Measuring and funding innovation

ROI is the default filter for most decisions, and it is a poor fit for innovation. Early projects have no revenue to project, so the spreadsheet asks teams to invent one.

Start with why ROI is not enough for strategic projects. It measures financial performance over a defined period, not whether a company stays relevant. Tristan Kromer calls the ROI of innovation the wrong question and suggests treating early projects as options, Brant Cooper and David Binetti discuss it in a one-hour conversation, and a rule written on a wall at Zappos asks what the ROI of hugging your mom is.

Then how to decide and fund. A Harvard Business Review article proposes a growth board that decides like venture capitalists. Steve Blank offers the investment readiness level, which judges startups on evidence. Two notes on the Lean Startup Day 2023 in French cover Alexander Osterwalder on valuing a portfolio of projects and Claus Hirzmann on real options in place of net present value. Stop wasting millions on innovation makes the case for starting from the problem.

Three notes on AI follow, all about the same question: savings or growth. Cost savings have a ceiling. A bank that automated one hour of a nine-day loan process changed little until it built a ten-minute loan. IKEA moved the agents its chatbot Billie freed up into a remote interior design service that grew to €1.3 billion.

The guide ends with ways to measure: Strategyzer’s assessment of how ready an organisation is to innovate, and a round table in French on the indicators that show the impact of intrapreneurship programmes.