Diversity

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
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