If you’re a fan of American baseball — or just, you know, a nerd — it’s likely that you know the concept of Moneyball, a way to approach evaluating and assembling players, often in counterintuitive ways, that relies on advanced sabermetrics, rather than the somewhat more subjective traditional approaches to baseball talent.

The bestselling book by Michael Lewis, as well as the movie of the same name, written by Aaron Sorkin, tells the compelling tale of how the Oakland A’s baseball team adopted/developed the Moneyball concept in 2002, and thereafter enjoyed a decade of success way out of proportion to the relatively small budget they had for players.

I highly recommend both the book and the movie, for a range of reasons — both are smart, energetic, and compelling, and if you’re a sports nut and/or a numbers geek you’ll love them — but there’s an additional reason I would recommend the Moneyball concept to anyone interested in/working on innovation and particularly corporate innovation.

Finally… a Sports Trope that Applies Perfectly to Business

We need “Moneyball” for innovation…

The parallels between the pre-Moneyball world of baseball and the current world of corporate innovation are striking. Today, in the corporate innovation realm:

  • There’s a ton of money being spent;
  • It’s usually being spent on the wrong things;
  • Decisions are often made to support subjective/flashy/expensive programs — like Innovation Teams, Innovation Labs, and Innovation Funds;
  • There are dozens (hundreds) of definitions of “innovation” out there, and the metrics for measuring innovation are usually focused on activity/innovation spend rather than anything remotely resembling a good ROI (Return on Innovation);
  • And of course, the biggest problem with corporate innovation today is that perhaps unsurprisingly, the results are terrible — in short, companies that actually innovate are very, very rare, and even the ones that do innovate in a big way usually only do that once, and certainly not consistently.

Ipso facto, dudes, we need a Moneyball for innovation…

We need a comprehensive, flexible, and effective way to measure innovation in ways that inspire and empower us to actually do it, that give us the biggest returns (in all senses of the word) from our innovation efforts, and that can help us to innovate consistently, over time, and amid ever-changing circumstances.

What’s more, I believe that the first companies to actually measure innovation effectively are going to have a massive competitive advantage in their industries.

The Yin-Yang of Innovation: Process and Progress

All of that begs the question: “Okay, so how should we measure innovation?”

I’ve been pretty much obsessed with innovation for 25 years, and specifically, over the past 7 years I’ve done 500 innovation engagements with 200 companies from 40 countries; based on that experience/data set, I think there are two broad categories for the innovation metrics that matter: innovation process and innovation progress.

First of all, a clarification: today the thing most corporations measure re: innovation is what I would call innovation process: in other words, activity, doing things, investing in things, setting up systems, etc.

All of that stuff is necessary but not sufficient: much of it is good to measure, but if you focus on measuring innovation process stuff, you will likely neglect the much more important thing to measure, which is innovation progress. Meaning, you know, are you actually innovating? How much of an impact is your innovation having? How can you improve your innovation? Etc.

Fortunately, I think there are some very clear things in both of these categories that can and should be measured by companies trying to innovate, and happily, these innovation process/progress metrics are sufficiently connected to each other that if you improve one area, that is likely to improve others.

So with that, I’d like to present my Innovation Measurement System — my Moneyball for innovation — and submit it for your approval (Rod Serling/Twilight Zone reference there)…

Go to Part Two to learn more about Innovation Process.