Innovation for the sake of it is detrimental to business growth

The finance team sits at the heart of a business's development. To maintain growth, this department has a central role to play in making sure the organisation's wider objectives and goals ladder up to growing revenue and profit.

However, the finance team can sometimes be seen as a blocker across the company. Money is often the difference between whether a project is or isn't allowed to run, and this can cause frustration by stifling innovation in the business.

There are ways the finance department can manage this reputation, but this means working more openly and honestly with other teams across the business, instead of operating as a silo. It must overcome legacy thinking, shifting from tried and tested ways of managing its relationships with other departments, to embracing a new culture of technological change.

The cost of innovation – perception vs reality

The finance team possesses and controls a huge amount of sensitive data in legacy systems, and this is often the reason for a perceived lack of pace. It’s difficult for teams to keep up with what other departments and organisations are doing due to their primary need to protect data first, and this is where finance professionals can be seen as reluctant to change.

Crucially, this mindset can bleed into how the finance team approaches innovation across other business lines. Being perceived as a blocker is a damaging reputation to have – especially as companies are competing for a strategic advantage against a constantly evolving business climate.

But is there a disconnect between the perception and reality of the finance department? It takes time and financial investment to even think about switching systems or implementing new technologies to drive efficiency. And given the role of the finance team centres around growing the business sustainably, it is their duty to accurately analyse every new solution or suggested project to ensure it fits within the company’s strategic goals, while also keeping the business safe from a monetary point of view.

This is a big responsibility to sit squarely on the finance team’s shoulders, so how can they effectively manage their internal reputation while simultaneously not becoming yes people?

Finance’s role in reimagining how the business innovates

Financial planning plays a critical role in managing stakeholders and creating a sustainable, high-performance organisation. By assessing the company’s current financial situation and working cross-departmentally to set goals, businesses can make they are working towards one shared vision and then slotting in what everyone needs – from both a resource and money point of view – to get there.

Critically, overcoming the perception of the finance department as reluctant to change means involving stakeholders from each department in the financial planning process. Making this inclusive from the start, as opposed to something the finance team puts together and then shares across the business, will help keep the organisation on track.

Boundaries are the key to success

Innovation is necessary for growth, but it needs the right guardrails in place across the business to create a positive change.

As people consider new projects or look to implement new solutions, they need to think about how this will affect the money that comes in and out of a business. They need to think about analysing sales data to identify growth opportunities they might otherwise have not noticed. And they need to develop considered investment strategies that align with the business’s goals and risk tolerance.

It is only with these guardrails in place that innovation can be enabled to help the business develop in the right way, ensuring leaders aren’t just relying on gut feel to underpin decisions, rather they’re using financial data to create measurable performance indicators to easily keep track of progress.

It can sometimes feel like finance teams are stifling innovation, but their role is to make sure the business grows in the right way. A company comprised entirely of innovation without thinking about the financial consequences is not going to be a healthy or growing business.

Regardless of the overall objective – whether this is finding ways to boost revenue, reducing expenses or saving for a big investment – a financial plan that balances innovation with realism is a vital tool in overcoming competing stakeholder motivations.