Nowadays when finance executives at middle-market companies talk about the necessity of the business moving “beyond traditional boundaries” and “being bold,” they aren’t referring to expanding its geographical reach. In fact, those comments are part of a new survey exploring how middle-market finance leaders view innovation.
Conducted by CFO Research, in collaboration with CPA firm Cherry Bekaert, the online survey collected data from 161 finance executives at companies with revenues of up to $1 billion. In both their written comments as well as their answers to fixed-choice questions, the finance leaders not only affirmed the necessity of ongoing innovation, but also admitted that their companies could—and must—do better. Only slightly more than 16% of survey respondents ranked their companies as “highly successful” at innovation.
The finance chiefs are well-aware of the rising importance of nurturing fresh ideas in an economy where customers and competitors are moving at breakneck speed. Nearly 90% agree that innovation is more important to their companies now than it was five years ago. To achieve their revenue and profit goals, finance executives know they need to do more than optimize existing brands or expand distribution.
Figuring out how to consistently bring value to market in the form of transformative innovations is itself a daunting creative challenge. Even as finance executives seek to identify models and implement guidelines that will foster original thinking throughout their organizations, they must also be cautious not to bury that spirit underneath layers of bureaucracy. One respondent captures that tension in a single phrase, suggesting that what companies now need is “a systematized process to look at new ideas.”
Another respondent stresses the need for CFOs and other finance executives to think of investments in innovation as fundamentally different from other initiatives. Finance executives, wrote the respondent, need to “acknowledge that innovation is a requirement to remain competitive and that expected returns won’t always be sustained as competitors match our effort.” Now that’s something to think about.
For more surprising insights into how middle-market finance executives view their innovation efforts, see A New and Improved Approach to Innovation.