It is no secret that finance professionals’ jobs are undergoing a radical shift. Artificial intelligence and automation already are transforming management accounting. Resource scarcity and geopolitical uncertainty are among the other factors making the job more challenging.
If companies are to survive and thrive in an automated world of scarcity and unpredictability, finance professionals will need to move faster and take greater responsibility for spotting obstacles and producing innovative outcomes than ever before by developing an entrepreneurial mindset.
“Who better than the people looking after the flow of funds and other resources around the organisation to be part of the early-warning system?” said Rita McGrath, professor of management at Columbia University Business School and co-author of The Entrepreneurial Mindset: Strategies for Continuously Creating Opportunity in an Age of Uncertainty.
One major characteristic, and benefit, of the entrepreneurial mindset is a steady stream of idea generation. Entrepreneurs see problems not as roadblocks but as opportunities for growth and profit.
Finance departments need to nurture and value idea generation for finance professionals to become more effectively inventive in addressing today’s issues. Finance departments should value and encourage innovation with a combination of specific processes and attitudes, according to McGrath.
“There are always changes in technology, expectations, and regulation that you need your people to address,” she said. “You need a way of getting ideas brought to the surface and entering some kind of decision-making bubble.”
Several entrepreneurial mindset experts offer tips on how to create an idea pipeline to encourage innovation.
Be open to the idea arc. If staff are not used to generating ideas, they may hesitate to speak up out of fear of looking foolish or wrong. That hesitation often cuts off creativity and innovation, according to Gary Schoeniger, founder and CEO of the Ohio-based Entrepreneurial Learning Initiative.
To kick-start the idea pipeline, employees should be encouraged to constantly brainstorm, and managers should cultivate a respect for the evolution of an idea rather than dismissing imperfect ideas immediately, according to Schoeniger. Managers should also communicate that unworkable ideas are a necessary part of the process and should not be considered a failure.
“If people understand the arc of an idea, good ideas are the result of a lot of bad ideas,” said Schoeniger. “People often think that ideas are epiphanies that fall out of the sky, but they take hard work to realise.”
To help employees see the arc of an idea, from flawed to actionable, Schoeniger recommended encouraging employees to “micro-experiment” by allowing them to make small changes and measure the results in order to actively shape ideas.
Involve everyone. For idea generation to be effective, it cannot come from the top down or from just a select few “creative types”. Diversity counts. For innovation pipelines to be successful, engagement needs to come from across the company, according to a 2017 research article published in the Harvard Business Review called “Data From 3.5 Million Employees Shows How Innovation Really Works,” by Dylan Minor, Paul Brook, and Josh Bernoff. The varied skillsets and experiences of different roles will bring fresh perspectives to problems, and that encourages innovation.
This makes getting ideas from everyone a priority, said Roger Cowdrey, a consultant based in Turkey and author of Entrepreneurship: Preparing for Uniqueness. Open idea development should be an ongoing and critical part of the workplace culture, according to Cowdrey.
“You have to create a culture that doesn’t penalise people for trying, that is open to new ideas, that is prepared to recruit people that have those characteristics,” he said. “We have to convince them that it’s OK to try.”
Institute regular brainstorming meetings and make sure that everyone sees them as a vital part of the work environment. Offer consistent feedback throughout to all participants to foster a sense of teamwork and engagement.
Offering financial or personal incentives, such as bonuses or extra paid time off, for accepted ideas that come out of the process can also encourage team members to engage.
Test your hypotheses. Experimentation and innovation mean testing concepts knowing that failure is a necessary part of the process. Embrace setbacks as ideas move from generation to implementation, and use them as springboards for more growth, Schoeniger said.
“When we look at what entrepreneurs are actually doing in the real world, they’re micro-experimenters. They’re not gamblers. They behave more like scientists conducting small experiments,” said Schoeniger.
Hitting dead ends is part of the hard work of making ideas a reality, and a part of the process one should embrace, according to Cowdrey.
“Start a failure log rather than a diary, and write down things that went wrong and what you learned from it,” he said. “Start having a go at not always winning.”
— Drew Adamek (Andrew.Adamek@aicpa-cima.com) is an FM magazine senior editor.