In October 2013, the European Commission presented a new indicator intended to capture innovation outputs and outcomes and
thereby "support policy-makers in establishing new or reinforced actions to remove bottlenecks that prevent innovators from
translating ideas into products and services that can be successful on the market". This article aims to evaluate the usefulness
of the new indicator against the background of the difficulties in measuring innovation outputs and outcomes. We develop a
unique conceptual framework for measuring innovation outcomes that distinguishes structural change and structural upgrading
as two key dimensions in both manufacturing and services. We conclude that the new indicator is biased towards a somewhat
narrowly defined "high-tech" understanding of innovation outcomes. We illustrate our framework proposing a broader set of
outcome indicators capturing also structural upgrading. We find that the results for the modified indicator differ substantially
for a number of countries, with potentially wide-ranging consequences for innovation and industrial policies.