The Hidden Risk of Measuring Innovation Success Rates

By 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.