Is a Culture of Innovation Meaningless to Management?

It seems obvious that a culture of innovation would be good for a
company’s performance. Unfortunately, accounting standards don’t
allow for intangible assets, such as innovation, to appear on the
balance sheet. Why then should a Culture of Innovation be measured,
valued and managed, if the financial results are meaningless to executive

A culture of innovation is an attribute in business, which can be measured both qualitatively and quantitatively. The measurement of innovation empirically correlates with other measures of the corporate brand, such as overall reputation, perception of management, and investment potential. It seems logical then that the process of innovation may be a more strategic tool that is akin to corporate branding, rather than being a tactical component of product development.
Whether developing innovative products or strategically building a culture of innovation in a company both require a commitment of a corporation’s management to provide resources, which means innovation should be financially accountable. Accountability requires measuring the return on innovation investment despite it being an internally grown intangible asset, which according to accounting standards cannot appear on the balance sheet.

This paper is one of a series that will examine the culture of innovation as it relates to marketing and branding measures in a quantitative research survey known as the CoreBrand Index® (CBI). This purpose of this paper is to examine what came before the CBI. It will be a prequel to the primary work, which will evaluate the feasibility of measuring innovation as an indicator of business health and financial vitality, which may ultimately become a predictor of future revenue and cash flow. Ultimately, we would like to see internally grown intangible assets on the balance sheet, but at the very least we would like to see that they have some financial accountability.

We hope to better understand what drives intangible assets like innovation, and how can it be measured, valued, and managed. To that end, we begin by examining areas we have not explored previously even after 25 years of measuring corporate brands.

Author: James R. Gregory


Cite as: Gregory, J.R. (2019). Is a culture of innovation meaningless to management? Muma Business Review 3(8). 89-97.