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Innovation Rate

How do you measure the rate of innovation? For many, its the percent of sales from new products over a given period. Like Heineken who is at 9%. Macquarie is much higher over a five year period, making them an innovation leader.

Measuring innovation in this way is useful in more traditional industries where new products and services eat the old. But what about cloud businesses who constantly innovate – where the product refreshes daily with new features and categories? Essentially all sales come a new product in any given period.

And this is what sets legacy software businesses from cloud businesses. In one, the rate of innovation is throttled by significant technical and business model debt. In the cloud, innovation isn’t just a constant, its the fuel on which the business runs.

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