Innovation has become a driving force in today’s advancing business landscape. CFOs play a critical role in managing their organisation towards financial advancements, and their potential to drive innovation can be transformative.
One way CFOs can drive the change in innovation is by utilising the power of technology. The finance industry has experienced significant progression in recent years, including AI, big data and blockchain. These technologies can accelerate financial processes, reduce costs and enhance decision-making.
The finance industry has experienced a major transformation, supported by technological progression, changing customer demands and evolving regulatory conditions. Traditional financial groups face rising competition from emerging fintechs that are more agile and innovative. To remain competitive and in touch with new technologies, CFOs must embrace innovation as a core strategy.
One of the main ways CFOs can lead changes in innovation is by utilising new technologies. The finance industry has witnessed significant progression in new tech solutions, and CFOs should look to harness these opportunities to integrate these technologies into their finance services. For example, using AI-powered algorithms to assess financial data can strengthen operational efficiency. According to the latest Deloitte State of AI in the Enterprise report, nearly half of CFOs were skilled in their AI plans. Major businesses like American Express applied AI and Machine Learning to measure transaction data and determine possible fraudulent activities. This process strengthened security and improved the customer experience.
Innovation goes beyond new technologies. It’s about creating a culture that supports and rewards creativity. CFOs can lay the foundations by promoting conditions where individuals feel empowered to implement innovative concepts.
Leading by example: CFOs must engage in innovative strategies and show their commitment to change. When employees see their leaders driving innovation, they are more likely to follow the same path.
Encourage multi-collaboration: Collaboration within multiple teams can generate innovative ideas. CFOs should support this cross-communication, bringing together people with diverse skills and ideas to tackle financial challenges.
Providing Resources: CFOs should support the delivery of resources to support innovation plans. This process may involve allocating a portion of budgets towards innovation or investing in training projects to strengthen employee innovation skills.
Celebrate achievements and learn from mistakes: It’s vital to celebrate progression and achievements within a business. Similarly, it is equally important to support a culture where projects have failed and recognise it as an opportunity to learn and improve.
A recent study by Harvard Business Review found that businesses that promote innovation have a 25% higher employee satisfaction rate.
Utilising data analytics
Data is often considered the new currency in today’s business world. CFOs have access to abundant financial data, and by harnessing analytics, CFOs can create valuable insights that support innovation. By assessing historical financial data and using predictive analytics, CFOs can make vital decisions, identify trends and determine potential market changes. Additionally, CFOs can use data analytics to improve risk management, identify possible financial risks and deliver the necessary mitigation plans. This process protects a business and creates a culture of innovation by supporting data-focused decision-making. According to a report from PwC, organisations that apply data analytics are five times more likely to make faster decisions.
CFOs play a critical part in allocating financial resources for strategic innovation plans. This process involves assessing possible projects and ensuring they meet the strategic goals and financial capabilities. Implementing a Cost-Benefit Analysis will determine potential return on investment of innovation projects and explore the overall costs, benefits and possible associated risks.
CFOs must also consider prioritisating innovation projects, highlighting ones with the highest potential to accelerate revenue growth, enhance efficiency or improve customer experience.
It’s also critical to continue monitoring and measuring the overall performance of innovation projects after implementation. CFOs should regularly measure KPIs to ensure the projects deliver the expected results. CFOs should collaborate with other senior leaders to gain support and funding for innovation projects. A study by Accenture stated that over 60% of surveyed businesses intended to increase their investment plans in innovation in response to market disruption.
Innovation is no longer considered a luxury in the finance market but a necessity for continued growth and progress. CFOs have a critical role in managing the changes in innovation within their business. Embracing new technology and driving a culture of innovation, applying data and investing in creative initiatives, CFOs can encourage continued progress in the financial landscape. By doing this, they can provide financial stability and support long-term sustainability and competitiveness of their organisations.