Growth Accounting

The percentage change in a metric from one year to the next, used to assess trends while neutralising seasonal effects. YoY growth rates in revenue, productivity, and intangible asset investment are fundamental to performance evaluation, valuation modelling, and growth accounting analysis.

The process of projecting a company's future growth trajectory based on historical data, market conditions, and investment patterns. Incorporating intangible asset data and productivity trends significantly improves forecast accuracy and reduces investor uncertainty.

The profession and practice of recording, classifying, and reporting financial transactions to provide stakeholders with accurate information about an organisation's financial position. In the context of intangible assets, accountancy plays a critical role in determining how items such as goodwill, intellectual property, and customer relationships are recognised, measured, and disclosed under frameworks like IFRS and UK GAAP.

The extent to which resources are distributed to their highest-value uses across an economy or within a firm. In growth accounting, improvements in allocative efficiency — particularly the reallocation of capital toward intangible-intensive activities — are a significant driver of productivity gains.

The number of months a company takes to recover its customer acquisition cost from gross profit on the cohort acquired. Calculated as CAC ÷ (monthly gross profit per customer).

The proportion of national or firm-level income paid to workers as compensation, as opposed to returns on capital. The declining labour share observed in many advanced economies is partly attributed to the growing role of intangible capital, which tends to be more scalable and generates higher returns for capital owners.

A measure of productivity that accounts for the contributions of multiple inputs — including labour, capital, energy, and materials — to output growth. MFP captures the efficiency with which all inputs are combined and is closely related to total factor productivity, serving as a key indicator of innovation and intangible capital contributions.

A goal-setting framework that defines qualitative objectives and pairs them with measurable key results. OKRs help growth businesses align teams around priorities and track progress against ambitious targets, from product development to revenue growth.

The AI Productivity Paradox: Why Trillions in AI Spending Aren't Moving the Needle

Global AI investment has surpassed $500 billion annually, yet total factor productivity growth remains stubbornly flat. This is Solow's paradox reborn: you can see AI everywhere except in the productivity statistics. History tells us why — and what needs to change.

What is Gross Value Added (GVA)?

GVA measures the value a company creates by subtracting intermediate consumption (purchases of goods and services) from total revenue — it's the firm-level equivalent of GDP contribution.

What is the Solow Residual?

The Solow Residual is the portion of output growth that cannot be explained by growth in labour and capital inputs — it represents Total Factor Productivity growth, which is largely driven by intangible assets.

What is Total Factor Productivity (TFP)?

TFP measures the portion of output growth that cannot be explained by increases in labour or capital inputs — it captures the efficiency gains from innovation, technology, and better management.