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Innovation Management - Role of the Accounting Function

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Essay title: Innovation Management - Role of the Accounting Function

"If you ever become a marketer, then your friend in the company should be the accountant"

These were the words of advise given to me by my Marketing professor at Red McCombs School of Business in University of Texas, Austin. I recall this statement every time I think of costs involved in new product development or in every marketing endeavor I undertake.

The above words also applies to all persons leading an Innovation projects: Be it new product development, process improvement or research.

In the world of innovation, accountants & their contribution are one of the least appreciated. A success/failure of an innovation project is credited to the project manager or product manager or the development manager, but rarely the name of finance controller/accountant are even mentioned - sad but true.

The reason for this apathy is really simple: Engineers or product managers or development managers are far disconnected from the world of finance & accounting departments, that they really have no clue about the actual numbers. The problem is more acute in large companies, where functions and roles are so widely distributed that the development/product manager has no clue as where the accountant works! Added to the organizational complexity, there is a natural tendency among engineers to focus on the product - rather than monitor the expense accounts. Many engineers also find it extremely challenging to read an account books.

Accounting is a very important function

The role of the accountant is to maintain records of all expenses, keep financial checks and balances within the organization. All the great innovation ideas and projects can vanish in the wake of an accountant’s recommendation - So never underestimate the power of the accountant. Accountants control the money taps - they can turn it on or off.

Accountant is your partner

I remember a time when I was bidding for an IT project. The person with whom I had to work closely to develop the financial model was an accountant - a Chartered accountant. Together we developed the cost models and based on the cost models, we cameup with a pricing model to present it to the client.

When developing a plan for an innovation project, it is best to sit with an accountant and comeup with a financial plan. Gather the financial information that determines the viability of the project, at what levels of expenditure the projects become unviable, develop a plan to monitor the project expenses and constantly review the viability of the project. To do all this, you have to work with the accountant as a partner in progress.

Also remember this: Money speaks louder than ideas!

So if your idea is backed by the accountant, then people will listen to you.

Track all your Costs

Once a project is approved, then managers need to keep a close tab on the costs of the project. But that’s in an ideal world.

Reality in most organizations is that product/development managers have little clue of what their current costs are, what their total costs is, and how much more money

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