This book provides a practical guide for measuring your company’s innovation ecosystem.
Why this book?
When a company is committed to growing through innovation – not just exploiting the existing business models – standard accounting documents offer insufficient and, often times. irrelevant data.
Who is this book for?
- executives looking for a new way of measuring corporate performance in a world where accounting-recognized assets are becoming commodities
- investors seeking better ways of looking at a company’s growth potential
- managers who need to valuate innovation product teams using not only financial indicators
Although a driving force for growth in most industries, innovation differs from company to company. But be it in banking, in automotive or FMCG, the uncertainty associated with innovation is still something that needs to be managed. And in order to be able to manage something, it first needs to
Measuring innovation has long been perceived as the pinnacle of innovation management. However in most organization today, innovation measurements are only take sporadically (if at all) and with little thought put into them. Moreover when a company wants to start measuring innovation it is most likely to make some mistakes.
This article was originally posted on the Thinkers50 Blog Oscar Wilde is credited with the quote “The cynic knows the price of everything and the value of nothing”. And some say this is a reflection of most financial executives’ mental model. To be successful any company requires assets. These range
Table of Contents
Chapter 1: Context
Before we can talk about innovation accounting we have to talk first about what is accounting, how did we get to the point where financial accounting is creating more problems than it solves, what is innovation and, lastly, how is innovation accounting defined.
Chapter 2: The principles of an innovation accounting system
From the business line to the macro context every enterprise is different. Hence their innovation accounting systems will differ too. But no matter how different companies are, their respective innovation accounting systems will have to follow a certain set of principles for them to be useful. Remember that the mantra of principles being universal while tactics are contextual applies to innovation accounting systems too.
Chapter 3: Tactical innovation accounting
To understand an organisam you first need to understand a cell. Much in the same way, to understand how to measure an enterprise innovation ecosystem you need to understand first how to measure a product team. We’d be looking at some tools, concepts and KPIs which can tell whether or not teams are making progress or just burning cash.
Chapter 4: Managerial innovation accounting
Measuring teams is not enough to have a functioning innovation accounting system. For a system to actually work you need to be able to take the right decisions at the right time – thus you need to zoom out from the team level to the managerial level using the right tools and KPIs.
Chapter 5: Strategic innovation accounting
Putting it all together for executive, stakeholders and investors. Aggregating team level data to KPIs that executives can use to make better decisions regarding the future of the company while at the same time conveying the health of the corporation’s innovation ecosystem to stakeholders and investors.
Chapter 6: Working with startups. Startups valuations
Acquiring and partnering with startups is big on every corporation’s agenda these days. Understanding how to do due diligence that’s looking beyond the accounting books can make the difference between betting on a unicorn or riding a dead horse.
Chapter 7: Measuring innovation culture
Culture is like a cloud. You can see, it impacts your day but you can’t touch it. But what you can do, is to measure it, and by doing so you can take actions that will influence it.
Chapter 8: Measuring your ecosystem’s HR capabilities
Measuring innovation HR capabilities is the first step in improving them. Putting everyone through a certain training might, or might not be the right thing to do. Only by measuring the HR capability you will know what training programs do you need to add and what impact past trainings had on your company.
Chapter 9: Starting tomorrow
Your battle plan for starting implementing an innovation accounting system in your company.
Chapter 10: Conclusions
How will an innovation accounting system impact your company and what to expect in the short, medium and long term from your journey.
About the authors
Esther Gons is the founder and managing partner of NEXT Amsterdam. NEXT Amsterdam is a boutique consultancy firm specialised in the strategy, governance and execution of innovation labs and the development of new business models. NEXT Amsterdam works with clients such as Schiphol Group, DHL and ABN Amro.
Esther is an international speaker on topics of corporate innovation, innovation accounting, entrepreneurship, and startups. She has been an entrepreneur for over 20 years and mentored over several hundred startups so far, e.g. as investor at NEXT Startup Ventures, lead mentor in the Rockstart Accelerator programmes, and Lean Startup Machine weekends.