On 16 November, CFOs were encouraged to be innovative leaders in this new era of disruption.
At the annual “Oscars of the finance profession”, attendees were treated to an array of entertainment, all with the same message: “Be ambidextrous leaders”. From the Johannesburg Queer Chorus, who sang about diversity with songs like Gloria Gaynor’s “I am what I am”, and Lady Gaga’s “Born this way”, to the keynote of the evening, by award-winning author and corporate innovation expert Tendayi Viki, a message of authenticity shone through.
In his keynote, Tendayi encouraged CFOs to be entrepreneurial, and to collaborate with innovators instead of being the one standing in their way.
“Innovation works slightly differently from how you run the core of the business, because when it comes to innovation, you’re working with unknowns and need the opportunity to test your ideas before you can decide whether they have any legs,” he said. “But the processes we have in organisations right now require you to make that decision before testing, because you don’t get any money until you write a business case.”
Tendayi used an example of an innovation team he has been working with in Mexico. “After they pitched their new product, the FD said they couldn’t go to test because it didn’t meet the financial hurdle rates. He instructed them to go work on their business plan again.”
He explained that when an innovation project doesn’t meet the hurdle rates on paper and you don’t invest in it, you’re acting as if it's already real, when in actuality the product has never been created or tested with customers. “That’s insane. We tell teams to work on the plan, not to go out in the world and test their ideas.”
He then posed a question to attendees, asking them: “Which key function in your organisation is the hardest to work with when it comes to innovation?” The CFOs were given a barcode to scan, where they were taken to a poll with three options: finance, legal and compliance, or IT. Most of the finance leaders in the room chose themselves.
Tendayi reminded the audience that innovation is uncertainty. “If everybody knew the answer to that question, companies would already be doing it. All things companies are competing on are answered questions.”
He explained that, when business is good and profits are growing, you might think that you don’t need to innovate anymore, but that’s the perfect time to keep on innovating. “The world changes so fast, if you start relying on just your current profit, you’ll likely get disrupted. Every story we hear about disruption is about a company that gets self-satisfied, like Kodak, Nokia and Blockbuster. If Blockbuster continued to innovate, they could have invented Netflix instead,” he noted.
He added: “You need to have just enough fear to keep exploring the future while you’re running your core business”. And the way to do this, he explained, is to be the CFO of the core business on one hand, and a venture capitalist for innovation on the other hand.
“While you are running the core business using the metrics you’ve always been using, you have to run an innovation portfolio on the other hand, where you keep on investing in new projects. Instead of measuring the return on each individual project, you have to measure the return on the entire portfolio,” Tendayi said.
He then left the CFOs with a final piece of advice on how to become an ambidextrous leader. “Don’t pick the winning idea on day one: it’s impossible to know which innovation is going to win from the get-go. If you know which one is going to win, it’s not innovation.
You have to manage it like a funnel, where you make multiple small bets, then stop the projects that are failing and increase the bets on the projects that are showing traction, and do more work on them. Finally, you’ll end up with a few ideas that are successful.”
