How to get started with Innovation Accounting

In 19th century Lord Kelvin said:

When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind.

In the Innovation Accounting book you can find 27 innovation metrics for measuring four distinct layers of an innovation ecosystem:

• Strategic innovation accounting (11 metrics). Are the investments in innovation paying off? Are they sufficient to take us where we want to go? Are we going in the right direction at all? How likely are we to be disrupted? As the name suggests, this layer is all about the big picture and portfolio thinking.
• Managerial innovation accounting (6 metrics). How are the innovation teams doing? Are our strategic assumptions holding up to the scrutiny of the market? How much does it cost us to explore one idea? How long does it take us? How can we improve the efficiency of our innovation ecosystem? This layer is all about connecting strategy to operations and vice versa.
• Tactical innovation accounting (8 metrics). How are customers reacting to our new offering? What is our speed and quality of learning? Are we focusing on the right things? How can we de-risk our specific idea? This layer is all about transforming ideas into products, services, and businesses—many are expected to perish in the process. On the bright side, all the learning and insight will stay in your company, as long as you take care of your talent.
• Culture and leadership (2 metrics). All the previous layers rest on this one. We are social creatures after all, and no amount of technical solutions will be able to cope with toxic culture and indifferent leadership.

Recently Dan wrote an ultra-condensed version of the above, focusing on the 12 foundational metrics for the Minimum Viable Innovation Accounting System. It is a great starting point before delving into a full implementation of Innovation Accounting System:

The Minimum Viable Innovation Accounting System - Innovation Accounting Book

Discover how the Minimum Viable Innovation Accounting System (MVIAS) empowers companies to measure, manage, and scale innovation with clear, actionable metrics across strategic, funnel, tactical, and cultural layers.

Innovation Accounting BookDan Toma