One of my New Year’s resolutions is to make time for researching and pondering big-picture ideas, especially those with a contrarian flavor. I want to remain alert to the flow of commercial currents that influence how CEOs and CFOs set growth strategies. Ultimately, those high-level decisions drive financial management priorities, particularly those in the realm of business decision-support and internal service delivery.
CFO bias when it comes to innovation funding is one such topic. Michael Raynor, a director with Deloitte Consulting LLP, who holds a doctorate from the Harvard Business School, offers fresh ideas for improving the odds of successful innovation. He argues that there is indeed an empirical way to make innovation more predictable. That can lead to what he calls transformational growth.
Raynor also questions conventional notions, such as this one many CFO embrace: it’s smart to reduce the cost of failure by allowing an initiative to “fail fast” when it has hit a big bump in the road.
In his recent book, The Innovator’s Manifesto: Deliberate Disruption for Transformational Growth (Crown Business, August 2011), Raynor makes the case that “Clayton Christensen’s Disruption Theory is virtually the only theory statistically demonstrated to have predictive power.” This theory explains how particular types of new products and services come to achieve success or even dominance, often at the expense of once-powerful incumbents.
How CFOs can better support true innovation?
Obviously, improving innovation success from 10% to 15% is still a long way from 100% accuracy. But Raynor argues that it is a material and significant improvement that can be used to better manage innovation processes. And, for CFOs, it may be the difference between having the confidence to support and fund disruptive innovation and missing an opportunity.
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