The Metrics of Potential
GUEST POST from Chateau G Pato
LAST UPDATED: January 13, 2026 at 12:07PM
The greatest tragedy in modern business isn’t the lack of ideas; it is the organizational immunity to new ways of thinking. We tell our employees to “act like owners,” to innovate, and to take risks. We beg for intrapreneurship. Yet, the moment they step outside the prescribed lines of operational efficiency, we suffocate them with metrics designed for a different era.
We are trying to measure exploration using tools designed for exploitation. When you judge an early-stage innovation initiative by the same Key Performance Indicators (KPIs) used for your core business — like immediate ROI or quarterly earnings impact — you aren’t managing innovation; you are killing it.
If we want human-centered change and genuine intrapreneurial behavior, we must radically rethink our reward structures. We need to pivot from measuring purely financial outcomes to measuring potential, effort, and learning.
“Innovation is not an efficiency exercise; it is an exploration exercise. If you judge explorers solely by how straight their path was or if they brought back gold on the first day, they will never leave the paved road again.” — Braden Kelley
The Failure of Operational KPIs
Traditional organizations are optimization machines. They are designed to do what they did yesterday, but slightly faster and cheaper today. The metrics that drive this — variance reduction, Six Sigma efficiency, immediate profitability — are actively hostile to the messy reality of intrapreneurship.
An intrapreneur is someone working within a large organization who possesses the entrepreneurial spirit. They navigate bureaucracy to turn an idea into a profitable reality. Their work is characterized by uncertainty, hypotheses, and inevitable pivots. When we apply operational KPIs to their work, we send a clear signal: “Innovate, but don’t you dare fail.” This creates a culture of incrementalism, where only the safest, least disruptive ideas are pursued.
From Results to Readiness
Most performance systems are optimized to reward delivery, not discovery. They excel at tracking milestones, budgets, and utilization. But intrapreneurial effort is about increasing organizational readiness for futures that cannot yet be predicted.
Readiness is a capability, not a result. It shows up in how quickly teams can learn, adapt, and mobilize when opportunity or disruption appears.
Shifting to “Return on Learning” (ROL)
To unlock intrapreneurial potential, we must move away from lagging indicators (did it make money?) toward leading indicators (are we learning fast enough to eventually make money?).
In the early stages of innovation, the primary output isn’t profit; it is validated learning. We need to value the reduction of uncertainty. A failed experiment that definitively proves a market doesn’t exist is a massive success — it stops the organization from wasting millions on a doomed product launch. Yet, standard performance reviews would penalize the intrapreneur who led that “failed” project.
We must introduce concepts like “Return on Learning” (ROL). ROL asks: How many hypotheses did we test? How quickly did we validate or invalidate our assumptions? Have we gained insights that provide a competitive advantage elsewhere in the company?
The Five Signals of Intrapreneurial Potential
After years of working with organizations across industries, five repeatable signals consistently indicate whether intrapreneurial effort is occurring productively:
- Learning Through Action: Experiments designed to answer meaningful questions, not to justify predetermined solutions.
- Assumption Discipline: Clear articulation and testing of what must be true for an idea to succeed.
- Customer Evidence: Decisions grounded in observed behavior rather than internal opinion.
- Networked Collaboration: Movement across organizational boundaries to access diverse insight.
- Adaptive Persistence: Willingness to change direction without disengaging.
These signals allow leaders to see progress even when revenue remains a distant milestone.
Rewarding Effort and the “Smart Failure”
This is the hardest cultural shift for legacy organizations: rewarding the behavior, not just the outcome. Intrapreneurship requires psychological safety. Employees must know that if they take a calculated risk based on sound data, execute a rigorous experiment, and the idea still fails due to market forces, their career won’t be collateral damage.
We must separate innovation performance from operational performance reviews. An intrapreneur’s bonus shouldn’t just be tied to the P&L of their new venture; it should be tied to the quality of their experimentation.
Case Study 1: 3M and the Valuation of “Slack” Time
3M is perhaps the grandfather of institutionalized intrapreneurship. Their famous “15% Culture” allows technical employees to spend up to 15% of their paid time pursuing projects of their own choosing, without needing management approval initially.
The Metric of Potential: 3M doesn’t measure the ROI of that 15% time immediately. They are effectively measuring — and rewarding — curiosity and engagement. The metric is simply: Are you using this time to explore? This policy acknowledges that innovation needs “slack” in the system. By structurally permitting time away from core tasks, 3M validates the effort of exploration before a commercial outcome is even visible. The Post-it Note is the legendary result of this policy, a product born from a “failed” adhesive experiment that found a new application because an employee had the time and cover to tinker.
Democratizing the Tools of Innovation
Another way to measure and reward potential is by lowering the barrier to entry. Instead of making employees fight through five layers of management approval to get $5,000 for a prototype, what if we trusted them? The metric here is engagement: how many employees are raising their hands to try something?
Case Study 2: Adobe Kickbox and Trust-Based Metrics
Adobe recognized that their approval processes were strangling internal innovation. They introduced “Kickbox,” a red box containing resources for any employee with an idea. It included instructions on how to validate ideas and, crucially, a pre-paid credit card with $1,000 to spend on testing, no questions asked, no expense reports required.
The Metric of Potential: Adobe didn’t measure Kickbox success by how many billion-dollar products emerged in year one. They measured the velocity of experimentation and the democratization of innovation. How many boxes were requested? How many ideas moved to the next stage of funding (the “Blue Box”)? By trusting employees with seed funding, they rewarded the act of stepping up. The reward wasn’t a bonus; it was autonomy and trust. This approach uncovered thousands of ideas that middle management would previously have filtered out.
Conclusion: From Accounting to Anthropology
Measuring intrapreneurial effort requires leaders to stop thinking like accountants and start thinking like anthropologists. We need to observe behaviors, understand motivations, and create environments where human potential can flourish.
If your organization wants the rewards of innovation, it must stop punishing the behaviors that lead to it. Start measuring the number of experiments run per month. Start celebrating the team that killed a bad idea fast. Start rewarding the insights gained from failure. When you change the metrics, you change the mindset. And when you change the mindset, you unlock the future.
Frequently Asked Questions on Innovation Metrics
Q: Why do traditional KPIs fail when applied to innovation and intrapreneurship?
A: Traditional KPIs focus on efficiency, predictability, and short-term ROI. Innovation is inherently inefficient, unpredictable, and long-term. Applying operational metrics to exploratory work punishes necessary failure and stifles risk-taking behavior.
Q: What is the difference between ‘Return on Investment’ (ROI) and ‘Return on Learning’ (ROL)?
A: ROI measures financial gain against money spent. ROL measures the insights, validated hypotheses, and organizational capabilities gained from an experiment, regardless of financial outcome. ROL is crucial for early-stage innovation.
Q: How can an organization reward an intrapreneur whose project failed?
A: Rewarding “smart failure” is vital. If the intrapreneur rigorously tested a hypothesis, killed a bad idea fast, and shared valuable market insights, they should be rewarded for saving the company money and increasing its knowledge base through recognition, new opportunities, or even bonuses related to learning goals.
Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.
Image credits: Unsplash
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