Are You The Innovative CFO?

In some reports or posts I've seen dating as far back as 2015, CFOs have been urged to take a leading role in Company Innovation. CFOs know everything that’s going on in a company; they know what costs and what makes money. But are CFO best placed to lead innovation if all that matters to them is money?

The real question is: why would you innovate if not for money?

Most organisations across the globe innovate to outperform competition; the objective is to improve the bottom line through increase of revenues and cost reduction. CFOs have reported the difficulty of measuring the impact of innovations in the short or medium term. If an innovation is launched, it may not materialise within 1 or 2 years.

Or it may.

The real danger for companies is not innovation per se; it’s the way they’re operating their innovation. Companies are slowed down by compliance obligations and bureaucracy. It is the #1 cause of concern in the C-Suite.

When you are part of or leading an Innovation Team, it’s easy to get excited by the creativity of the process, the engagement of a community, the events and social sharing, the entrepreneurs and startups. The process is exciting. Those teams tend to keep that excitement for themselves because they understand each other and they don’t need to explain it all. They just do. They innovate.

This is not a criticism. We need people who breathe innovation every day. But what about the rest of the organisation?

How can a CFO lead innovation when the Chief Innovation Officer (‘CIO’) is meant to have that role?

It’s matter of measuring and reporting impact.

If the CEO and Board Members articulate the Company’s Vision, Strategy and Objectives for the next 5 years; and if the CIO leads the process of producing innovations that align with Vision, Strategy and Objectives; then, the CFO may lead the provisioning of resources to feed the process successfully.

It’s dangerous to let a team innovate and then realise that the process is too expensive or that further resources may not be available because budgets were possibly under-estimated. The impact of bureaucracy and compliance ought to be evaluated beforehand. The CFO can voice the reasons why the innovation process may be affected over the next few years.

At the same time, to make sure process is indeed compliant in any way, and budgets are properly set, it makes sense to decide on innovation impact measurement and reporting at the outset. If it is an objective that any innovation be developed to have an impact on the bottom line within a year; then, how this is measured and reported must be discussed thoroughly to make the innovation process complete.

Many organisations don’t have this level of discussion. They certainly do have the same economic objectives, but they often omit to discuss reporting from a CFO standpoint. That’s maybe the role that the CFO ought to take. Maybe the CFO shouldn’t lead innovation as it has been suggested or professed; maybe the CFO shouldn’t not be directly involved in the innovation process. Maybe the CFO should only explain what they need to know from the CIO to confirm that innovations have the expected impact within timescales.

We all get excited by new trends. We look up to successful early adopters who built amazing innovations and make the rest of us wonder what we may be able to achieve if all available resources were mobilised around a common goal. Let’s not forget that innovation is only a means to an economic end.  

We all get involved in innovation for the money.

#OpenInnovation #InnovationManagement @Ideascale