The document discusses key performance indicators (KPIs) for measuring innovation. It argues against a "one-size-fits-all" Procrustean KPI system, as financial KPIs alone can stifle innovation. Instead, KPIs should be adapted based on a project or venture's maturity. It presents a classification of innovation accounting KPIs for reporting, governance, and overall performance. Specific KPIs discussed include cost per learning, experimentation velocity, knowledge-to-assumption ratio, and barebones net present value. The document concludes that an innovation accounting system tailored to a venture's stage is necessary for corporate startups to succeed.

1. Innovation Accounting
The anti-Procrustean approach to key performance indicators

2. The Procrustean KPI system
Mass corporate standardization effect:
everything is (has to be) one-size-fits-all,
KPIs too.

3. The Procrustean KPI system

4. The Procrustean KPI system
Best way to kill innovation: measure
progress with financial KPIs

5. The Procrustean KPI system

6. The Procrustean KPI system
For relevant progress tracking, KPIs need to
be adapted.

7. The Procrustean KPI system

8. Classification of Innovation Accounting KPIs
based on the purpose they serve

9. Classification of Innovation Accounting KPIs
based on the purpose they serve
Reporting: measure the progress from ideation through to
product-market fit.

10. Classification of Innovation Accounting KPIs
based on the purpose they serve
Reporting: measure the progress from ideation through to
product-market fit.
Governance: helping company’s board with investment
decisions

11. Classification of Innovation Accounting KPIs
based on the purpose they serve
Reporting: measure the progress from ideation through to
product-market fit.
Global: examine the overall performance of the innovation
department
Governance: helping company’s board with investment
decisions

12. Innovation Accounting:
Reporting KPIs
Text

13. Innovation Accounting:
Reporting KPIs
Text
Cost per learning (cost per failure): businesses fail because
they ran out of $$$ before product market fit was found

14. Innovation Accounting:
Reporting KPIs
Text
Cost per learning (cost per failure): businesses fail because
they ran out of $$$ before product market fit was found
better fail 100 times with $1,000/failure than,1 time with $100,000/failure
fail fast, fail cheap, fail often...but do learn

15. Innovation Accounting:
Reporting KPIs
Text
Cost per learning (cost per failure): businesses fail because
they ran out of $$$ before product market fit was found

16. Innovation Accounting:
Reporting KPIs
Text

17. Innovation Accounting:
Reporting KPIs
Text
Experimentation velocity: the speed at which validation
happens is important for the venture to have a competitive
edge in the market place.

18. Innovation Accounting:
Reporting KPIs
Text
Experimentation velocity: the speed at which validation
happens is important for the venture to have a competitive
edge in the market place.
I have not failed. I've just found 10,000 ways that won't work.
- Thomas.A. Edison

19. Innovation Accounting:
Governance KPIs
Source: Rita McGrath

20. Innovation Accounting:
Governance KPIs
Knowledge-to-assumption ratio: number of validated vs.
non-validated assumptions in the business model.
Source: Rita McGrath

21. Innovation Accounting:
Governance KPIs
Knowledge-to-assumption ratio: number of validated vs.
non-validated assumptions in the business model.
The closer to 1 it is, the less risky the business model is.
Source: Rita McGrath

22. Innovation Accounting:
Governance KPIs
Knowledge-to-assumption ratio: number of validated vs.
non-validated assumptions in the business model.
Source: Rita McGrath

23. Innovation Accounting:
Governance KPIs
Source: Rita McGrath

24. Innovation Accounting:
Governance KPIs
Source: Rita McGrath
Barebones NPV: answers the question of whether or not to
continue investing in a particular venture.

25. Innovation Accounting:
Governance KPIs
Source: Rita McGrath
Barebones NPV: answers the question of whether or not to
continue investing in a particular venture.
Knowing when to stop doing what you are doing is sometimes more
important to knowing what to do.

26. Innovation Accounting:
Global KPIs

27. Innovation Accounting:
Global KPIs
Innovation contribution: how much money are being made
today by the ventures launched X years ago (in %).

28. Innovation Accounting:
Global KPIs

29. Innovation Accounting:
Global KPIs
Cohort performance: the innovation department should be
improving with regards to its overall contribution to company
revenues with each incubated cohort.

30. Innovation Accounting:
Global KPIs

31. Innovation Accounting:
Global KPIs
Innovation conversion: % of old customers that are
converting to new offerings replacing the old ones (or being
complementary to existing offerings — customers which are
using more than one product/service from the corporation’s
portfolio)

32. Conclusions

33. Conclusions
KPIs should be adapted to the maturity stage
of the business model. Procrustean was killed
by Theseus.

34. Conclusions

35. Conclusions
For corporate startups to prosper an innovation
accounting system needs to be put in place.

36. Conclusions

37. Conclusions
Read more on innovation accounting
and corporate startups.

38. www.thecorporatestartupbook.com
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