The CFO and Innovation

by Stefan Lindegaard

Can it work?

by Stefan Lindegaard

The CFO and InnovationI ask whether CFO’s can make innovation happen, but in reality this should not even be a question of whether it can be done but rather a question of how to do it.

The reason for turning this a how-to question is the increasing role of the CFO in many companies. Their influence keeps growing and this includes influence on innovation and in particular on the funding that goes to innovation.

The problem is that these executives often have a hard time understanding innovation as this discipline is full of risk and uncertainty, which is somewhat different from their corporate world.

I have no clear-cut answers on how to make this work, but let me share some thoughts and hopefully others can join in with more advice.

First, I believe you need to better understand the focus of such top executives. Their world is very much about numbers. This forces you to present innovation projects with a strong focus on numbers. This is difficult and in many cases outright wrong, but you need to find a way to speak in a language that the CFO understands.

The good thing is that if this can be done, there is a better chance of getting the CFO personally engaged and perhaps even committed to innovation.

You also need to figure out how to teach your CFO and other finance guys about innovation and how to build innovation capabilities. This needs to be done in partnership with your CTO or Head of Research as there is no reason in undermining this person and perhaps get another adversary.

Perhaps you can find some inspiration in the case of Dell (early days as they grew the company). A key element here was business model innovation as their customers paid upfront and their suppliers got paid 90 days later. You can read more about this in Doblin’s Ten Types of Innovation framework.

Business model innovation is a hot topic right now. Perhaps you can find other cases that can help convince your CFO that he or she can play a part in your corporate innovation efforts.

You also need to link innovation projects better with the overall corporate strategy in order to make it harder for the CFO to just look at the numbers and cut project with the argument that it is hard to justify these projects as reasonable investments that are aligned with future strategy.

Unfortunately, there is not much information on how CFO’s work with innovation. I did a search on Twitter using the keywords CFO + innovation as well as CEO + innovation. I got ONE reference on the CFO compared with more than hundred CEO references over the last three days…

We need to help each other improve on this important topic…

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Stegan LindegaardStefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

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  1. Job One of every CFO is preparing the company to double sales profitably. Doing this means turning customer information into cash fast by driving days of sales in inventories and receivables to less than ten and 25 respectively.

    This will force a thorough review of supply chains and sales operations, revealing all the cash wait states that slow the flow of customer information into the system. And, by extension, slowing, even arresting, the ability to add value for customers. The innovations that flow from this (see Apple, Intel, Cisco) will revolutionize any company. And generate more job offers than God!

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