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Prior innovation audits consist of scorecards that firms use to assess their innovation processes and capabilities. The multifaceted nature of innovation means that this approach does not contextualize the audit for the audited firms. This paper proposes an innovation audit method that identifies and formulates valuable innovation‐related problems. It comprises four sequentially dependent modules which follow a structured process that allows the firm's innovation processes and capabilities to be audited. The audit was developed based on performing innovation audits with five multinational companies in the manufacturing and hygiene sectors, and nine pulp and paper companies. The paper discusses the pros and cons of different innovation audits. We suggest that the innovation audit process may be a means for changing a firm's strategic innovation orientation, and contribute to the development of innovation …