70 Innovation ACCOUNTANCY IRELAND APRIL 2017
Innovation 71 The strategy of innovation Ciarán Black and David O’Leary explain why Chartered Accountants should involve themselves in all stages of the innovation process. To most people, the mention of “accountancy” and “innovation” in the same sentence conjures up an incongruity at best. It doesn’t add-up, if you’ll forgive the pun! Accountants, however, are key business leaders and have long played an important role in driving the growth agenda in most companies. As we all know, business growth is increasingly predicated on innovation and, as a result, the equation is changing for accountants. The role of accountants needs to extend beyond the core business and into new business areas, and they need to become more attuned to the principles that drive innovation. The good news is that this does not require as big a leap as you might expect. With the right mindset and armed with the leading tools of innovation, accountants can maintain and enhance their leadership positions in modern business. To start our discussion, we need to debunk one or two perceptions about innovation. The paradox of innovation and risk Innovation is risky. This fact may lead some accountants to have a naturally conservative bias towards innovation, so that they can honour their key role in flagging significant risks. However, most accept that, in modern business, it is unwise to rest on the laurels of the current core business. It is rational and prudent, therefore, to search for new ways to protect the current business from threats and to explore new growth opportunities outside the core. But this is innovation, so innovating is risky but not innovating is even riskier. In protecting the longterm sustainability of a business, accountants must view innovation as a key tool in managing risk and not as taking in new risk per se. The role of accountants needs to extend beyond the core business and into new business areas, and they need to become more attuned to the principles that drive innovation. The “genius myth” of innovation There is a common perception that innovation comes from a spark of genius, a creative leap, a light-bulb moment in the head of a solitary and visionary leader. This does happen from time to time in some highprofile examples, but it is far from the norm. It is now well understood in the rapidly emerging management science of innovation, that creativity in business is a skill that can be taught and therefore acquired. There are now many tools that allow companies to follow a systematic and structured approach to innovation with great success. Armed with these approaches, innovative companies have demonstrated that the truism of “the harder I practise, the luckier I get” can also be applied to innovation. The two key lessons – that we should view innovation as part of risk mitigation and that we can and should follow disciplined and structured approaches to innovation – are both well within the accountant’s comfort zone. Here are a number of ways in which accountants can apply these lessons and play a fundamental role in fostering and driving innovation. Portfolio mindset Portfolio management is nothing new in finance. Accountants are in pole position to apply a portfolio approach to managing the risks associated with innovation. To stay relevant and continue to grow, companies must look for innovation opportunities in three areas: incremental improvements in the core business, natural extensions of current activities (adjacencies), and transformational changes to the business or sector. Like any good portfolio, you don’t want to be too reliant on any single area and, to de-risk your future, you need to pursue opportunities in all three dimensions. A vital element of corporate strategy is making deliberate choices about balancing your innovation www.accountancyireland.ie