Metrics Innovation

Strategy + Business published a great article here on how powerful and important the creation of new metrics can be. It cites the creation of “horsepower” to help people envision the power of Watt’s steam engine, “99-44/100% Pure” as a way of describing Ivory soap and  “clock speed” as a way of envisioning the speed of Intel’s microprocessors:

As the late mathematician Richard Hamming tartly observed, “The purpose of computing is insight, not numbers.” That’s also the goal of innovative metrics. The measure of the success of innovative metrics is how clearly they convey the value – and risks – of the innovation. Watt’s steam engines, P&G’s soap, and Intel’s microprocessors might well have dominated their markets without novel metrics. But for these businesses and many others, innovative metrics made selling their products to a large number of customers a much less difficult prospect. Indeed, as many innovators are learning, oftentimes the best way to take the mea­sure of a new market is to create a new measure for the market.

Interesting thought as we move into the intangibles era. Because traditional financial metrics do not convey the value of intangibles, we need to find other ways of suggesting their power–and ultimate effect on finanical performance.