Industry disruptors have CFOs up at night thinking about how their companies can innovate while maintaining operations. With change happening at a rapid pace, CFOs see the need to step out of their comfort zones and offer strategies to manage these risks.
The obstacles to innovation and growth are continually increasing. Obstacles discussed at The CFO Alliance Q3 Roundtable series include:
However, by adding new skills, leveraging technology and working more closely with other business functions, CFOs can adapt and drive innovation.
Andrew Farag, CFO of rEvolution Marketing, an integrated sports marketing firm, was the featured guest at the Q3 Roundtable in Chicago. He offered insights on how he helped facilitate innovative strategies to help their firm continue its growth trajectory. Part of Andrew’s strategy involved identifying and managing risks inherent in business processes and implementing efficient technology systems. Andrew shared a few strategies on how he helped drive innovation, including focus on a niche market, investment in attracting and retaining talent, and optimization of pricing models.
When evaluating rEvolution’s return on investment in sponsorships, the company saw that their results were better when they focused strictly within sports.
“We found that staying niche, staying in sports, was where we saw the best return on investment,” Farag said. “We just couldn’t show the value the same way outside of the industry.”
Staying niche allowed rEvolution to identify the best path forward when they were looking to expandoperations. By sticking to their business plan, the firm made a choice to purchase another sports marketing company in London. Oddly enough, the London company had the same name, Revolution.
A common theme among businesses today is attracting the right employees—and then keeping them happy so that talent is not lost. The firm did not want to risk losing quality talent and then have to spend more on recruiting efforts, so they changed how they were hiring and operating. First, rEvolution only hired when they had new, contracted work so they did not risk over-hiring. Then, to ensure that employees felt empowered in their roles, Farag proposed a pay for performance incentive for teams versus individual performance. By doing this, the company also moved forward in a unified fashion—and saw a reduction in turnover.
Last year, after implementing several innovative strategies, rEvolution saw top line growth at 2.5% while bottom-line growth increased 70%. These results were also due to an improved pricing model that expanded gross margin, implemented a rigid procurement process with major vendors, centralized purchasing and drove down unit costs based on negotiated volume discounts. They also implemented new technology tools to streamline business, such as HRIS/payroll system, ERP system, and hardware leases.
Farag offered advice on the importance of taking risks on innovation.
“As financial leaders we typically approach innovation in a risk-averse fashion, weighing costs against perceived benefits,” Farag said. “In today’s global and ever-changing economy, to be relevant and continue to grow, we have to continually invest and find areas to innovate beyond our industry peers or we will fail to exist.”
To hear more about Farag’s strategy and to hear insights from the other featured guests in the Q3 Roundtable series, please sign up for the Q3 Series Roundup Webinar taking place on October 11.
Stephanie Gandsey is the Marketing Director at DHJJ, an accounting and business advisory firm based in the suburbs of Chicago.