19-689 Finance for Innovation Management
6 units, Carnegie Mellon University
In this course, there will be three main elements all focused around the innovation decision-making process: Basic financial concepts Business case development by innovation project managers. Tools and processes used in innovation decision-making With respect to financial concepts, the course will provide an introduction of the basic financial concepts that corporations use to capture their financial performance including the following: Basic financial statement information income statement / balance sheet / meanings / interpretations / analysis of financial statements/determination of cash flow / annual reports, etc. Performance metrics, ROI, Debt to Equity ratio, EPS, NOPAT, EBITDA, Liquidity, Days outstanding, other appropriate measures The intention of this introduction is to provide future project managers with a sufficient understanding of the financial information that is typically used in building a business case to make innovation decisions both in a corporate setting and in a more entrepreneurial setting. With respect to actual innovation decision-making, the course will examine the various tools and techniques that are used by (1) corporations to make investment decisions in specific R&D projects and (2) entrepreneurial organizations to make investments > decisions in new technical projects. This course will address a number of commonly used decision tools such as: (1) Discounting / Net Present Value calculations (NPV), IRR / Payback Period / ROIC / etc.; (2) Decision and Risk Analysis methodologies; and (3) Portfolio management Finally, the course will develop an understanding of the differences between how corporations and how entrepreneurial firms use these tools, examine the implications of financial analysis techniques on R&D decision-making, and will examine some of the suggested fallacies and the limitations of financial analysis of innovation management.
Prerequisites: none listed
Offered: Spring 2027, Spring 2026
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