An example of a metric that matters is return on innovation investment (ROI²). A series of Booz & Company studies conducted over the past seven years statistically correlates ROI² with organic growth, and links innovation spending with financial performance in ways that can lead decision makers to generate higher, more reliable returns on innovation and research and development. The statistical validity of ROI² bolsters its value as a metric, but so does the fact that it functions as a leading indicator, helping decision makers anticipate what their product portfolio will look like in the future. Too often, companies rely solely on lagging indicators that accurately report past performance while giving no hint of what lies around the next bend.
Source: “Crafting Best-in-Class Business Intelligence”
Original Publication: strategy+business