The Innovation Accounting 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
“Innovation Accounting is a complex and broad topic but essential for any organization hoping to grow through innovation. This book covers the subject in a very comprehensive and practical way. Based on knowledge and experience, provides an extensive set of methods, tools and techniques that make Innovation Accounting approachable”.
Susana Jurado Apruzzese, Head of Open Innovation, Academia Telefónica
“A great read to uncover why a “one-size-fits-all” approach for measuring your innovation portfolio doesn’t work, and how you can outsize impact by deploying a modern and comprehensive innovation accounting system”.
Alexa Dembek, CTO, DuPont
“One of the biggest challenges in building cultures of innovation is tracking the progress and impact of these efforts. In this easy to read, practical and clear book Dan Toma and Esther Gons break down exactly what innovation is and what it can be and how to ensure your efforts are measured and your decisions are always based on evidence”.
Jeff Gothelf, Author of Lean UX, Sense & Respond and Forever Employable
“For established companies, innovation shouldn’t happen by accident nor should its success be based on luck. Being successful with innovation requires a rigorous approach. This includes evaluating the progress of each innovation venture and investing in the most promising ones. The trick is to find the right indicators of success from the moment a venture is created all the way till it impacts the topline. Innovation Accounting provides the tools and concepts that will help you refrain from asking for a business plan or ROI in the early stages, yet making sure there is proof of sustainable momentum and value creation before starting to scale”.
Lieven Haesaert, Global Lead Innovation Management and Transformation, ING
“Research, and my own experience, continuously show that one of the most critical factors for driving innovation is organizational culture. However, many organizations neglect this crucial component as it’s difficult to measure. Based on the thought leadership of the authors and other contributing industry experts and practitioners, this is the game-changing guide to measuring all things innovation, from innovation culture to workforce development and from the progress a team is making to the performance of their innovation portfolio. If you’re responsible for innovation, this is compulsory reading!”
Cris Beswick, Co-author of Building a Culture of Innovation
“The book offers metrics to track emergent ideas to help innovation succeed rather than snuff it out prematurely”.
Aidan McCullen, Author of Undisruptable.
Table of Contents
What better place to start the conversation on Innovation Accounting than discussing what we mean by innovation. This is important as innovation should not be used as a catch all word. Understanding the different facets of innovation has direct implications for the innovation measurement system.
Innovation vs Accounting
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, and how is innovation accounting defined.
Myths and Principles of Measuring Innovation
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.
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.
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.
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.
Measuring Startup Collaborations
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.
Measuring Innovation 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.
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.
Innovation Accounting for CFO’s and Shareholders
To have a successful system of innovation accounting can only be achieved if the core system acknowledges the new KPI’s and controls It makes sense that the companies financial accounting system somehow integrates with this system. The job of the Innovation Accounting system is to make visible the investment strategy and the way the innovation ecosystem works.
Your battle plan for starting implementing an innovation accounting system in your company.
About the authors
Dan is the co-creator of AIM, the assessment tool for Innovation Maturity. He started his career in entrepreneurship, being involved with technology startups across the world. Puzzled by the questions ‘why are innovative products mainly launched by startups?’, he dedicated himself to enterprise innovation strategy – specifically on the changes blue-chip organizations need to make to allow for new ventures to be built in a corporate setting. In this capacity he worked with companies like Deutsche Telekom, Bosch, Jaguar Land Rover, Bayer, John Deere or Allianz. With multiple corporate wide transformations under his belt, Dan possess the right skill-set to move companies beyond innovation theatrics.
Esther Gons is the founder and CEO of GroundControl. GroundControl is the Innovation Accounting software platform that implements all the best practices from the Innovation Accounting book to help corporate ventures with the development of new business models. GroundControl works with clients such as DHL, Colgate Palmolive, Schiphol Group, and ABN Amro bank.
Esther is co-author of The Corporate Startup and is an international speaker on corporate innovation, innovation accounting, portfolio management, and startups. She has been an entrepreneur for over 20 years and mentored several hundred startups so far, as investor at NEXT Startup Ventures, lead mentor in the Rockstart Accelerator programmes, and several corporate innovation labs.
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