Innovation’s Bottom Line: The CFO’s Role in Bringing New Ideas to Market
by Rob Shelton
The traditional role of chief financial officers is more closely aligned with managing business and financial risk – setting spending limits, meeting budget, trimming excess and enforcing the bottom line.
Yet today’s CFO has a vital role in driving innovation and boosting a company’s “partner of choice” appeal. Innovation-savvy CEOs know if they can tap into, use and support their CFO’s inquisitive nature, rigor and instinctive caution, they’ll also be able to scale and sustain breakthrough changes while creating an innovation ecosystem.
To get the CFO’s endorsement on the company’s innovation strategy, C-level leaders–whether that’s the CEO, chief operating officer, chief strategy officer or the chief marketing officer–will have to help a CFO make sense of one significant overriding question: How is innovation going to drive long-term and profitable revenue growth?
Although a straightforward question, there may not be a simple answer.
CFOs often emphasize short-term goals and meeting Wall Street’s quarterly expectations. Most of the metrics used by financial teams tend to provide revenue and profitability projections for about two years out.
Additionally, since CFOs are responsible for aligning project funding to strategic business objectives, they calculate things like speed to innovation, time to value and the potential ROI of commercializing ideas, products and services. CFOs manage big project portfolios and make yes-no decisions based on risk vs. return equations. If the data they’re given doesn’t match their own analytical assessment and poses too much risk to the company, even the most potentially creative initiatives may not win the CFO’s approval.
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