The finance function is undergoing a profound transformation, open controlling is one of them. 

To meet the current challenges, it must make a 360-degree change from an opposition position to a mission to promote innovation.

 This challenge is for both a corporate CFO and a TPE management controller.

Why should the CFO be the guarantor of this support for innovation ?

Because where yesterday, innovation was a condition to become a leader in his field, it is, nowadays, a simple condition of existence of the company.

However, an analysis of innovation activities shows that they are the unloved of the traditional tools of the business economy.

Why ?

The net present value of an innovation project will necessarily be negative, suggesting a destruction of value when in reality it may be a real gem for the company. Indeed, no one can imagine for sure the gains and costs generated by a future innovative product or service that will by definition be avant-gardist in the field.

The net present value measures, based on accounting information, whether the investment can achieve the expected objectives of the capital providers.

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It is essential that the management controller make a distinction between research and innovation projects and projects of development.

Management control tools must therefore be profoundly transformed so that management control does not pose a threat to the company’s innovation and sustainability.

The analysis of the unknown through open controlling

The monitoring tool to analyze research or innovation projects must respond to a management model that emphasizes a multidimensional view of the value.

The objective of this tool is not to evaluate projects on the basis of stable and established repositories but to highlight the monitoring levers of the economic, strategic and organisational potential of the projects.

Thus, open controlling represents the new challenge of management control, allowing a real revolution of the latter, especially in its potential of discernment.

Just like the lean management of factories, open controlling should allow a new management of the performance on 3 axes :

  • An economic value to serve the profitable growth of the business
  • A strategic value to monitor according to non-monetary criteria that underpin the company’s identity
  • A membership value to identify successes or rejections, specific to innovative projects

The convergence of stakeholders : an indicator of performance

The evaluation of an innovation project can be seen as a utopia as it is impossible to describe it before it has been conceived.

This is why the interaction and adherence of the various stakeholders is one of the first conditions of the performance of the product or service…

We can therefore see the convergence of the different stakeholders as a first lever of performance in the management of innovative projects, which in itself represents a management innovation.

This convergence is all the more important because it is the answer to two essential elements of this monitoring :

  • The creation of a bond of trust between the different stakeholders in innovation
  • The preparation of the ground from a technical and organisational point of view for the integration of innovation

Management control needs to be redesigned to become a gem light

It is essential to achieve a change approach to the management controller’s job, as new innovation projects do not meet any of the evaluation criteria used thus far.

The evaluation will then have to be focused on 3 indicators :

  • The strategic profile score of the project (non-monetary indicator)
  • The membership rate of the stakeholders assigned to each project

As much as research and development must apply a traditional management model and be subject to the notion of profitability as traditional development projects, innovation projects must be managed on a completely different management mode, more promoter of potential gems.

It is important to remember that it is innovative projects that can implement to products and services whose sales prices will be much higher than those imposed by the competition.

Inspired by Roland Stasia‘s article, accessible here

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