Innovation can be defined as the creation of new value – making it a core tenet for every chief financial officer. But how can CFOs help foster the sorts of innovative enterprise cultures that successful modern business requires?
Tiziana Bianco, who leads the Commonwealth Bank's Innovation Labs spoke at a recent FEI event in Sydney, to explain what the bank has learned in the four years since it formed the labs as an exemplar of innovative practices.
The labs are not however solely responsible for CBA innovation. Bianco stressed that while the bank's three innovation labs in Sydney, London and Hong Kong with a complement of 35 people were focussed on "horizon two" innovations, the bank's innovation culture required every employee to focus on what she called "horizon one" or incremental innovations.
She said that it was important businesses also scan the market not just for disruption coming from within the sector, but from adjacent ones.
"Innovation or disruptive innovation nine out of ten times will not come from a company that looks like you - generally (it comes) from outside of your industry and from existing tech applied in a new way," she said.
When it came to disruptive technologies Tiziano said artificial intelligence was one of the most transformative for finance executives.
In an article published in January, McKinsey & Co partners Frank Plaschke, Ishaan Seth, and Rob Whiteman explored the extent to which digital technologies and AI would transform the finance function.
They stress that CFOs will need to identify opportunities to transform the way in which their teams operate, but also manage the disruption carefully so as not to damage an already stretched corporate function.
They estimate that current technology would allow the full automation of 42 per cent of finance tasks, and the partial automation of a further 19 per cent of tasks. Robotic process automation had a major role to play, with “cognitive-automation technologies, like machine-learning algorithms and natural-language tools” – AI in a nutshell – on the march.
AI is one of the most impactful technologies for finance according to Bianco. As custodians of much of an organisation's data she said the finance team was in a position to analyse data and use AI tools to help spot opportunities and drive new revenue streams.
She referred to rapid advances in the field over the last year which was now starting to percolate into finance, referencing a new AI tool from accounting software company MYOB which identifies where in a business bookkeepers should pay particular attention - either to deflect risks or pounce on opportunities.
CFOs which wanted to help nurture innovation cultures should, said Tiziano:
- Challenge the status quo - but have some rules
- Embrace your weirdos - diversity drives change
- Don't pretend to know all the answers
Keeping an open mind and being prepared to do things differently were essential to sustained and successful innovation, she stressed. “Rather than seeing innovation as a risky enterprise, I think if you are innovating in the right way - you are de-risking yourself.”
Breaking innovation into smaller chunks made it easier to fund, and also reduced the risk of signing up for a long programme of work that might not work. She said one of the major learnings from running the innovation labs was that it was important to remain very flexible – shutting down projects that weren’t working and reprioritizing regularly.