When applying Innovation Accounting, we need to understand and describe the likelihood of certain events occurring. For example, the likelihood of a customer purchasing our product, a user returning, a sponsor donating money, or reducing the carbon impact of our product.

All of these events can be described by a distribution. Graphs of data distributions allow you to easily see the likelihood and magnitude of an event, usually sequenced from smallest to largest, and the frequency with which they appear. Once a distribution function is identified, it can be used as a shorthand for describing and calculating related quantities, such as likelihoods of observations.

Use this Workbook as a sandbox to familiarize yourself with different distributions and their shapes to better understand the possibilities and probabilities that your experiment data (for example, your financial model) may take.