CFO role is changing, so now is an exciting time for those pursuing careers where a stint in finance can enhance their contributions to their company and build future potential taking on greater responsibilities
Every sector of the economy is seeing a renewed focus on innovation to anticipate and satisfy increased customer expectations brought on by and arising from the pandemic. We are not returning to the way things were prior to 2020 in a hurry. The impetus is on holistic transformation of business models and acceptance of the fact that innovation, far from being “cool stuff” or an ancillary, is at the core of any company’s strategy. Moreover, in the current dynamic environment that is uncertain and unpredictable.
Due to their position within an organization, the platform where they operate from, their connect to various stakeholders, the CEO, and other members of the C-suite, CFOs in particular, are in a unique position to support a company’s innovation journey. The success of their company may depend on their ability to spearhead innovation.
This article offers suggestions on what the CFO may do to support the innovation agenda and how to guarantee that their efforts translate into results.
What leverage does the CFO have to promote innovation?
- The CFO can energize the organization, promote culture change, and speed up innovative progress.
- Firstly, make sure that resources are allocated for innovation adequately and appropriately.
- For that, encourage people coming forward with innovation proposals wearing the hat of an intrapreneur and looking for funding their ideas/project.
- One may borrow ideas from the startup playbook and support early-stage concept development in modest, incremental tranches, investing money in small amounts as milestones are reached.
- Each innovation initiative needs to be valued and considered as a component of the investment portfolio that the business is creating to secure its future.
- Be a champion of automation of processes, and sponsor projects/hackathons.
- Provide platforms and flexibility to digital team to have budgets for quick developments of prototypes etc.
Create processes and develop policies that encourage innovation.
- Applying procedures and policies that are effective for large-scale operations may be overkill for a new idea.
- Innovation calls for a novel strategy that is rigorous enough for the work, risk, and money at stake.
What can the CFO do to foster innovation appropriate policies and procedures?
- As the C-suite and the finance team member, assess the next steps for a new concept by assisting them towards focusing on the question “What is the problem we are trying to solve?”
- Make sure that relevant procedures are in place to evaluate and approve innovation vendors and other strategic choices that permit experimentation while also protecting the enterprise’s requirements.
- They can help set up/be part of Committees on Digital/Innovation.
Use pertinent metrics
- In order to establish discipline – for assessing and monitoring innovative business models, the CFO can spearhead the adoption of appropriate techniques/approaches.
- Asking the proper questions, being confident in using judgement when facts are simply absent, looking for parallels from other industries or marketplaces, and accepting good enough data that can be improved along the way, are some of the most crucial factors in determining how beneficial an innovation is.
- The hard data can provide reassurance. Seeing data in well-organized columns and rows with positive trends indicating success is comforting. However, innovation is messy, therefore it’s crucial to investigate, pay attention to, and delve into qualitative ideas that could be significant signals that are simply too raw to quantify.
- Be a champion of automation of processes – sponsor projects/hackathons – give leeway to Digital team to have budgets for rapid prototypes etc.
- The CFO role is changing, therefore, now is an exciting time for those pursuing careers, that including a stint in the finance function can enhance their contributions to their company and build future potential taking up higher responsibilities.
- Address the above priorities and become a catalyst of innovation and disruption.