Eric Ries

An Accountability Framework That Works Across Industries

Innovation accounting begins by turning the leap-of-faith assumptions discussed in Chapter 5 into a quantitative financial model. Every business plan has some kind of model associated with it, even if it’s written on the back of a napkin. That model provides assumptions about what the business will look like at a successful point in the future.

The rate of growth depends primarily on three things: the profitability of each customer, the cost of acquiring new customers, and the repeat purchase rate of existing customers.