Voice of Lumesse

Of course times change and whilst "cash is king" in (theory) any business, based on a report from a recent CFO gathering of roughly 40 big-company CFO's at The Wall Street Journal's second annual CFO Network meeting this week in Washington, D.C. the modern day CFO stated the following:

"Chief Financial Officers believe they should have a large role in driving innovation at their companies, whether through creating incentives or making sure sufficient funding is available."

There were five (5) top areas the group voted as the most important but what sparked this blog post is their interest in people!

Talent and Culture

The top priority for attendees was to create an innovative environment at their companies by "getting the culture and talent right."

"Innovation is where our financial capital meets intellectual capital," said Joseph Zubretsky, CFO of Aetna Inc.

CFOs need to make sure that the right incentive programs are in place and "the talent-management organization is hiring the people with the right entrepreneurial spirit and know-how," Mr. Zubretsky said. CFOs and boards also need to foster a culture where talent can thrive. "You're never going to create entrepreneurial spirit if you are always punishing failure," Mr. Zubretsky said. "Some of the best innovations came out of recent failures." 

You can read the entire blog post CFO's wish list on the WSJ website to get the flipside to the above but just taking these points alone shows a very different approach than would have probably been expected.

Innovation is where the value lies

Of course the CFO has not all of a sudden got in touch with their softer side and is in no way ignoring the money side of business. Maybe they are looking at businesses such as Instragram or Yammer and seeing the kind of valuations they are getting and realising there is more to company value than pure turnover and profit.

On Business Insider a very apt article This Quote Explains The Difference Between Silicon Valley And The Rest Of The World maybe explains a bit more behind the people vs. turnover valuation.

Marc Andreessen explained that that the fundamental output of a technology company is innovation and that's very different than a lot of businesses. Car companies produce cars. Banks give out loans. The fundamental output of a tech company is innovation, so, the value of what you've actually built so far, and are shipping today is a small percentage of the value of what you're going to ship in the future if you're good at innovation.

So on the innovation argument some of the tech companies are valued at >$1bn because of their potential to create innovation and whilst Mr Andreessen appears to only consider that tech companies that can deliver this type of innovation maybe he is wrong. Maybe the CFO's recognise the value of their people and by making the money available to allow them to innovate, maybe they'll get a better return on their cash reserves. 

Either way, it's great to see that the CFO can see the value of the people in the organisation hopefully regardless of sector. Or is Martin Sorrell, CEO of WPP Group PLC and a former CFO himself, correct to question whether finance chiefs could truly be innovative?

Mr. Sorrell said he thinks CFO's want to push innovation, but he didn't know "whether they are allowed in the straitjacket that we operate in."  

I hope that CEO's like Martin Sorrell release the CFO to invest in people. Will it actually happen? You tell me.....