Startups

The CFO as creative spark – The Manila Times


The CFO as creative spark

IMELDA TAPAY-LAPRES

CHIEF Financial Officers (CFOs) are rarely counted on to be the most creative minds in a team. As finance leaders, they are expected to be fiscally responsible, disciplined, and at all times, the designated adult in the room. And yet, there’s a case to be made for CFOs being the key to cultivating a creative mindset in an organization.

In an IBM survey of CEOs (chief executive officers) across 33 industries and 60 countries, respondents identified creativity above rigor, management discipline, or vision as necessary for leaders to successfully navigate an increasingly complex business environment. This doesn’t mean that CFOs are expected to design the next breakthrough product or technology. But they can be instrumental in building organizations where innovative ideas are identified, financed, and delivered.

This starts with recognizing that creative thinking is a tangible contributor to the bottom line. A recent analysis of Fortune 500 companies found that 38 percent experienced a decline in revenue between 2014 and 2016. In many major markets, organizations are also grappling with the looming prospect of an economic downturn. In such a situation, CFOs may be called upon to find creative ways to boost efficiency in an already-lean organization. This slowdown may also be an opportune time to invest in innovation, the better with which to bounce back once market conditions improve.

As a close partner of the CEO, finance leaders will always be expected to act as stewards in the organization. The sense of discipline they bring to that role can be applied to the creative process to maintain the balance between creative risks and short-term profits/long-term growth.

Here are some ways CFOs can instill clarity and accountability in the creative effort without stifling it.

Reframe questions
When evaluating a new product or service, CFOs may be tempted to provide the easy feedback: either a thumbs up or a thumbs down. Unfortunately, this unequivocal approach leaves no room to discuss what works and what doesn’t. Finance leaders may, instead, consider sharing their concerns say, the launch sounds too risky and work with the team to address those issues. By not dismissing new ideas altogether, CFOs can keep the creative impulses going and maybe even encourage better ideas or solutions.

Encourage low-cost experimentation
Remember that tech company that had to delay the launch of a groundbreaking foldable smart phone/tablet because the test units kept breaking apart? Not a lot of organizations can afford that kind of blunder, the kind that certainly keeps CFOs awake at night. And yet, failure is an integral part of innovation. To avoid such a serious misstep, finance leaders can encourage workers to innovate through iteration. Creatives can build a prototype first rather than focus straightaway on a product that is market ready, or they can test a strategy before implementing it, all the while absorbing feedback, learning, and assessing until they come up with a well-thought out product or strategy.

Practice operational flexibility
One way CFOs can let their own creative impulses flow is by looking at new dimensions to evaluating strategic decisions, or assessing the suitability of a potential acquisition. They can also encourage workers to look outside the box that is, outside their organization’s particular industry for sources of big ideas or solutions. The health care unit of a listed company, for example, developed a new approach to infection control by studying the way veterinarians and make-up artists keep infections at bay in their own line of work. This approach broadens an organization’s perspective and also lessens the chances of blindly copying competitors.

Develop fitting metrics
At the front end of an innovation project, it may be difficult to determine what metrics to monitor for success. Do you look at a 10-year revenue model? If the numbers are too low, do you scrap the idea altogether?

One tech company set up a lab where employees can work on their own business ideas testing, refining, and experimenting. And the only factors leaders consider before they fully support a project is if it is truly innovative, and if other colleagues approve of it. While the company has faltered with some of its products, it is widely recognized as a leading innovator, outpacing its competitors in bringing new ideas to market.

With CEOs themselves underscoring the importance of creativity during this period of innovation and disruption, finance leaders have a clear mandate to nurture not stifle inventiveness. And while it may be challenging for some CFOs who favor predictability, linear thinking and minimal risk, not to make the shift may be the biggest risk they take: They could have the beginnings of the next big thing germinating in their organization and they wouldn’t know what to do with it.

The author is a partner with the Business Process Solutions division of Navarro Amper & Co., one of 11 practices that make up Deloitte Southeast Asia Ltd. Deloitte Southeast Asia Ltd is a member of Deloitte Touche Tohmatsu Limited, a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax and related services.





READ NEWS SOURCE

This website uses cookies. By continuing to use this site, you accept our use of cookies.