ICAEW.com works better with JavaScript enabled.

Special report 24: Innovation

The perceived wisdom during a downturn is to focus on what is core to your business. If something is not necessary then do not do it. But is innovation simply a nice to have? Is creating new products, or new methods of production, ever an expendable activity?

Download full report

Full report is only available to ICAEW Members and students.

The authors of this special report would certainly answer 'no'. Customer requirements change, and an existing product may no longer satisfy the new (currently cost conscious) market. In fact when the authors discuss what makes an ideal innovation one of the winning factors that they mention is being able to piggyback on a macroeconomic trend.

History also says no. Few would think of the great depression of the 1930s as a hotbed of innovation. However, this was when DuPont invented the durable material nylon. And nylon was used to create something that customers loved enough to pay for, even in those cash strapped times: stockings. During World War 2 (when the focus shifted away from stockings) nylon was also used to manufacture parachutes and tyres: yet more timely innovation.

But maybe you are thinking that you are not the creative type and that you had better leave all that imaginative stuff to the rest of the business? Think again. As the authors point out the best innovation processes combine creative techniques with strong financial and commercial disciplines. So those of us with the critical financial capabilities are indispensable.

Why else should you read on? Well there are also cautionary tales about getting too absorbed with financial modelling early on in the process - a temptation that has led many of us accountants astray in the past. Plus the all too familiar spectres of poor communication and a lack of senior sponsorship raise their heads again.

Whether you have an innovation process that simply needs improving or whether you are establishing one for the first time, we hope you will find this report helpful. Please let us know if you have any comments.

Published by the Finance and Management faculty (SR24, March 2009)