How can the CFO be a valuable ally for innovation? - A multiple-case study on what current methods CFOs are using for fostering innovation in an organisation
Abstract: Globalisation, digitalisation and rapid advancements in technology are creating faster businessenvironments which demand organisations to be more innovative. At the same time, it has beenproven difficult for companies to successfully manage innovation. To accomplish innovation,different resources are required from the organisation and the top management team. One keyplayer in the top management team is the Chief Financial Officer (CFO), which is responsiblefor the financial ambit of a company. Traditionally, the CFO has focused on minimising risk,controlling budgets and delivering good financial figures in quarterly reports. CFOs tend to workwith short time horizons, which doesn’t support the longer term thinking often required forsuccessfully designing and implementing innovation.Research suggests that the role of the CFO has evolved during the recent decade and that themodern CFO possess bigger responsibilities for fostering innovation. However, contemporaryreports also indicate that few CFOs understand exactly how their actions can promote innovation,and many think this responsibility is challenging. By providing a multiple-case example of sixSwedish mid-sized and large enterprises, this report aims to provide an increased understandingof what methods CFOs are using for fostering innovation. Furthermore, the report willinvestigate how the found methods relate to five different elements of innovation; innovationstrategy, people culture and organisation, ideation, selection and implementation. Theseelements are identified by the Pentathlon Framework for innovation.The findings indicate that the CFOs of the case-companies have a rich understanding ofinnovation and experience having a large responsibility for these endeavours within theirorganisations. Furthermore, the results show that CFOs are more directly involved in theselection and implementation phase of innovation rather than the ideation-phase. For ideation,influence by the CFO is more indirect through higher-level tasks. Regarding innovation strategy,the findings show that separate strategies for innovation do not exist within the case-companies.Rather, innovation is incorporated in the overall business strategy. Regarding people, cultureand organisation, the findings show that CFOs are concerned with promoting the right corporateculture and have direct influence over organisational structures i.e. through setting structure forreporting.The methods which have been found in the research that CFOs use for fostering innovation are:Establishing a language for innovation to institutionalise a definition, use corporate culture as acontrol system, standardising internal processes, fostering a learning organisation, knowledgemanagement through digitalisation efforts, exercising leadership that show failure is OK,participating in resource allocation that consider additional values, engaging in project managementthrough financial control and lastly to impose measurements and surveillance systems in the overallbusiness.
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