The Hidden Risk of Measuring Innovation Success Rates
Jun 24, 2025By Dave Caissy, Founder of the Innovation Leaders Club
Measuring the success rate of new products sounds logical—until you realize it can do more harm than good.
In fact, I’d argue that the success rate of innovations isn’t a very useful metric at all.
(Usually, it’s right after I say this that the executive committee starts paying closer attention!)
Here’s why: most organizations don’t even agree on what counts as a failure.
When “Failure” Isn’t So Simple
Take this scenario: a new product generates $1M in annual sales. It’s labeled a failure because leadership expected $2M. But what if $1M was the realistic potential? And what if it attracted a new customer segment that now buys an additional $2M worth of your actual products? Is that still a failure?
Or consider a product that earns $0 but leads you to discover a new untapped market. The following year, your team launches a new product in that market—now earning $20M/year. Was the first project really a failure, or a necessary stepping stone?
Innovation Isn’t Linear: A Few Stories
Pixar started as a hardware company under Steve Jobs after he bought it from Lucasfilm’s computer division. It failed at selling powerful computers. But in trying to showcase its technology, Pixar created a short film—featuring that now-iconic lamp—and landed the Toy Story contract. The rest is history.
Pixar “failed” at its original goal… yet became a $7.4B success when acquired by Disney. Was it truly a failure?
Sony’s Betamax couldn’t beat VHS. But the technology lived on in Betacam, which transformed camcorder markets—crushing VHS-based competition.
Even YouTube began as a dating site. That flopped—but pivoting led to a platform that redefined online video. Was the original failure… really a failure?
A Hockey Metaphor That Works
Luc Sirois, Chief Innovator of Quebec, once said:
Innovation is like hockey. The goal is to outscore your opponent. And to do that—you have to take shots.
You don’t wait for the perfect empty net. You shoot. If your team fires 40 shots and only scores twice, we still say the goalie did well—but so did your offense.
So let’s stop discouraging failed shots. Instead, we need to reward smart, frequent, well-aimed ones.
Practical Insight: Cost-Efficient “Shots on Goal”
In consumer goods, shelf space is expensive. For manufacturers, paying to be placed on that shelf reduces your number of shots. That’s why innovation must find low-cost ways to experiment.
Small bets with modest cost can lead to huge returns. But costly failures require multiple wins to break even. The real game is to maximize low-cost, high-learning shots—not avoid misses.
What Actually Matters
Don’t measure success or failure rates. They distort reality.
What counts is return on investment (ROI) across your full innovation portfolio—not on a per-project basis.
Whether I launch 3 or 12 new products this year, and whether 1 or 4 succeed, the real metric is this:
What did I invest? And what did I get back across the board?
Research Agrees
Studies show the long-term financial return of innovation—especially from organic growth—is significantly higher than return via acquisition. But it requires patience.
McKinsey research backs this up:
Final Thought
So… what’s your take on measuring innovation success?
Is it time to rethink the question entirely?
