Innovation Accounting: What It Is and How to Get Started

1. Use a simple dashboard of metrics that allows the team to track progress over time at the start of a project. It gives a basic sense of what’s working and what’s not. If customers won’t even try the product, it doesn’t matter what their repeat purchase rate is.
2. It represents the complete interaction with a customer and includes later-stage variables like repeat purchases, bad retention levels, or margin.
3. Looks at the learnings gained from the first two levels of IA translated into dollars by rerunning the full original business case with each Lvl 1 and 2 iteration.

1. Come up with some initial metrics. These should be simple and actionable and should not have to be related to one another.

For example, a number of customers interviewed and their rating on identified struggles might be two starting metrics.

2. If you’re stuck on metrics, ask these four questions, each of which will give rise to a set of metrics designed to answer it.

• Did we do what we said we were going to do?
• Are our people working differently?
• Do customers (internal or external) recognize and improvement?
• Are we unlocking new sources of growth as a company? 

Here’s an example of a Level 1 dashboard looking at the first experiment done by a team building a lemonade stand and hoping for hypergrowth through the use of drone delivery and premium ingredients down the road:

Use the dashboard to hold your team accountable. Simply ask this question: Which metrics are improving over time?

For example, a team that’s trying to prove they can charge a price premium for a new product might do an initial version where nobody is willing to buy, so revenue per customer is $0 for the first test. A few product revisions later, perhaps revenue has grown to $1. This is progress, even if the goal is ultimately $10 or $100.