Innovation is crucial to the success of most organisations. Solving problems, moving forward progressively and introducing new ideas, processes, products and services are all essential practices for organisations, not least over the past few challenging years.
Some of these challenges also represent great opportunities for leadership teams. For example, while climate change is one of the biggest challenges we have ever faced, it is easy to spot those organisations that are innovating and turning this challenge into an opportunity, and those who have been slow to embrace change.
Keep asking 'What is the problem you are trying to solve?'
The banking sector is another example of ‘sink or swim’ – those who have innovated have risen to the top. If you leave room for innovation and problems unsolved, entrepreneurial challengers will pop up to fill the gaps.
Finance professionals are essential to the innovation process in all organisations. Not only do they support the decision-making, risk analysis and resource allocation, finance leaders are also essential in promoting a culture of innovation as well as bringing competitive advantage, future revenue, profitability and impact.
Here are the top 10 tips from King’s College London’s Entrepreneurship Institute and King’s Business School, which might help you to support innovation where you work:
- Help your organisation to understand what innovation is or could be. All too often, innovation is seen as a ‘department’ – a thing that somebody else does that only relates to products or services. Really, it’s something we should all engage with, solving the problems around us, reducing friction and having ideas about how to improve things. Change the language around innovation to make it more about solving problems and making improvements.
- Be an ‘invest-to-grow’ finance professional helping colleagues to understand how to analyse the potential returns from investing in innovation. It’s too easy for others to label finance professionals as anti-spending when they are actually seeking a return for the organisation.
- On the spectrum of risk management, edge yourself away from risk avoidance and towards risk management. It’s the job of finance professionals to help colleagues to manage risks rather than shy away from them. It is easy to regard innovation as being inherently risky, but in the fast-paced world of change in which we now live, failure to innovate is a greater risk.
- In your risk register, consider problems that remain in your organisation as well as competition that exists in your sector. Innovation may provide a route to managing these types of risk.
- Watch the competition in your industry as closely as your sales director does. Notice when competitors are stepping ahead of your organisation or when good ideas are being adopted in your sector. Talk about the risks and opportunities that this presents in your management meetings.
- Challenge your organisation to know its customer groups and to position customers centrally with other important stakeholders. This will lead to better decision-making in relation to problem solving and innovation.
- Entrepreneurs famously adopt lean and agile methodologies to develop new ideas and propositions. This means that they develop things in small, experimental iterations before moving on, and they do lots on shoestring budgets. This reduces the risk considerably. Supporting your colleagues to learn how to do things in a leaner and more agile way can materially support the innovation process.
- Give people time to reflect on problems and opportunities in their areas of work, along with how these might be solved or optimised. The best solutions often come from those with lived experience of the problem.
- Launch a small budget as ‘The Finance Director’s Innovation Fund’ and open a competition to suggest new ideas, solutions, products and services. Winning ideas could receive small grants and time to deliver their innovation for the business.
- As finance leaders who are actively assessing and supporting innovation in your organisation, the best question to ask – and to keep asking – is ‘What is the problem you are trying to solve?’
For too long, it’s been a standing joke that, when it comes to organisational spending decisions by finance professionals, ‘the computer says no’. But, in reality, many finance professionals have learnt to analyse resources and risks relating to investment in innovation, to challenge their organisations when they may be slipping behind, to support colleagues to be able to deliver innovation, and to actively contribute towards a culture where innovation can flourish.
See the short video where experts from King's College London's Entrepreneurship Institute explain the effects of the significant shifts in how innovators do business post-pandemic