One question that seems to me to be coming up more and more from CFOs is “am I getting a good return on my investment in R&D?”  And to be honest, many of those CFOs who aren’t asking the question, probably should be!

When we talk about ‘R&D’ here, we’re essentially talking about the innovation that is going on in the business, whether it’s chemists coming up with new compounds for a pharma company, engineers trying to design more efficient heat exchangers or IT specialists designing a new contactless payment technology for mobile apps.  The simple reality is that, if you ask the leaders of these technology teams, they will all say they need more resources. To be fair, giving them more resources may well lead to a quicker or better solution.  But it might not, and even if it does, it it worth the cost?

No company has limitless resources and the CFO must ensure that his or her company’s resources are most effectively utilised.  Now that may sound obvious but in my experience the reality is that many CFOs simply don’t have sufficient information to allow them to properly assess the impact of increasing (or decreasing) investment in innovation.  What’s worse is that, too often, they don’t know what to do about getting that information.

Now that is not meant to be a criticism of CFOs’ abilities.  The reality is that many CFOs, whilst very good at the financial aspects of running a company, do not readily understand what goes on in the innovation teams.  Conversely, of course, the Chief Scientist, Chief Engineer of CIO does not have the big picture about what is going on in the rest of the company.  Someone needs to be able to link the two aspects of the company management to get a view of the impact of innovation on the company’s overall performance.

What is needed is someone with an overview of the Business of Innovation.