Innovation is an immensely potent tool which empowers an organisation to drive meaningful value. Not only does it increase workplace productivity but it also provides the business with a unique blend of creativity and skill. In the longer run, this enables a company to gain a decisive edge over its competitors.
Despite the many benefits associated with innovation planning, a number of executives are quite fearful of the inherent risks which accompany the perusal of these new ideas. Consequently, they either delay its implementation or simply push the innovation away. However, handling innovation risk is a form of strategic business management which requires diligence coupled with efficiency. If a business is to unleash its full potential, it must adopt an effective innovation risk management strategy.
As a Chief Financial Officer (CFO), overlooking the monetary aspects of good innovation planning is one of your primary responsibilities. Here are a few ways through which different variables can be properly considered and flawed business practices can be avoided at the planning stage itself:
1. Develop A Model
The first step towards strategic business management is the development of an innovation risk model. This involves identifying the specific objectives which an organisation plans to achieve by introducing an innovation. Even if it is just a minor alteration, the overall risks and expected returns must be weighed on a financial and operational scale. Doing this will bring out all the possible limitations, the elimination of which would help develop an appropriate innovation risk management model.
2. Obtain User Understanding
Once the context has been determined and the model has been developed, the next function of innovation planning is to gain user understanding. How would the introduction of a new idea affect the final users? Are they qualified enough to understand its importance? Is there a scope of the innovation being misused or misapplied? In order to deal with such issues, a detailed user profile must be created in accordance to which all innovation-centric business practices should be aligned.
3. Outline The Process
Strategic business management requires outlining the entire process which would define the innovation cycle. These processes have to be smooth, seamless, and transparent. Without causing systemic shocks, they should be able to replicate probable scenarios, recognise failures, and undertake course corrections in a timely manner. Inter and intradepartmental negotiations should govern how these processes would ultimately be assimilated into the organisational workflow.
4. Settle The Finance
One of the best business owner tips that can help boost the adoption of innovation is the quick allocation and settling of finances. Each innovation entails the use of new resources and infrastructure. A CFO needs to delineate the precise ways in which this expenditure can be adequately accounted for. This includes working in coordination with the risk management team and devising a financial strategy that decides long-term outlays, provides continuous supervision, and measures performance outcomes.
As a CFO, you need to work towards ensuring that an agile and iterative innovation approach is followed throughout the planning stage. Give the business owner tips about how breakthroughs can be achieved without needlessly straining finances. This can help breed risk-tolerance while allowing innovation to flourish, both sustainably and successfully.