TL;DR

In this research project, a design science research project was developed with the aim of developing an innovation accounting system for a professional services company. 

​

The output of the paper is a conceptual solution design for an innovation accounting system in the context of the product innovation process for a professional service firm.

​

You can read the full paper here: LINK

​​​

PROJECT SPONSOR - SIMON DAVID ARSENIDIS
 
ADDRESSING THE CHALLENGE

For professional service firms (PSFs) it is increasingly important to engage in innovation activities (PSFs = human capital intensive firms providing knowledge intensive services). 

​

While innovation activities are critical for PSFs, how to measure and manage them has been a little neglected area. In the past, innovation teams would present a full business plan, including a calculated return on investment and net present value, before starting development. As a result, they received customer feedback only after the product was on the market. Today, companies are breaking down the innovation process into smaller pieces and trying to gain customer insight at the outset to make evidence-based decisions. 

​

The question now is: How could an innovation accounting system assess the success of digital product innovations developed within a professional services firm? 

​

Osterwalder's opportunity framework

Based on Osterwalder's Opportunity Framework, a conceptualization of ideas based on the intersection of (a) customer or stakeholder needs and (b) what can be built was developed. 

​

What are Stakeholders Need

Based on three sixty-minute semi-structured interviews and a ninety-minute workshop, the following design principles were developed: 

​

​

​

​

​

​

​​​

What can be Built

Based on the current discussion in the literature on innovation metrics, it is argued that innovation activities should use accounting metrics to achieve the best results in the search for new value propositions and business models - such metrics should not compete with traditional financial metrics, but rather serve as additional indicators for comprehensive innovation evaluation. 
 

Solution Design​

The designed solution object consists of two parts: (1) process-specific metrics, i.e. a set of metrics that focus on process tracking within each state of the defined innovation process (marked with a star icon), and (2) cross-process metrics, i.e. a set of metrics that cut across the innovation process (marked with a triangle icon).

​

​

​

​

​

​

​​
 

​​

​​

​

​

​

​

​

​​​

Innovation process-specific metrics
Process-specific metrics are designed alongside the innovation process and should track activities and outcomes at each stage. Progress tracking is relevant to each stakeholder from a different perspective and should therefore be defined with respect to each user group. 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Innovation process-specific metrics

These overarching metrics (marked with a triangle icon in the morphological box design selection above) provide insight into the active throughput of the innovation process and provide information to continuously improve the process. The metrics are primarily relevant for the management team to keep track of the innovation activities in general. ​

​

​

​

​

​

​

​

 

​

Conclusion​

The innovation accounting system designed for PSFs offers a conceptual approach that makes activities and outcomes measurable throughout a structured innovation process. Through its implementation, users can access key information to make informed, evidence-based decisions. By increasing transparency at each stage of innovation, the system significantly reduces the uncertainty surrounding the impact of innovation efforts.

​

​To gain deeper insights into the potential of innovation accounting, future research could explore how measurement systems impact innovation processes across various PSFs. The proposed model should also undergo academic refinement and testing, potentially in industries beyond PSFs.