In an age of disruption and rapid technological advancement, organizations must be able to pivot on a sixpence to adapt or they risk losing market share. Innovation must be timely, and to achieve this, companies must be able to turn as one, leaning together in the same way that a bobsled team would.
CFOs can play a critical role in this. To continue the bobsled metaphor, they are the John Candy character in Cool Runnings, putting everything in place for the Jamaican team to enter the Winter Olympics and making sure they have the equipment and skills necessary to race.
The finance function has a number of responsibilities key to ensuring innovation is managed carefully and optimized for growth, particularly in early stage investment and acquiring funding. They are also integral for establishing relationships with partners both internal and external to the organization. Internally, they must develop strategic partnerships with marketing, sales and supply chain departments and help build new business models to best drive forward innovation initiatives. When it comes to external partners, they must make sure that from a financial perspective, relationships create value, and that risk and reward is evenly shared through the collaboration.
An overly risk-averse finance department can kill innovation. CFOs need to help operating executives understand the potential of new projects in the long term and help them understand what innovation could lead to from a finance, revenue, and profitability perspective. To do this, a CFO must monitor and stay current on trends around consumer behavior, looking at what factors are driving demand for new and different products. Any change requires careful strategic thought, as they could result in infrastructure changes that can be costly, and finance leaders need to be aware ahead of time.
The television industry is a prime example of incumbents having to react quickly to new developments or risk failing. It has been dramatically disrupted over the course of the past decade or so, with the rise of YouTube, Netflix, Amazon Prime, and the like seeing a shift in the way audiences drive content that traditional broadcasters have had to rapidly adjust to.
At the forefront of this change has been Channel 4, whose On Demand platform and YouTube channel saw them become the first major broadcaster to embrace the revolution in people’s viewing habits. You can now watch Channel 4 programming on 25 devices and platforms, and its ability to lead on new technology has seen them remain relevant even as many in the industry has floundered.
Matt Hann, Head of Commercial Finance at Channel 4, recently sat down with us to discuss the role of finance within such a challenging environment. He emphasised the importance of flexibility in planning, with members of the finance function needing a dynamic mindset above all else. In the early 2010s, the online streaming market was flooded with new platforms and channels. Channel 4’s finance department built a model to prioritise the 30 or 40 platforms out there, working closely with their strategy team to ensure that the company could focus on the channels that would the most value to help them reach their growth targets.
It is from this position that finance can have the most impact on innovation and growth - overlooking the entire organization and providing decision makers with the necessary information around risks, where investment is needed, and guiding partnerships both internal and external that will help an innovation initiative reach its full potential.