Diversity

Innovation
73
Graph 1: Title TBD
Why?
Revenue
model
executable tests that can generate
meaningful results in the validation
process. Accountants have strong
skills in this area – rigour, discipline
and analytics. A useful approach is
to use “reverse financials” to identify
the biggest financial challenges that
need to be addressed for the concept
to have a chance of becoming viable.
But a word of caution – we are not
yet trying to “prove” anything. Our
focus is to identify and learn about
the most important issues that need
to be addressed. We then iterate back
and forth into the ideation phase to
generate creative new solutions. So
accountants need to resist judgement
for now, as they need to trust in the
structured process.
By now, we have tested quickly
and cheaply and only the strongest
concepts have survived. We are
now in the next phase of refining
and working towards a full-blown
business case. We are still not ready
for launch into the market and we
are still in learning mode, but we
must now commit serious time and
resources. This needs finance to
be heavily involved in justifying
the expenditure but because
accountants have been part of the
innovation journey from the start,
they intimately understand what
is involved. They are familiar with
the risks and understand them
What?
Value
proposition
Who?
Value
chain
How?
better. We follow a similar ‘build,
test, learn’ cycle as before, but now
with substantially more resources at
stake. Accountants are now in more
familiar territory and ultimately
start building the financial models
to make the investment case. It is
structured better because we’ve
learned from previous tests about the
most important causal relationships
and how they interact. With the
valuable input of accountants, we
have maintained a holistic view of
innovation and sought to innovate
across the business model to capture
more value from the opportunity.
Managing innovation
Innovation is very different to
business as usual. To manage it
effectively requires a different set of
processes, skills, talent and resources
and, above all, a different mindset.
This is especially true from the
accountant’s perspective.
The level of knowledge and
certainty in the core business is, by
definition, not available in innovative
opportunities. This doesn’t mean that
we should accept any less rigour in
the analysis, but we must recognise
that we will not be able to answer
all the questions. We must address
these ambiguities through a culture
of experimentation and learning, and
be much more open to external input
and collaboration. It should be noted
that, if all the answers are available,
then we are not really dealing with
an innovation.
Accountants in the senior
management team need to buy into
the fact that they must set different
expectations. To support this shift,
separate governance structures need
to be established for innovation
activities. Teams need less of a
‘steering’ and more of a ‘feedback’
input as they progress through
the governance of an innovation
project. Accountants need to ensure
that the all-too-common “we’ll find
it when we need it” approach to
resourcing innovation is replaced
with appropriate and dedicated
commitments so teams are resourced
to win. One of the best ways for an
accountant to ensure that we get
value for this money is to become
an active member of the innovation
team.
Conclusion
In DeBono’s famous ‘Six Thinking
Hats’ methodology for problemsolving,
two hats are ideally suited
to accountants – the white hat of
facts (information and data) and
the black hat of caution (identifying
weaknesses, risks, logic). Why only
don these hats at the end of the
process, when significant resources
have already been expended?
In the past, accountants may
have made modest contributions
to innovation and probably only
at a later stage in the process –
sometimes to pour cold water on,
or kill, the initiatives. This doesn’t
have to be the case. Accountants
can make vital contributions to a
structured, rigorous and evidencedriven
approach to innovation and
proactively promote innovation as an
essential part of risk management.
CIARÁN BLACK
Ciarán Black is a Partner at BMI Labs, an
international partnership that helps firms
capitalise on business model innovation.
DAVID O’LEARY
David O’Leary is also a Partner at BMI
Labs, which is based in Dublin.
www.accountancyireland.ie