Why tough times demand finance innovation

BF: In light of the electric current economic clime, you would think that most companies are not as focused on invention as they were even six calendar month ago …

Champy: I really think that invention is very relevant at a time when the economic system is challenged, because companies all the more have to distinguish themselves, and it's all the more important to learn how to operate well. What happens during recessionary periods is that people are often fight for the same client. Innovation becomes absolutely critical. How you're able to innovate, both in the value you deliver to client and how you do it, will determine the victor. It's really very possible to grow your concern during a recessionary period.

BF: Why do finance executives often fail to become primary drivers of invention?

Champy: Let me identify three behaviors that I think finance people in specific have to watch out for.

The first is about risk. The fortunate or unfortunate person condition is that invention doesn't develop within larger companies or even ongoing companies unless that company is prepared to take risks. Invention and risk go hand-in-hand. If I look at the companies that I used as illustration in this book, none of them ever talked about risk. It was ever, "Hey, we had a good idea." Or, "Intuition tells me now that we have to alteration our concern model." They fact is, they did not get hung up on risk. And for good or for worse, finance folks can really delay invention -- delay what their companies need to do -- because they're so focused on risk.

sec, there are a lot of companies in which good ideas bubble up in the center of the year. And too often the response from finance to those good ideas is, "Well, we won't do that now. We can't do that until next year." Or, "We don't have the money to do that." And the budgets start to dictate what innovation looks like.

I think that finance people have to be prepared to take some risks around budget, to let good decisions be made about strategy, and to not be constrained by decisions based on the budget. So, be careful about how budget constrains what the company is actually able to do.

There's a third learning point for finance people in this book. Finance people, again because of where they come from, often see their jobs as putting controls in place. Controls and rules. None of these companies I discuss ran on controls or rules. They didn't control behaviors by rules. The controlled behavior was by culture, by beliefs -- you know, the fundamental beliefs of a company of what's right to do. I think that finance folks would do well to recognize this, particularly in a big company. You can write all the controls you want, but they don't determine behavior. Behavior in a company, particularly around innovation, is driven by culture.