31 Metrics for Managing Innovation: Lessons From Growth Leaders ^Top The first step is to compile all the growth initiatives that are underway. Because innovation portfolios tend to expand organically, with little central oversight, a full picture may be hard to capture. To be sure, R&D should know all about their technology initiatives and the new product pipeline. But other growth initiatives may be more dispersed: marketing may be exploring a new end-use market with a partner, while senior management may be investing in early-stage start-ups or considering a business model innovation. For each initiative there should be an expected value based on long-run potential, ad- justed for risk. Less than half the companies in our study were able to do this. The next step is to use the innovation dashboard to root out waste and find bottlenecks that persistently slow projects. The process effectiveness and input measures work in tandem with the outcome measures. If customer sat- isfaction with new products is persistently poor—which also compromises the success rate—one possible reason is that quality targets are being missed. Armed with this information, the innovation portfolio can be stress tested. This requires tough choices and broad organizational participation to make the outcomes palatable. The objective is to make decisions on which projects are really worthy, and which innovation activities can be done more cheaply, faster or better by development partners. The focus should not be solely on budget discipline, but also on cutting time-to-market and assets tied up in innovation activities that can be taken off the balance sheet. A central lesson from our study is the need to mindfully align incentives with the right metrics. If discipline is to be maintained then key managers have to be rewarded for their efforts. A mix of carrot and stick can help: rewards for improving the success rate, and penalties for exceeding budget. Organiza- tions with a supportive culture have a much better chance of finding the right balance of investments in the future and short-run discipline. 