“We need to be more innovative!” goes the rallying cry. “We need to think outside the box!” exhorts the CEO. In today’s market, with growth hard to come by, most companies are frantically seeking new ideas. And many finance chiefs, who are trained to follow rules and regulations and are often specifically required not to be creative, wonder where to start.
While disruptive innovators — those who develop industry-changing products and services — have incredible natural innovation abilities, anyone can learn to be more innovative, no matter what his inherent cognitive style, says Hal Gregersen, a professor of leadership at INSEAD and author of The Innovator’s DNA, a new book that outlines the key ingredients of innovative thinking.
The five skills shared by such well-known innovators as Apple’s Steve Jobs, Amazon’s Jeff Bezos, and eBay’s Pierre Omidyar? Questioning, observing, networking, experimenting, and associating, or connecting ideas from seemingly unrelated sources. Gregersen, who along with co-authors Clayton Christensen and Jeff Dyer studied more than 5,000 executives and assessed their abilities, calls these “discovery” skills — all areas where strong innovators score very well.
Finance executives, on the other hand, tend to be more “delivery-oriented,” scoring well on things like organizing, planning, attention to detail, and execution. While these talents are hugely valuable, CFOs also need discovery skills to progress in their organizations, says Gregersen. “When a CFO is sitting with the chief marketing officer and the chief operations officer, he’s there to have a functional perspective, which is finance, but if that’s the only language he speaks, his influence within that senior management team is going to be quite limited,” he says.
Bringing Innovation to Finance
How, then, can finance chiefs apply innovative thinking to a role in which risk-aversion and accuracy are prized? By consciously trying to use discovery skills to improve processes and solve problems within finance, says Gregersen.
He gives the example of a CFO who is reviewing a product line and trying to determine which items to eliminate. The innovative CFO would spend some of his time over the course of a month writing down questions about the various products, visiting stores to observe customers buying and looking at the products, and meeting with contacts outside the company to discuss the products. He would then sit down and review his findings, crunch the numbers, and present his recommendations to the rest of the management team. When compared with a more traditional CFO, who would likely stay in the office, analyze the data gathered by his staff, and then make his presentation, “which one brings more strategic value?” asks Gregersen. “If CFOs want to create value in their roles, they have to be connected to the jobs that their products and services are doing.”
While some parts of the finance job, such as preparing financial statements, for example, are clearly off-limits for innovation, CFOs can bring new thinking to how they construct reports, what they analyze, how they structure their finance teams, and how they pursue financing for a given project. Gregersen cites the example of a highly innovative company he once worked with where, “by all accounts, the CFO couldn’t innovate himself out of a paper bag.” The finance chief scored in the 10th percentile on the discovery-skills assessment Gregersen administered. But over the course of a few years of working at the company and being surrounded by innovative thinkers, he improved his score to reach the 35th or 40th percentile. He was asking more and better questions, and was contributing new ideas about how to improve the business. “It didn’t make him the next Steve Jobs,” says Gregersen, “but it did make him more capable of talking to the next Steve Jobs.”
Playing Well with Others
That, perhaps, is the key. While discovery-driven innovators and delivery-driven executors often tend to clash, and even disparage each other, a successful innovative company needs both to thrive. “If those two types of folks don’t learn how to play well together and respect each other, great ideas go nowhere,” says Gregersen. “Most people who have disruptive ideas don’t have the capacity to translate them into actions that are sustainable.”
For every innovative Steve Jobs, then, there needs to be a delivery-driven executive like Tim Cook, the chief operating officer at Apple who runs sales and operations, oversees the company’s vast supply chain, and manages relationships with resellers, ensuring that for each new idea from Jobs, the company has access to the materials and people it needs to make a real product.
“CFOs matter,” says Gregersen. “Delivery-driven skills matter. But only if CFOs can play well with people who think differently. If they can’t bridge that divide, value for the company is going to get lost.”