Innovation Accounting: What It Is and How to Get Started - Deepstash

Keep reading for FREE

Use IA in the early game

Use IA in the early game

Innovation Accounting is a way of evaluating progress when all the metrics typically used in an established company (revenue, customers, ROI, market share) are effectively zero.

Innovation Accounting is not only a way for individual teams to report their progress and communicate in financial terms. It’s also extremely useful for seeing how projects, portfolios of projects, or even whole enterprises are changing over time. And, most importantly, it gives the ability to summarize these disparate initiatives using a common vocabulary and accountability framework. 

5

315 reads

What does IA help with

What does IA help with

  • It provides a framework of chained leading indicators, each of which predicts success. Each link in the chain is essential and, when broken, demands immediate attention.
  • It’s a focusing device for teams, keeping their attention on the most important assumptions they’ve made about their project.
  • It provides a way to tie long-term growth and R&D into a system that follows a clear process for funding innovation and can be audited for its ability to drive value creation. 

4

19 reads

The 3 Stages of IA

  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.

3

13 reads

Steps for your Level 1 dashboard

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? 

4

10 reads

ERIC RIES

“To truly transform our organizations and our way of working, we need to change our accounting systems, too.”

ERIC RIES

3

16 reads

A simple Level 1 dashboard

A simple Level 1 dashboard

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:

4

9 reads

Accountability is Key

Accountability is Key

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.

3

16 reads

CURATED BY

alexbadut

36 yr old product guy. Interested in meditation, product design and the future.

Recently learned about Innovation Accounting that's been recommended as the practice to adopt until thinking about metrics relevant to product-market fit.

Ready for the next level?

Read Like a Pro

stash-superman-illustration

Explore the World’s

Best Ideas

200,000+ ideas on pretty much any topic. Created by the smartest people around & well-organized so you can explore at will.

An Idea for Everything

Explore the biggest library of insights. And we've infused it with powerful filtering tools so you can easily find what you need.

Knowledge Library

Powerful Saving & Organizational Tools

Save ideas for later reading, for personalized stashes, or for remembering it later.

# Personal Growth

Take Your Ideas

Anywhere

Organize your ideas & listen on the go. And with Pro, there are no limits.

Listen on the go

Just press play and we take care of the words.

Never worry about spotty connections

No Internet access? No problem. Within the mobile app, all your ideas are available, even when offline.

Get Organized with Stashes

Ideas for your next work project? Quotes that inspire you? Put them in the right place so you never lose them.

Join

2 Million Stashers

4.8

Stars

5,740 Reviews

App Store

4.7

Stars

72,690 Reviews

Google Play

Sean Green

Great interesting short snippets of informative articles. Highly recommended to anyone who loves information and lacks patience.

Ashley Anthony

This app is LOADED with RELEVANT, HELPFUL, AND EDUCATIONAL material. It is creatively intellectual, yet minimal enough to not overstimulate and create a learning block. I am exceptionally impressed with this app!

Shankul Varada

Best app ever! You heard it right. This app has helped me get back on my quest to get things done while equipping myself with knowledge everyday.

samz905

Don’t look further if you love learning new things. A refreshing concept that provides quick ideas for busy thought leaders.

Giovanna Scalzone

Brilliant. It feels fresh and encouraging. So many interesting pieces of information that are just enough to absorb and apply. So happy I found this.

Ghazala Begum

Even five minutes a day will improve your thinking. I've come across new ideas and learnt to improve existing ways to become more motivated, confident and happier.

Laetitia Berton

I have only been using it for a few days now, but I have found answers to questions I had never consciously formulated, or to problems I face everyday at work or at home. I wish I had found this earlier, highly recommended!

Jamyson Haug

Great for quick bits of information and interesting ideas around whatever topics you are interested in. Visually, it looks great as well.

Read & Learn

20x Faster

without
deepstash

with
deepstash

with

deepstash

Access to 200,000+ ideas

Access to the mobile app

Unlimited idea saving & library

Unlimited history

Unlimited listening to ideas

Downloading & offline access

Personalized recommendations

FAQ

Claim Your Limited Offer

Get Deepstash Pro

BLACK FRIDAY

75% OFF | 1-Year Pro Subscription

Claim Offer