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Measuring Learning in DollarsDavid Binetti
@dbinetti
... But Consider Finance's Perspective
The Accounting is the Problem
We Need Options
Financial Options→ Right, but not obligation
→ Delay decisions until we know more
Where there is uncertainty, you'll find options.
We Need Innovation
Options
Value = Sum of the Possibilities
$3.3M - $1.0M = $2.3M
Lean Startup, Positive ROI
Now, Let's Learn
Given what you've learned,are you better, worse,
or about the same?
Invest
Pass
Pivot
Measures Learning in
Dollars
Measures Risk
Risk Sigma 1.6
Risk Sigma 1.1
Risk Sigma 0.8
Risk Sigma 0.4
Risk Sigma→ Normalized metric
→ Comparable between projects→ Enables corporate governance
KPIs(We want the Truth, Fast)
Accurate bad news is superior to inaccurate
good news
KPIs→ Sensitivity and Specificity (Accuracy)
→ Fall out, miss rate, PPV, FOR→ Clinical trials for your business model
WarningValuation is NOT a KPI
Innovation Options are Profit Insurance
Value, Risk, KPIs?That's (Innovation) Accounting!
Product Happy→ No traps
→ Focuses on learning→ Rewards speed and truth
Finance Happy→ Reports in dollars/sigma→ Allocates resources→ Meaningful KPIs
Deliver FabricationsDetermine Reality
@dbinettihttp://innovation-options.com