INTHEBLACK July 2026 - Magazine - Page 39
THREE METRICS FOR SUCCESS
To effectively measure performance, metrics need to be drawn from three stages: input, process and outcomes,
Kaushika Jayalath CPA, principal solutions consultant at Oracle and a CPA Australia board member, says.
These should account for financial outcomes along with non-financial drivers of long-term value.
When assessing innovation, context is important.
For individual organisations, the choice of metrics will
be determined by their size, industry, capital intensity
and risk appetite.
1. INPUT METRICS
Input metrics track what is being invested and should make
the funding explicit and comparable. They need to answer the
question: “Are we investing enough, and in the right places?”
Jayalath says. “Input metrics alone run the risk of creating
the illusion of spend equating to progress, which can be
divorced from actual outcomes.” Useful input metrics include:
• Innovation spend as percentage of sales: The proportion
of revenue being reinvested into innovation activity, making
the commitment visible and comparable.
• Dedicated project/program full-time employees:
Headcount and salary costs assigned to innovation
initiatives.
• Leadership time spent on innovation: The hours and
associated cost of the senior leaders directly engaged
in innovation work, recognising that their time carries
a premium.
• Venture funding: Capital committed to early-stage
or externally sourced innovation bets.
• Training spend: The investment in building internal
capability to support innovation delivery.
• Change management spend: The resources dedicated
to embedding new ways of working across the organisation.
2. PROCESS METRICS
Process metrics measure the quality and speed
of experimentation, development, governance and scaling
processes. Jayalath says that they should answer the
question: “Are we converting effort into validated learning
and scalable options?”
While these are useful in identifying bottlenecks,
improving speed-to-learning and execution quality, they
can also paint a rosy picture by over-optimising the pipeline.
“Process metrics can also be gamed by pushing low-quality
work through stages as ‘quick wins’,” he says.
Track the mechanics of the innovation pipeline through
these metrics:
• Cycle time from idea to experiment to pilot: The time
required to move an idea through early development stages,
measuring speed-to-learning.
• Experiment cadence: The frequency at which new experiments
are being run, indicating active learning momentum.
• Stage-gate throughput: The rate at which initiatives
progress through defined development checkpoints.
• Kill/continue rates: The proportion of initiatives being
stopped versus advanced, signalling decisiveness
and discipline.
• Compliance readiness for pilots: Whether initiatives meet
regulatory or governance requirements before scaling.
3A. OUTCOME METRICS — PROJECT LEVEL
Jayalath says project-level metrics should capture the impact
of innovation. They need to answer the question:
“Did innovation change customer, financial or risk outcomes
in line with strategy?”
He suggests a set of outcome-focused metrics:
• Percentage of revenue from new products/services:
The share of revenue from new offerings within a defined
period, measuring legacy-dependency reduction.
• Margin uplift: The profit improvement attributable to new
products or services.
• Adoption/retention rates: Customer uptake and loyalty
outcomes linked to a specific innovation.
• Risk reduction: Reduced compliance breaches, operational
failures or other risk events attributable to innovation.
• Customer Lifetime Value uplift: Increase in the long-term
revenue value of a customer, driven by new offerings.
• Percentage of transactions fully automated: The share
of processes or transactions completed without manual
intervention, measuring operational efficiency gains.
• Cost-to-serve reduction: A decrease in the cost of
delivering a product or service to a customer as a
result of innovation.
3B. OUTCOME METRICS — PORTFOLIO LEVEL
These wider metrics should answer the question: “Are we
getting better at innovation as a system?” says Jayalath,
who recommends these key metrics:
• Innovation portfolio ROI: Aggregate return across
all innovation investments, giving a system-level view.
• Horizon mix realisation: The balance of short-, medium- and
long-term innovation bets and how they match the intended
strategic mix.
• Capital reallocation efficiency: The proportion of funding
actively shifted toward better-performing initiatives based
on evidence.
• Kill-rate effectiveness: The proportion of initiatives stopped
early enough to avoid wasted capital, treated as a positive
signal of governance discipline.
intheblack.cpaaustralia.com.au 39
