Most backward looking corporate performance metrics leave a lot to be desired as measures to drive long-term, forward looking decision-making by corporate strategists and CEOs. Jeff Bezos, former CEO of Amazon, has often said that when being congratulated on Amazon having a great quarter, he’s really thinking, “that quarter, the one we just had, has already been baked two or even three years ago.

Adding to the problem is that companies incentivize corporate leaders on the basis of backward looking measures, for instance, on stock price during a given period. As behavioral economist, Dan Ariely points out, “Human beings adjust behavior based on the metrics they’re held against. Anything you measure will impel a person to optimize his score on that metric.”

As a consequence, CEOs who would like to fatten their current bonus are therefore not motivated to make risky investments in unproven innovations that might fail and cause lower quarterly earnings and a drop in company stock price. And yet, there are exceptions – companies that manage to invest for the long-term even as they experience short-term performance pressures. Amazon, of course, Best Buy, Honeywell, Klo¨ckner, ørsted, Bosch, WalMart, Adobe and many others have transformed themselves digitally, made investments in innovation and growth, left behind legacy businesses and explored new business models. If that is the kind of leadership behavior that should be incentivized and evaluated, it stands to reason that business needs a metric for assessing the potential for growth that CEOs and leadership teams can actively manage. As a more forward-looking measure for evaluating companies’ prospects and executive success we propose The Imagination Premium.