Rethinking CFO's Role In Innovation
The CFOs role today is no longer limited to finance, but also in shaping the company’s strategy and driving innovation. This sentiment has been echoed in a poll of 100 large-company CFOs conducted at a Deloitte CFO Vision Conference. The poll results suggest that 87% confirmed they are either being asked by their CEOs to play a key role in driving innovation in their companies, or their CEO expects them to support and enable the execution of innovation decisions.
CFOs are needed to make sure that there are guard rails in place to protect the core business and that people don’t cross them. They are the ones who can make sure that the core business does not get fundamentally hurt as innovation teams start to play with different business models, mention Deloitte researchers in an article published by The Wall Street Journal.
Developing talent for Innovation
CFOs can help advance their organization’s innovation efforts by adding new skills and capabilities for themselves and their finance team, and supporting a culture of innovation across the enterprise with a talent agenda that encourages employees to innovate, say the authors.
For organizations to be innovative, employees have to be encouraged to explore ideas, experiment with them and see how viral they become in the organization. Moreover, it’s critical to have a performance management model that recognizes that innovation requires failure. Ideally, the performance model not only protects employees involved in an innovation project from being dinged for failure, but even rewards it under certain circumstances, such as when an innovation journey that doesn’t work out provides a valuable learning experience.
In the same way, the CFO need to be just as innovative as the rest of the organization―and be just as willing to fail in pursuit of innovation. CFOs need to ask themselves, “Does an opportunity allow the business to go down avenues that over the long run are going to be good for the company, while not compromising its risk exposure?”
Innovation Through Design Thinking
The research mentions CFOs who want to develop an innovative finance organization need to provide their people training in innovative methods and techniques such as design thinking. These tools encourage looking at things differently, questioning what’s in place, and seeking new solutions to challenges that perhaps were not even recognized as constraints previously, believe researchers.
CFOs also need to bring people whom finance has not typically sought out―data scientists, MBAs, innovators, people with a financial vision―often because they can be more expensive. The skillsets these people bring need to be part of the finance organization’s toolkit in order to tackle the business issues we see today, let alone tomorrow. And CFOs will need to give them as strong a voice as they do those on the traditional general ledger side.
Looking Into the Future
Supporting innovation also means thinking strategically today about the implications of new developments, new technologies and potential business model changes, and both the constraints and the opportunities those might create. This means looking into the future. As the researchers note, Innovation is heavily dependent on having a culture of curiosity and experimentation, along with the necessary talent and skills. But as CFOs know all too well, talent is not only critical in today’s knowledge economy, it’s scarce. “That’s all the more reason to take the time and resources to develop the talent you have,” they say.
The expansion of the CFO role and the speed of change occurring in business demand that CFOs shape strategy, drive innovation and harness technologies to support the business—while staying focused on the financials. To do this, CFOs will need to work hard to be able to delegate some of their traditional responsibilities. That means thinking differently about talent needs and innovating a new talent model for the finance organization, as well as fostering new approaches to talent attraction, development, and retention across their organization.
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