs about what the engine produces and where it leads? Out of scope. These are actually the ones an executive committee should be focusing on.
