How To Drive Innovation As CFO7 September, 2015 / Articles
Innovation is an important – but often overlooked – responsibility of the finance department. As accounting and finance professionals, if we want to be known as strategic leaders within our organizations, we need to see more than dollars and numbers. Rather, it’s important we play an integral role in our organization’s innovation process, so our colleagues recognize we are more than the “no” department. I recently spoke with CFO Rick Puckett about his involvement in innovation at snack company Snyder’s-Lance.
This interview has been edited and condensed.
Jeff Thomson: Snyder’s-Lance has released several new innovative products this year, while continuing to see impressive growth. As CFO, what is your role in the innovation process?
Rick Puckett: We have an effective “Stage Gate” process in place for all innovation, which includes projected profitability as one of the gates. As CFO, I monitor the process and make sure that finance is fully engaged at all innovation stages, and that there are strategic partnerships with the marketing, sales and supply chain departments, as we define our products and profitability goals.
Thomson: How can CFOs promote innovation, while still managing risk and ensuring long-term financial goals are met? Can you provide an example from your experience?
Puckett: As a CFO, it is imperative that I monitor and stay current on consumer trends. There are significant shifts in consumer behavior and expectations happening today that are driving demand for new and different products. For example, there is an urban movement happening that drives where products are sold and how they are distributed. All of these things require careful strategic thought from companies today, as they could result in infrastructure changes that can be costly.
Thomson: Previous surveys had found CFOs were primarily involved with innovation on a periphery level – but recent surveys find 70% of CFOs respond that they need to be “somewhat or often” involved in innovation. To enable this, what are the steps or skills CFOs must possess to get more involved and be successful?
Puckett: The development of process and gates help make this easier. Putting in guardrails and disciplines enable the CFO to feel comfortable that innovation will deliver continued profitability. Occasionally, there may very well be an investment that makes sense (e.g. for a new platform that can reach new consumers), but for extended innovation it may not.
Thomson: In late 2013, IMA released a report about the top 10 technology trends that have potential to significantly reshape the business landscape. Which of these trends, or other non-technology trends, do you believe will have the biggest impact on the innovation process?
Puckett: The ability for consumers to research details about the product and its manufacturer will be a driver of future decisions to purchase. In addition, consumer demand for simple labeling and ingredients are important factors that have to be considered when we create a new product. All consumers are not necessarily looking for “better for you” items, but 33% are, which is not insignificant. As an innovator, we have to address all consumers with a balanced portfolio of products and innovation. “Better for you” and indulgent products are required, which necessitates a broader range of innovative thought.
Thomson: As we know, the role of the CFO is transforming from that of a bean-counter to a bean-sprouter. How can CFOs use their promotion of innovation to strengthen their relationship with the executive team and solidify their position as a strategic thinker and leader?
Puckett: Along with the rest of the leadership team, I spend time reviewing packaging and consuming new products to develop the direction of future innovation. As a member of the executive team, it is imperative the CFO be familiar with the marketplace. In addition, it’s also very important they are involved in the discussions surrounding all investments, which include innovation.