How Finance Executives Earned Supporting Roles in Innovation
It’s now part of the CFO’s responsibilities to monitor and assess the state of the company’s innovation efforts, making sure that it can access the resources it needs, whether in-house or through a strategic partnership. In an atmosphere that requires a creative mindset throughout the business, CFOs need to help scrutinize ideas, looking for the most valuable and potentially profitable nuggets.
The CFO’s rapidly emerging role in corporate innovation is revealed in a new survey conducted by CFO Research, in collaboration with CPA firm Cherry Bekaert. The study, based on data from 161 finance executives at middle-market companies (defined as having revenues of up to $1 billion) found that more than half of respondents view themselves as either an advisor to others (28%) or as an equal partner (24%) when it comes to managing innovation. Just over half say that their corporate leadership (such as the company’s CEO or owner) is the driving force behind innovation, with about the same number of CFOs saying they should be more involved in evaluating and selecting innovation projects to pursue.
More specifically, as one survey-taker wrote: “The finance function needs to contribute to the detailed discussions with cross-functional business units regarding innovation projects.” Indeed, CFOs can be instrumental in bringing discipline to the innovation process by setting time-frames, stressing accountability and establishing priorities. Bringing their understanding of company strategy to bear, they can divvy up resources among different types of initiatives ranging from those within the core business to “moonshot” projects with slim chances but grand potential.
Inhabiting their new role may require middle-market CFOs to sharpen their people skills with regard to collaboration and teamwork. Finance, as one insightful survey-taker put it, must “demonstrate to the rest of the company that…we are a resource that can help make projects more successful.” Doing so successfully may mean, for example, supporting others in building the business case for an innovation that they have chosen to champion. If such tasks represent a visible departure from past duties, then CFOs and other finance leaders are serving a valuable function in taking them on. To be effective role models, notes one finance executive, the “finance team needs to behave in a more innovative way”—advice which needs to be spread throughout the business.
For more surprising insights into how middle-market finance executives view their innovation efforts, see Counting on the Finance Function to be Resourceful.