This article is Part 3 in a four-part series on the CFO’s Role in Innovation Series.
One of the world’s largest publicly listed multinational property and infrastructure companies decided to explore the concept of innovation. The company is highly regarded globally as an innovator. Its engineers have designed and built some of the world’s most demanding 21st Century infrastructure. The challenge the senior leadership set itself was to transfer the innovation thinking and capability as exemplified in its design and construction into and across the entire operating entity – to make the operating entity itself innovative and the CFO, along with his direct report, the COO were appointed to lead this transformation.
The CFO chose to launch this initiative at the internal three-day International Financial Leaders Conference. Attended by the organization’s 100 global financial leaders, the conference program began by introducing the concept of innovation, in the process challenging the leaders to increase revenue by $5 million and to save $5 million within the finance department operations globally – an overall contribution to the financial global budget of $10 million.
The 100 global financial leaders divided into teams of ten for the $10 million Challenge as it now became known. Ten of the senior financial leaders spent half a day being introduced to the processes and practices of creative leadership and management innovation with the understanding they would act as challenge team leaders facilitating the creative thinking around the challenge in their teams the next day.
The three hour long $10 million Challenge workshop combined live and on-line idea facilitation using Ideascale, a software ideation platform, with the participants’ ideas being projected on a screen at the head of the room in real time. The participants formed ten teams of ten and the session involved three 20 minute rounds of brainstorming. In the first round, each team had to submit five ideas for savings, in the second round five ideas for revenue generation. The 9 teams rated the ideas submitted one out of five. The team submitting the ideas could not vote for itself. In the third round, each team was asked to develop the idea that was voted best by the other teams. The workshop concluded with the voting and selection of the best overall revenue and savings generation ideas.
The exercise was an extraordinary success. Ideas emerged adding $250 million to revenue and cost savings of $10 million emerged. At the end of the workshop, the CFO shocked the leaders by announcing a bonus of $10,000 each to the teams whose revenue and savings ideas won, once their ideas had been implemented.
How is this different from any other ideation session I might have run in an organization?
I have not experienced a group of leading financial executives from one company in important strategic or tactical ideation sessions previously. Yet the CFO and his immediate senior reports are the ones with the total organizational financial budget at their fingertips. The CFO needs an understanding of how the business is operating daily, weekly, monthly, annually, what has made money, what has failed financially from a business perspective and is employed to prioritize and maintain fiscal probity and balance. When it comes to a new initiative, their responsibility is to question its importance, to value and validate it, to ensure proper commercial governance practices are adhered to and to make a conscious effort to reduce risk – all from a financial management perspective. They are the ones in the organization where innovation and the ideas associated with it are often impeded – often for good reasons.
However, when the finance leaders group was flipped from their traditional decision-making role, and they were challenged to become innovators, the innate entrepreneurial skills CFO’s keep submerged and guarded, were suddenly unleashed. This creative unleashing, though, came in a very disciplined manner. You could hear each team discuss the idea using their financial skills to frame the solution using numbers first – to give the idea a value from its very conceptualization. Suddenly the finance teams were owning ideas because the ideas had context – they had a value – and if the idea’s conceptualisation was a winner, the financial leaders knew how to justify its implementation financially.
What if the CFO was sitting at the ideation table when the brainstorming was occurring? Would innovation in organizations suddenly take on a whole new dimension? The innovation purists might argue we need to develop the idea first. I would argue ideas need to have context and focus first and most importantly financial assumptions that can be tested as the ideas develop and emerge.
Globally, innovation practitioners report innovation failure in many organizations. I suspect this would not be the case if the CFO was able to lead rather than be the gatekeeper of the idea innovation flow in organizations.
Stay tuned for the fourth and final article on Thursday in the four-part series, the CFO’s Role in Innovation Series.
In case you might have missed the previous 2 articles, you can find them here: Part 1 & Part 2
Image courtesy of pixabay.com.
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