Left: Michael Conway, President and CEO of FEI Canada Right: David King, director of Robert Half.
Chief financial officers in Canada are assuming growing responsibility for corporate innovation, which in many organizations includes a commitment to realizing the long-term benefits of research and development.
"The CFO, being a critical leader, plays a dual role – making sure the tone at the top of the organization truly allows for a culture of innovation, and then making sure enough financial resources are set aside to facilitate that innovation," says David King, director of Robert Half in Toronto.
A resourceful CFO can do many things from an innovative standpoint, both inside his or her organization and in communicating to external stakeholders, says Michael Conway, FCPA, FCA, president and CEO of FEI Canada.
"They can present all the merits of a business case to help business units clearly communicate the benefits of their particular project. On the external side, the CFO's ability to cut through all of the data and present convincing information on the merits of a business case is precisely what those who provide financing for the project are looking for," he says.
'The CFO's ability to cut through all of the data and present convincing information…is precisely what those who provide financing for the project are looking for.'
Michael Conway
President and CEO, FEI Canada
One of the important elements of the CFO's innovation-related analysis, including endeavours related to R&D, is the ability to look toward the longer term and ascertain when projects might begin to provide a financial payoff. While it is important for original thinking to permeate the corporation, little can come of that unless it can be translated into commercial gain.
"The CFO would basically be supporting the development of a one, three or five-year plan," says Philip Grosch, a management and technology consultant, and partner with PwC in Toronto. "Included in that plan are longer-term investments around some foundational capabilities, one of which is the investment in enabling technologies that drive innovation. Then there's operational funding, because the foundational core of innovation is [to] experiment, fail and learn, and this requires investment."
From that, the CFO needs to build a robust framework for return on investment in order to start measuring and realizing the value from innovation, adds Mr. Grosch.
But one thing CFOs should never lose sight of is the potential for innovation risks.
"From a practical perspective, there's often a high start-up cost when you're investing in a future revenue stream" says Domenico Magisano, a partner with the law firm Lerners LLP in Toronto. "If that revenue stream doesn't materialize or that innovative concept does not go according to plan, it can create both operational and financial problems. If the company has invested in 'bet the farm' changes to its business model, it could result in financial distress for the company, or worse yet, its financial demise."
While CFOs will envision the best-case scenario from any innovative revenue stream, they must also have an exit strategy to deal with the worst-case scenario, he adds.
This content was produced by The Globe and Mail's advertising department. The Globe's editorial department was not involved in its creation.