-The CFOs are gatekeepers of resources and still the most important enablers of innovation.
-The biggest misconception around corporate innovation and the CFO’s role within it.
- Innovation is not just about products. It includes services, experiences, customer service and business models. It involves both tangible and intangible assets.
-Innovation is not just an ideas problem but a resource allocation problem. The CFO acts as a venture capital investor looking at a start-up.
-Sustainable innovation involves continuous efforts, not one-off initiatives. The CFOs and CEOs should be supportive of the motivated innovators.
-Innovation should not stop as it should be a year-after-year in different parts of their product or service portfolios as this will be sustainable.
Finance Teams’ approach to innovation
-CFO should integrate innovation into the company’s fabric, not as a sporadic exercise. It should be an integrated mechanism to drive growth and should be budgeted and forecasted resources on a continuous basis.
-Continuous budgeting and forecasting for innovation resources are crucial.
-Innovations is also a resource problem, but also a process problem, the CFOs help to identify, select, and refine the values proposition of the ideas that came up.
-CFOs priority is that innovative investments produce economic value for the company.
Essentials of sustainable innovation
-Mastering multiple innovation practices exponentially impacts economic profit. If a few are interested, it doesn’t have a material impact on economic profit.
-Companies practicing five or six essentials show a 60% higher economic profit.
-Among the practices the most important are:
1. Aspire- you must set a high innovation goal and allocate resources to the chosen projects.
3. Mobilize- Relevant to the CFOs as they must put a lot of process in place to grease the organization’s wheels. This emphasizes the shift from efficiency to top line growth.
Ensuring Resources for innovation
-Establishing a defined stage -gate process helps CFO identify and refine valuable innovation propositions.
-Common metric aid in resource allocation, ensuring efficiency across the organization.
-CFOs must also mobilize other leaders to work with the high potential individuals by working with other leaders to provide a fast track for them to the next promotion into operating roles.
Creating a safe environment for innovation
-Culture plays a role: recognizing and rewarding innovation fosters a positive environment and makes it fun.
-Celebrating the people who take the risk and demonstrate leadership. They should be celebrated both during project reviews and in communication with the organization.
CFO’s role in balancing short term and long-term horizons:
-CFOs must treat innovation as a pipeline as it’s a regular, definable, repeatable process, and in that process some initiatives pay off earlier than others.
-They must maintain a fluid pipeline with a mix of incremental and big swing projects to balance risks and awards.
Calling off investments
-Use a stage-gate process to evaluate volume, pricing and cast before significant resource allocation.
-Every innovation must meet assumptions such as expected revenue, market share, price point. If enough of these assumptions turn out to be untrue, it’s a sign that a company needs to look at a new strategy.
-CFOs should be taught expectations at each stage gate to make the innovation process self-fulfilling.
-Emphasize learning through pilots and prototypes to gather information and refine assumptions.
Churpy’s Major Role in helping CFOs achieve innovation.
Here at Churpy we help encourage innovation by providing up-to-date invoice reconciliation and ensure that all your bank transactions into your ERP system are automatically harmonized in real-time where it acts as a one-stop shop for all vital transaction data. That enable businesses realize major profits and bigger steps towards success.
We also help CFOs track account balances in real-time and generate debtor insight and credit analytics through self-service dashboards that help them gain single-view insights and be more prosperous amidst these challenges they face today in terms of inventing new ways to look at such data.