Leadership Microsoft

Innovation vs. Process


Sponsored by Microsoft

Innovation is a necessity for the growth of a business. This article examines how a CFO can encourage innovation within their organizations while also promoting established business processes.

Einstein once said, “We cannot solve our problems with the same thinking we used when we created them.” This quote quite eloquently summarizes the conflict between process and innovation. If we wish to innovate, we can’t work from within the same paradigm that we wish to innovate. True innovation can only be achieved when the rules are broken, otherwise it’s just paint by number.

As CFOs look to assure the stability and growth of their organizations, innovation isn’t a luxury, it’s a necessity. As Don Allan, CFO of Stanley Black & Decker put it, “Two thirds of what you do in innovation is to maintain market share.” In a 2014 study by CFO Alliance, 95% of respondents agreed that creating a culture of innovation was necessary to achieve their objectives, and they projected spending increases to keep pace with technological advancements and innovation trends. As companies are driving more innovation, CFOs and financial executives are playing a larger role in the process, providing information and analysis (31%), having a voice in decisions (31%), facilitating and leading innovation (25%), and implementing the innovations (13%).

Yet despite the generally accepted necessity for innovation, there is still conflict. CFOs are tasked with managing expenses, ensuring returns on money invested into R&D, and keeping the company focused on broader objectives. Fifty-nine percent of CFOs felt that innovation at- tempts only some- times return their capital (Deloitte, 2014), a reality of the fact that in order to innovate, you must be willing to fail. As they try to reign in their corporate ships through challenging economic times, many are looking to do so by implementing tighter processes through their organizations. So how can CFOs promote process without stifling innovation?

The answer is not one-dimensional, but there are a few overarching principles that should drive your approach. When applied correctly, process can be used to amplify innovation instead of squander it. Jonathan Oliver, Global Head of Innovation for Microsoft, recently said, “I believe [process] is the only way to harness innovation. A spark of genius and new thinking can come from anywhere; however, it tends to be years in the making.” The balance starts with getting input from your innovators. The further removed business leaders are from the “on-the-ground innovation,” the more important this is. These innovators will be able to provide honest feedback on where process is useful and where it limits their potential.

Business leaders should apply process to make innovation nimbler, streamlining systems for socializing and vetting ideas, as well as putting new products into market. Jonathan Oliver explains the importance of process for moving products into market, “One of my rules with regards to true innovation is it has to be applied, lest it’s just an invention. I adhere to the old adage of 1% inspiration, 99% perspiration. You need process to get the perspiration part down and to apply. I’ve been impressed with how quickly Google goes from Lab to Street. Their model is to test, learn, and iterate, so applying it quickly is key to success…but that really does take a lot of perspiration and process.

It’s all about balance and elegant transition between allowing creativity to flourish, then applying it without bankrupting the business that you’re in today.”

Recognize that innovation should be the culture, not a task. Innovation may come in the form of a new product idea or an improved financial process. Provide a system to cultivate innovative thinking throughout the organization. Ultimately, innovation requires a little bit of working outside the lines, which can be a challenge for financial professionals who can be extremely process and rule driven. Track progress and success, but know that the returns on innovation may be difficult to quantify in the short-term. Keep your innovators pointed in the right direction, and have enough faith in them to let them do what they do best: create the future.

Learn how Microsoft technology empowers finance professionals to do more at www.microsoft.com/finance.