• Micha Veen

Introduce Finance Innovation to achieve Operational Innovation…


Introducing Finance Innovation has its challenges. Although finance has always been looking at optimisations to increase cost effectiveness, harmonisation and standardisation across the finance function and beyond, finance professionals have always “struggled” with introducing Finance Innovation.

Over the years, finance organisations have been leading the introduction of automation and digitalisation, shared services, outsourcing of non-core activities and other similar optimisation activities to achieve high performance via existing modes of finance operation. But executing finance transaction without fundamentally changing how that transaction gets accomplished is not Finance Innovation.

Delivering Operational Innovation across an organisation also requires finance to start question the “status quo” of their finance operation. However, governance, compliance and risk frameworks have always been a crucial part of a finance environment, which introduces early constraint thinking among finance professionals.

Additionally, finance professionals are trained in sequential task management. Many of the finance operational processes are sequential, e.g.:

  • Most finance organisations utilise a very stringent period-end process through period-end calendars, hand-offs, etc,

  • Transactional finance, e.g. accounts payable (AP) or receivable (AR) follow a sequential resolution and process logic, being:

  • Supplier invoice receipt vs. Customer invoice submission,

  • Goods/ services receipt or delivery validations,

  • Rejections, payments or receivables,

  • Financial Reporting follows a sequential hands-off approach:

  • Identify data requirements,

  • Collect “all” the data,

  • Analyse and manipulate data,

  • Deliver reports, insights, etc.

Innovation, however, is an iterative “create, review, deliver” process. Instead of following a “start-end process” where all the information is received up-front and a delivered outcome is expected, innovation is a continuous learning and improvement process, which continuously addresses the opportunities and constraints to progress towards an evolving goal.

To allow Finance Innovation to be introduced into a finance organisation, it’s crucial for finance professionals to understand and adopt the creative innovation process and in particular, the different mind-set needed for the early stages where the premature application of too many constraints can kill off a good innovative idea too soon…

So, how do you introduce Operational Innovation through Finance Innovation by your finance organisation?

Transitioning towards Finance Innovation requires finance to introduce an innovation-hybrid approach. I have experienced that many finance organisations often fail to introduce Finance Innovation effectively, because they don’t use an innovation methodology. Using a structured innovation methodology has allowed finance organisations to:

  • Define your finance goals and targets – short, medium and long-term – and relate these to your business and organisational goals,

  • Introduce a solid, proven step-by-step innovation approach (e.g. Agile Innovation),

  • Combine the methodology with progress KPI’s, measurements and metrics to show progress from idea through innovation towards meeting your goals,

  • Introduce a business or software tool to:

  • Capture ideas and their owners, stakeholders, end-users, etc.

  • Obtain buy-in for the ideas,

  • Rate or prioritise to the finance organisational goals,

  • Enhance visibility internally and/ or externally (cross-functional) to obtain feedback, support or “grow” the idea,

  • Conduct periodic idea assessments to allow further idea development towards a Minimal Viable Solution,

  • Continuously assess, review and release the idea developments,

  • Use cross-functional expertise, outside your core-finance function, or even external expertise to ensure your finance goals continue to meet your stakeholder’s requirements,

Having worked with numerous Finance Executive teams, incl. CFO’s, FD’s, Divisional Finance leaders and operational finance professionals to introduce Finance Innovation through a structured and effective process, I have seen many innovative finance solutions being delivered and continuously being improved week-on-week, month-on-month and year-on-year, incl.

  • Improved, accurate and real-time scenario planning for supply chain, sales teams, procurement, etc.,

  • Increased AP-AR partnerships through end-to-end procurement and sales teams, leading to continuous cash flow efficiencies,

  • End-to-end review of the financial accounting environment to allow reducing transactions, re-work, corrections, etc. while maintaining fully compliant,

  • Adapting finance deliverables through finance goals into business goals, reducing redundant deliverables, re-work, etc.

  • Conducting a continuous “value-add analysis”.

Only through close collaboration between finance professionals and internal/ external cross-functional finance specialists, and using a structured innovation approach, finance is able to adopt a continuous Finance Innovation mind-set, contributing to Operational Innovation at the heart of their business…

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