Innovation accounting: concept and application

The outstanding book by Eris Ries entitled “Lean Startup” puts on stage this concept called innovation accounting. It consists of defining the metrics needed to measure the performance of a product through a continuous learning process based on experiments.

These experiments generate the information needed to make decisions and adjust strategies through the:

  • creation of a Minimum Viable Product (MVP)
  • division of indicators based on value hypotheses (UX)
  • growth assumptions (Conversion Funnel)
Cómo crear una ventaja competitiva gracias a la innovación
Innovation accounting: concept and application

Why is innovation accounting important in companies?

Because it is a concept that helps teams to be clear about the real value of their innovation for the customer and the business. In addition, it can shorten the development stages. This is because many validations that are assumed to be necessary can be performed with the product in the market.

Additionally, the company can develop a culture of experimentation and replace traditional planning with continuous learning. Also, it can focus on real metrics instead of vanity metrics.

Application of innovation accounting

Establish the experimentation period

It is important to negotiate with those involved in the innovation process and in the project how long the experiment will last.

Define the hypotheses to be validated

The team must define the main hypotheses to be validated in the experimentation process.

These hypotheses should be divided into value and growth hypotheses in a matrix based on the number of experiments. When a hypothesis is validated and we adjust the strategy a pivot occurs.

Develop the experiment matrix

A matrix must be designed as a tool for monitoring the process. In it we will combine qualitative information with quantitative information to be able to make decisions.

An experiment in innovation must have a rigorous follow-up to ensure that the information generated is allowing the evolution of the process.

Start the first experiment with the value hypotheses.

At the beginning of the launch, it is best to fine-tune the user experience through constant feedback. To do this, a qualitative information gathering tool must be developed.

Innovation accounting is a teamwork tool.

The matrix analysis process should involve everyone involved in the project. Developing the mindset of experimentation is not easy. The most important thing.

Photo credit: Pinterest

Leave a Reply

Your email address will not be published. Required fields are marked *

Información base sobre privacidad:
- Responsable: Francisco Torreblanca (fran@franciscotorreblanca.es)
- Fin del tratamiento: Moderación de comentarios para evitar spam
- Legitimación: Tu consentimiento
- Comunicación de los datos: No se comunicarán los datos a terceros salvo por obligación legal
- Derechos: Acceso, rectificación, portabilidad, olvido

Share this article

LinkedIn
Twitter
Facebook
Email
WhatsApp