Does Your Company Actually Need Innovation Accounting?

Does Your Company Actually Need Innovation Accounting?

Does Your Company Actually Need Innovation Accounting?

  • Posted by Dan Toma
  • On 21/03/2023

Many times in life, what we want is actually very different from what we need. I want that very tasty Blackforest Cake, but what I actually need is to go for that daily run 🙂 The same can be said about businesses. What companies say they want is not necessarily the same as what they need. And everyone that saw a client brief for a project can attest to this.

We’ve been approached a handful of times by corporate leaders asking us to give them tips on how to measure innovation performance – in essence how to implement innovation accounting. But after a brief conversation, we both realize that what they actually need is to sharpen up their innovation practices instead. In other words, if companies don’t do innovation or don’t do it professionally enough there’s no point in spending time implementing a fancy accounting system. There are bigger things that need solving before the lack of performance indicators becomes an issue.

Below we have summarized our way of figuring out if a company really needs innovation accounting or if it just wants it in order to tick things off a ‘to-do’ list.

If you want to know if the lack of innovation metrics is a real issue for your company answer (honestly) the questions below:


You typically have more than 20 innovation teams working on a new idea at any given moment

YES

NO


Innovation is a considerable operational expense (OPEX) for your company

YES

NO


Innovation is mandated to drive certain results for your company and it’s connected to the core business through strategy.

YES

NO


Innovation is seen as a career path in the company.

YES

NO


In our company, innovation is done primarily by full time employees.

YES

NO


Your company is using a mix of innovation vehicles (eg.: CVC, internal innovation, M&A, startup acceleration programs etc.)

YES

NO


In your company, innovation is not siloed.

YES

NO


Innovation is happening continuously in your company. It’s not something that’s happening ad-hoc or seasonal.

YES

NO


Interpreting your answers is really straightforward. Basically, if you answered NO to 4 or more of the questions above, innovation accounting is not yet a real problem for your organziation. What you need to focus your efforts on instead is improving the innovation practice.

Conversely, if you answered YES to the majority of the questions, your company will benefit massively from innovation accounting and you need to start building that metrics system sooner than later. Now that you validated that innovation accounting is actually needed in your company, here is a list of three things you need to have in place before you can start implementing innovation accounting.


This article was originally published on the Innovation Accounting book’s blog.