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PART I Innovation—A Call to Action

Some men look at things the way they are and ask why? I dream of things that are not and ask why not?

—Robert Kennedy

I believe the call to action around innovation has never been stronger than it is today. Why? Because in addition to IMA’s research on innovation, there is other research and discussion that talks about how companies wish they could innovate more, better, and faster and generate more value creation. A 2015 McKinsey poll stated that “94% of the managers surveyed said they were dissatisfied with their company’s innovation performance.”¹ And 3M has declared that “Innovation is a survival issue.”2 Clearly, as businesses look inside their four walls, they are not happy and feel the pressure to innovate.

But the really scary fact of this call to action is what is happening externally. The world is moving faster than ever before! It seems like every generation says “We are going through a rate of change faster than ever before.” I think that has probably been true—technology, globalization, and other factors have had us on a perpetual treadmill that seems to go faster and faster each year, month, week, and day! A general rule of thumb in business used to be that you need to reinvent your value proposition about every 10 years to stay relevant, profitable, and competitive. Of course that varies from industry to industry, and disruptive technologies, legislation, and political environments can all cause turbulence; but, as a rule, 10 years was about average. New research says the 10-year rule is dead, that the new rule is you need to reinvent your business and value proposition about every five years, which correlates with the IMA research.³

Five years!!! The research doesn’t say you have to totally reinvent yourself and introduce new breakthrough innovations and products every five years, but if you are not advancing your core value proposition after five years, you are going to be a shrinking business and less relevant. Your best days will be behind you, not in front of you. McKinsey also lightly touched on this fact when it said, “In the digital age, the pace of change has gone into hyper speed, so companies must get these strategic, creative, executional and organizational factors right to innovate successfully.”⁴ Many thought leaders are saying it: The world is moving faster than ever before. The question is: How are you reacting and adapting to this change?

You may ask yourself, “As a finance leader, why is this a call to action for me?” Because finance is not an independent discipline; it needs to be managed and led in tandem with all other disciplines in an organization. In the worst case, finance and accounting can dominate strategy and stifle innovation. In the best case, finance and accounting can be a leader of innovation and a driver of successful achievement of strategy and mission. If finance leadership is not involved either in a direct leadership role or in a very strong support capacity, innovation efforts are going to have a far lesser chance of being successful—and almost zero chance of having any long-term staying power and influence in an organization. Finance, strategy, and innovation are inextricably linked, and finance and accounting leaders need to have a role in innovation governance in order to help and lead our businesses in value creation.

This call to action and the importance of innovation is validated by the feedback IMA received:

 67% of respondents agreed or strongly agreed that innovation is a key focus in their organization’s strategy.

 92% agreed or strongly agreed that innovation should be a key focus in their strategy.

 But 47% agreed or strongly agreed that while their organization wants to innovate, short-term financial risks and goals get in the way. Another 25% were neutral. That means only 28% truly make innovation a priority and don’t push it to the side to get short-term results.

Businesses need stronger leadership around innovation and a way to measure results and value. Otherwise, they’ll continue to push their innovation initiatives to the side when pressured for short-term results. You know it’s important and is key to your strategy, so let’s focus on how to execute and how to measure to drive results.

Consider the opening quote by Robert Kennedy again: “Some men look at things the way they are and ask why? I dream of things that are not and ask why not?” Yes, dream. Dream big, dream small, dream in all shapes and sizes! Consider things as they are and challenge the status quo. But don’t just be a dreamer. Be a disciplined, multifaceted dreamer, facilitator, and leader who empowers others to dream and, therefore, innovate. Innovation is a team sport! Innovation can’t be about one person sitting in a think tank dreaming up ideas.

While I love the Kennedy quote as a great example and reminder to stretch our thinking from the current state, I also believe the quote can be a disservice by suggesting that people see innovation as only something dreamers can do. We ALL can innovate! We ALL can create value!

With a desire to innovate and many data points telling us we better innovate or get left behind, let’s discuss in Part I what is really needed for innovation to succeed. Let’s consider what kind of innovation we want to promote and get from our employees and other stakeholders and then define the skill set we’ll need to make it all happen!

Notes

1 1 Gary Hamel and Nancy Tennant, “The 5 Requirements of a Truly Innovative Company,” Harvard Business Review, April 27, 2015.

2 2 Tony Davila, Marc Epstein, and Robert Shelton, Making Innovation Work: How to Manage It, Measure It, and Profit from It, Pearson FT Press, 2012.

3 3 Larry Downes and Paul Nunes, Big Bang Disruption: Strategy in the Age of Devastating Innovation, Portfolio, 2014.

4 4 Marc de Jong, Nathan Marson, and Erik Roth, “The Eight Essentials of Innovation,” McKinsey Quarterly, April 2015, p. 2.