Even if you know everything about the lean startup methodology, there’s one tool you must have in your kit: innovation accounting.
This strategy allows you to measure the quality and effectiveness of your edtech upheaval. Without innovation accounting, you’re not measuring your progress the way you should be. For several reasons, innovation can be one of the most difficult initiatives to measure, and it can lead to guessing wildly.
If your business and resulting edtech innovation have no precedent, how do you know what to measure?
The answer lies in innovation accounting.
How to make the best use of innovative accounting
Your edtech startup is still in its infancy. Unlike an established business, your performance metrics are nil. Your minimum viable product isn’t ready yet, but you’re already developing a consumer fan base. Teachers are eagerly anticipating the release of your product.
To measure your progress, you’ll have to come up with an innovative set of dashboard metrics. Innovative accounting to measure your edtech progress is not the use of questionable financial practices that are illegal or unethical. Instead, these metrics measure current progress toward your goals.
The secret in developing a good innovative accounting dashboard lies in being able to measure what you do have, like:
· Customer-focused metrics – you’ll be measuring how many customers you talk to each week, what feedback they provide, and how many convert (or express interest in buying your edtech product)
· LOFAs (Leap of Faith Assumptions) — base these metrics on how many word-of-mouth referrals you get and your retention rates. Compare how your metrics stack up next to your competition’s dashboard but use your numbers to pivot.
· Net present value dashboards – This metric is a little more advanced. Measure how many buyers you have, have many products you have on the market, all of your transactions, and the revenue each transaction generates.
Never write your metrics in stone
Your edtech startup will change and grow, and so should your innovative accounting metrics.
Once you begin to consistently meet your dashboard metrics for 4-6 weeks in a row, it’s time to develop new metrics. Lean startup methodology is simple and dynamic. Nothing is ever static. As your startup develops, your accounting measures will change as well.
Holding fast to the same metrics will mire your product in the Stone Age, and you’ll never be able to shed the weight holding you down. Your innovative accounting metrics are supposed to be guideposts along the journey, not anchors.
Get to know the education leaders
Here’s another secret: education has been doing innovation accounting for some time. Schools regularly use curriculum-based assessments and other evaluations to teach, measure and strategize. It’s all about checking for understanding and determining what progress has been made. That’s not too different from the lean startup methodology for validating learning.
Get to know the value leader in the field to find out how they rely on metrics for making their purchases – including your edtech product. One thing is for sure, innovation accounting can help your edtech business thrive.