At the recent AFR Business Summit 2016 (15 & 16th March), the impact of rapid change on the business environment was a major topic. We are living in a time of massive economic change which is being driven by a number of factors including: readjusting from the mining boom, rapid technological changes and the rise of the Asian middle class[1].

Businesses cannot avoid the risks that are presented by this pace of change. Neither can they rely on how things have been done in the past. They need to innovate and adapt to the environment. Success or failure can be determined by each business’ ability to embrace new ways of doing business.

For most businesses, managed innovation is the key to success. Managing innovation is really much the same as managing the continuous improvement process. The added requirement is an open mind to embrace the new.

The ONUS on SMEs

For SME businesses to manage this approach, there are some essential requirements. These include:

  • Thinking and learning time

  • Access to quality reporting and analysis systems

  • A focus on sales & marketing and operational excellence

Many SME businesses struggle with one or more of these essential requirements.

One area of innovation that they should consider to enable them to become a successful innovative business is to consider working with a virtual CFO.

Virtual CFOs are specialist financial management professionals who provide a number of valuable functions within a business enterprise. Supporting a business to manage their innovation process is just one of these functions.

The BONUS for SMEs

Broadly speaking, your virtual CFO will support you in each area of the innovation cycle in a number of ways:

Assess: Your virtual CFO will provide your business with performance reports and analysis that will highlight the areas that need to be reviewed. Areas of diminishing margin or increasing cost will be identified and analysed to focus in on the underlying causes.

Design: Innovation will mean new strategies involving change to systems, processes, products, services, channels or markets. Your virtual CFO will provide essential strategic planning support and analysis. It is critical that resource capacity is considered in this stage.

Implement: Change management is always a difficult process and can become very costly and unproductive if not managed well. In the majority of cases it stalls or loses direction. It is critical that key managers are free to focus on these activities. A reporting framework will assist them to stay on track.

Evaluate: Your virtual CFO will provide a reporting framework that enables you to assess progress against the strategic plan. These reports provide key management with the necessary information to review the strategic performance and revisit the “Assess” stage in the innovation cycle.

Find out more about how a virtual CFO can help you assess and control the risks in running your business. Contact Colin at colin@3sgroup.com.au at 3S Synergy Group.

[1] Australian Financial Review, 19-20 March 2016, p.19