I was going to open a can of worms. In Spanish, the equivalent saying is "getting into a garden". And that was what I was into. Literally.
I walk through Bogotá's Parque de la 93 in a heavy downpour. I'm on my way to give a talk on innovation management, to which I was invited by surprise the night before ‘taking advantage of the fact that I was in town’. (Side note: never accept a challenge in front of the second beer). Already in the room, with several dozen managers and technicians from one of the largest companies in Latin America, I launched the provocation: ‘Who is more important: The CFO or the Director of Innovation?’
There followed a few seconds of uneasy silence among the attendees, representatives of both areas of the corporation (the solution to the question, at the end of the post).
Now that we are up to our necks in next year's budget, it is time to reflect on it. Some of us are starting now, others are just in the middle of the maelstrom, others have already closed their budgets.
Traditionally, the CFO has been considered a stopper by the innovation team, as he or she is the automatic guillotine that cuts technology or product development plans to pieces with the argument ‘it's not in the budget’.
‘The budget'. Next year's budget, of course. And maybe next year's. And the next...
It seems the CEO listens to Dr. No more than anyone else. Of course, he's a risk blocker. And we would all like to minimise risk. However, nowadays the most dangerous thing to do is not to move. Because one day we wake up and wonder, ‘Who Moved my Cheese?' It is not for nothing that companies with a strong focus on financial control innovate the least. (Note to the reader: This is the author's impression based on a limited practice of only a little more than thirty years of professional practice).
Most of us have heard of De Bono's ‘6 thinking hats’ method. And we will remember that two of those hats are perfect for the CFO: the black one, which pursues care and caution; and the white one, which represents neutral and objective thinking, based on facts and figures. However, the method succeeds when we all switch hats. This has some implications.
Innovation projects must be defended in the objectivity of numbers (the language of the CFO), their relevance to strategy, and the analysis of the environment arising from Competitive and Technological Intelligence (the languages of the CEO). We have already talked a lot in our blog about how Competitive Intelligence reinforces Innovation.
The inverse, that the CFO speaks the language of innovation, is much more difficult. To use a simile: It is easier for an engineer to become a salesperson than for a salesperson to become an engineer. (Here, again, I have applied simple experience).
Here we need to clarify that ‘the beginning’. Some innovation consultants insist that the CFO (Dr. No) should never be involved in the early stages of creativity. They are afraid that it will cool down the primordial broth where ideas emerge. However, he should at least be involved in the early stages of discussion, after the technical feasibility analysis. I would like to see it participate even earlier.
This involvement of the CFO in the process of managing ideas makes him participate in their maturation, and therefore he sees himself as a co-creator of those important assets for the company that ideas are. Innovation funnel management solutions make it much easier to involve the CFO in the whole process and have him contribute his vision.
The CFO will not continue to minimise risk in the short term, but when an idea does not fit the budget, he or she will participate more actively in the analysis of alternatives. Not everything needs to be developed or resourced internally. We can look for alliances, technology partners...
We said ‘short term’, and herein lies one of the keys. The CFO is concerned with the strength of the company in the short and medium term. He or she is concerned about paying the payroll for this year and the next (and maybe the next). But the CIO must be concerned about the company's medium and long term survival. That the payroll can be paid in 5 years' time, thanks to the fact that our product is better than the others. Or at the very least, cheaper.
And that was the conclusion of the session in Bogotá. Both are important for the company. It depends on the measure of space-time and on our height of vision.
(Dr. No is the first 007 film, released in 1962 and based on a novel of the same name by Ian Fleming).
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The authors' opinions reflect their own views, not those of the company.