What is Innovation Accounting? Explained by Artificial Intelligence

By Elijah Eilert

My friend Mark Vaughn recently found this interesting tool – OpenAI. In a group chat with friends, we had some fun with it, writing poems and asking the AI silly questions.

Needless to say, I wanted to see how well the answer to this question would turn out:

What is innovation accounting?

“Innovation accounting is a framework for measuring and managing the progress of innovative initiatives. It is based on the premise that all innovation projects are investments, and that like any other investment, they should be managed in a disciplined and systematic way.

The framework consists of four key elements:

  • A clear and shared definition of success
  • A way to track progress against that definition of success
  • A method for making decisions about whether to continue investing in an initiative
  • A process for learning from failures and successes

The goal of innovation accounting is to help organizations make better decisions about where to invest their resources, and to improve the chances of success for their innovation projects.”

It is possible to play with the settings and ask many times, which will generate different answers. If you are interested in a more in-depth explanation of innovation accounting, I recommend you read this article by Tristan Kromer.

For many people, myself included, innovation accounting has grown. From being startup focused to supporting broader critical innovation-related decision making within large organisations. Besides measuring product or service success and progress, it may therefore include measuring innovation teams, portfolios, funnels, strategy, culture and an entire innovation ecosystem. As such, it is an extension of the financial and managerial accounting toolset. Innovation accounting does not yet influence statutory accounting so the line is drawn there for now.

Given how little has been written about the topic in general and how young the discipline is, I found the definition above to be mindblowing. It made me wonder if the tool can write an entire article.

Can Artificial intelligence write an Article about Innovation Accounting?

Since it looks like I don’t have to answer this question myself anymore, I simply asked the AI:

Can OpenAI write an article about innovation accounting with only headline inputs?

No, it cannot.

I did not believe the answer given what I had already seen. It reminded me of what Tendayi Viki once wrote about innovation accounting in this article: “Innovation Accounting Is About Asking The Right Question At The Right Time”. So I asked a slightly different question:

Can OpenAI write an article about innovation accounting if I provide sub-headers as inputs?

Yes

See, innovation accounting works 🤓

I will go ahead and co-create an article with OpenAl, about innovation accounting, only using headers and subheaders as inputs. In fact, Mark has already built an App based on OpenAI to enable this.

Stay tuned to find out if I changed the question to get the answer I wanted or if the article will provide value and be enjoyable to read!

What Does Mixing Innovation Accounting & Artificial Intelligence Look Like?

According to Midjourney another AI tool for image generation like this​​:

Innovation Accounting and Artificial Intelligence

Lessons Learned

  • It is possible to have fun with innovation accounting
  • Artificial Intelligence can describe innovation accounting better than most people
  • Asking the right questions is key to making better innovation decisions
  • AI helped me to become an artist

RELATED INNOVATION WORKSHOPS & TRAINING

Innovation Accounting Course

Innovation Accounting Course

Learn how to create a financial model that works for innovation projects. 

MORE ABOUT THE COURSE

2 Comments

  1. DAHLAN SIMPSON August 11, 2022 at 3:07 pm - Reply

    i love the summary provided by AI. It is actionable and on mission.

    • Elijah Eilert August 11, 2022 at 9:08 pm - Reply

      Thank you for the feedback Dahlan. I would pass it on to the tool, but it probably already knows what you are thinking…

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