How CFOs are Fuelling Innovation

Innovation is a very broad concept. In its purest sense, innovation is generally referring to changing or creating more effective processes, products and ideas. It’s tweaking business models, adapting to changes in the environment, and otherwise improving on existing products or services for a streamlined efficiency. It also boils down to risk-taking because innovative thinking essentially leads to creating new markets.

So why has there been a connotation attached to CFOs as merely the money manager, and not the forward-thinking innovative architect that has the ability to fuel an organization's growth?

Introducing the Contemporary CFO

The contemporary role of the CFO has evolved into this hybrid position that has now been seen as a go-to person within the dominant coalition of a company. It shouldn’t serve as a huge surprise, but many companies are now coming to the realization that other than the CEO, the CFO is the only other executive with a clear view of the big picture, has access to all essential data, is well versed about the business and overall operations. They are conscious of all the moving parts of an organization and with this unique bird's eye view vantage point, they can recognize the overall health of the company and how to effectively forecast any growing trends and demonstrate to other corporate stakeholders that these plans are worth investing in and pursuing.

“By providing capital flexibility, delivering data-backed insight to make informed decisions, building transparency into capital-allocation decisions, and knowing when to be opportunistic, CFOs can help their companies responsibly pursue growth and innovation in a weak economy.” – Frank Friedman, Deloitte CFO.

CFOs are now looked at to create more value within a company than ever before with their innovative thinking and creative problem solving – backed by data. This exclusive position of influence propels them to the strategic table with fresh insights on how to mitigate risk and guidance on how to drive better overall performance.

CFOs are tasked with promoting innovation, while still managing risk and ensuring long-term financial goals are met– a delicate juggling act to say the least.

Employing a proactive approach
“CFOs are now expected to be more than just an accountant. They are expected to drive business fundamentals and value creation through leadership skills, strategic thinking, and the ability to work collaboratively across teams and stakeholders.”  - Maria Izurieta, CFO

 CFOs can leverage their greatest skill of comprehending analytics and transforming this raw data into decision-making power. This function wouldn’t be made possible if they didn’t have a financial budgeting solution that acts as a single system to store, consolidate and manage the entire company’s data.

How CFOs can learn to embrace an innovative mentality

This is ground zero to enable them to create an environment that stimulates innovation, which would then lead to getting a product to market in a cost-effective manner.

Here are a few important aspects of why CFOs can embrace innovation.

  • They have a firm grasp of the evolving economic climate and market conditions.
  • They monitor and stay current on consumer trends.
  • There are significant shifts in consumer behavior and expectations happening today that are driving demand for new and different products.

In order for CFOs to enhance their position of being strategic architects, they first and foremost need to be able to paint a picture of the overall status of their company. It starts with finding a healthy equilibrium by balancing the spreadsheet; streamlining the entire process, shortening the budget cycles, and simplifying the overall data collection.

“CFOs are increasingly looked to for strategic guidance on how to improve the financial metrics of the business.” - Maria Izurieta, CFO

Gaining access to data and financial performance metrics faster with enhanced visibility and real-time insights is imperative before looking down the road to identify opportunities to free up capital for investments. It also helps them have full transparency when the decision–making process gets expedited and when to be a bit more opportunistic from a strategic lens.

Connecting the dots

Sir Richard Branson has a perfect mantra that he uses to fuel his companies. A-B-C-D. Always be connecting the dots.

The foundation for true innovation is the ability to connect the dots. Innovation stems from the dots that others skipped over, didn’t question, or connect. Therein lies the massive opportunity to create value for the organization moving forward.

It’s a delicate maneuver to push towards innovative measures while at the same time protecting the balance sheet and managing risk. As Friedman explains, having a strong balance sheet is important in order to ‘pursue our strategies while continuing to invest in our infrastructure and improve performance – all while protecting financial stability.’

CFOs have evolved into a highly critical role than ever before. Their breadth of strategic and analytical knowledge vastly outweighs their role as merely highly placed money managers. In order for a business to succeed in this competitive landscape, it’s imperative to stop viewing the position through a back-office lens and understand how important they are at fueling your business forward.

It will be interesting to see how many CFOs embrace this strategic position and when to differentiate between operations and opportunity. None of these decisions would be made possible if the right amounts of tools are not added to their financial arsenal to easily aggregate and filter data.

Financial management is critical to an organization’s success. Book a free demo of Limelight and discover how easy it is to produce budgets, forecasts, and reports to ensure your long-term financial goals are met and to accurately depict the overall health of your company.

 

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