The Innovation Metric Bill Hewlett and Dave Packard Used
From The Innovators Studio with Phil McKinney by Phil McKinney
April 1, 2026 · 20 min · Season 21 · Episode 2
About this episode
This episode discusses the unique innovation metric used by Bill Hewlett and Dave Packard, contrasting it with the common R&D spending metric in the technology industry.
Every public company in the technology industry measures innovation spending the same way. R&D as a percentage of revenue. Why? Because Wall Street tracks it. Boards benchmark it. CEOs get fired over it. And it tells you almost nothing about whether the spending is working. Bill Hewlett and Dave Packard knew that. From the very beginning, they measured something different. Something the rest of the industry has been ignoring for seventy years. And the proof was sitting in a paper that Chuck House pulled out and sent to me after a conversation at a Computer History Museum board meeting. By the end of this episode, you'll know what that metric is, why it works, and why the one everyone else uses makes it nearly impossible to tell whether your innovation investment is building the future or just burning cash. Here's how I found it. The Question That Wouldn't Let Go In the last episode, I talked about the argument with Mark Hurd . The question was over whether HP should cut R&D as a percentage of revenue to match Acer. I knew Mark was fundamentally wrong. But I couldn't prove it. The only metric on the table was R&D as a percentage of revenue. That was what Wall Street…
People in this episode
Host: Phil McKinney
Topics covered
- innovation metrics
- R&D spending
- technology industry
- business strategy
- financial analysis
- entrepreneurship
Keywords
- innovation
- R&D
- metrics
- HP
- business
- technology
- financial records
- investment
Mentioned in this episode
Organizations: HP, Acer, Wall Street, Computer History Museum
More episodes of The Innovators Studio with Phil McKinney
- How to Improve Your Second-Order Thinking Skills · June 10, 2026 · 15 min
- How to Improve Your Inversion Thinking Skills · June 3, 2026 · 16 min
- How to Improve Your First Principles Thinking · May 13, 2026 · 17 min
- How to Overcome Expert Bias · May 13, 2026 · 15 min
- How to Overcome Confirmation Bias · May 6, 2026 · 15 min
- Why Most Organizations Aren't Funding Innovation · April 29, 2026 · 21 min
Explore listener stats, chart rankings, contacts and more on the The Innovators Studio with Phil McKinney podcast page.