Innovation Financial Management

The Project Charter and Innovation Financial Management are two of the most important techniques in this book. After all, you can generate thousands of clever ideas, but if no one needs or wants what you have to offer then your time and money is wasted. Therefore, don t overlook the value of spending time up front, and throughout the project, continually verifying that your innovation is marketable, feasible, and able to bring your organization a profit. 

Most business endeavors evolve from a series of assumptions related to functionality, outcomes, value, process, price, and so on. To identify which key assumptions need to be tested for your innovation, start by creating a comprehensive list of assumptions that are built into your idea. You can use the approach of Innovation Financial Management (Technique 11) to help with this task. Once you have a comprehensive list, prioritize your assumptions and select ones that will have the greatest impact on the success of the innovation. List these on the Project Charter. 

Financial projections are often one of the most scrutinized aspects of an innovation Project Charter, especially when executives are trying to select which few innovation projects to fund. Almost all financial projections include estimates of revenue. Or, you can estimate profitability using Innovation Financial Management (Technique 11). Either way, the financial projections listed on the Project Charter should be estimated from the point your innovation will be available to customers, and should align with the company s current accounting periodicity (monthly, quarterly, annually). 

To complete the initial project investment estimates, identify the cost of raw materials, people, training, time, capital expenditures, and other costs that will be required to bring your innovation to market. You can use Innovation Financial Management (Technique 11) to help you identify investment costs relative to your assumptions. 

Any innovation is risky. Innovation financial management reduces this risk by increasing the ratio of verified knowledge to unverified assumptions as the project unfolds. This learn-as-you-go approach ensures that you have the most accurate and updated information possible and enables you to confidently proceed or abandon the project at any point. 

Innovation financial management offers an alternative to these methods by identifying, tracking, and updating key assumptions, and linking the verification of these assumptions to the investment decision-making process. 

Innovation financial management is an amalgamation of other proven financial management approaches. For more information, see ... 

The extent to which you can complete the innovation financial management documents early in the project depends on the level of innovation you hope to achieve. During incremental innovation, your initial ratio of knowledge to assumptions (Exhibit 11.1) will be higher than for substantial or breakthrough innovation. In either case, you should update the relevant financial documents, as well as the Project Charter, as you uncover new data throughout the project. 

Scenario To demonstrate the basics of innovation financial management, we ll continue the Pikes Peak Coffee example from the Project Charter technique (Technique 10). The company can use this approach to determine the profitability of adding a healthy, portable breakfast offering to its menu. 

For example. Pikes Peak Coffee knows that it currently has 32 locations, and that if the innovative breakfast offering proves to be viable, it would be offered in all locations. What the company doesn t know yet is the details of the offering, the retail price, the demand, or the cost (materials, personnel, and new equipment). However, for each of these assumptions, innovation financial management encourages you to put forth an educated guess. The point is not to show what you know, but to learn as you go (Exhibit 11.2). 

Function 3. Financial Management. Failure to properly assess financial resources Is cited as a major cause of failure for Individual entrepreneurs and small businesses. In contrast, large corporations often overdo financial evaluation and analysis of the prospects of a new Idea. Indeed, the new-Idea champions in a corporation rightly complain of "paralysis by analysis" and feel that few Innovative Ideas can get through these corporate filters. 

I recommend that, as early as practicable, safety practitioners take a course in financial management as a career enhancement measure. To introduce this subject, I borrow from the chapter titled A Short Course on Financial Management in the book Innovations in Safety Management Addressing Career Knowledge Needs. 

United Parcel Service (UPS) is another company epitomizing innovation. UPS has become entrepreneurial by (1) implementing a new higher-margin service, (2) managing its customers supply chains, and (3) providing financial services to small businesses. UPS is not only... 

This observation is however not restricted to supposedly conservative factory owners, who at best fear liability problems or financial risks. It applies to workers and technicians alike, to purchasing department and management, to associations and scientific branch institutes as well as to sub-contractors of machinery, components and anxiliary eqnipment, in which the chemicals are nsed. This conservative stance applies not only with regard to enviromnent and health-related iimovation, bnt also to innovation in general and it is amplified (and also repeatedly npset) by the stress of globalisation and social uncertainty. 

There should be an oral presentation towards the end of the semester to the management (which is your classmates, the professor, and the invitees) on your business plan for a proposed new product on the innovative product idea, on market and technology analysis, on the financial and environmental analysis, and on your recommended action. Be prepared to answer searching questions from your management, and to hear constructive comments intended to improve your research, your analysis, your recommendation, and your presentation skills. If time permits, it would be useful to take all the comments and constructive suggestions into consideration, and make a second oral presentation. The product design project concludes with the submission of a written report, which would be in parallel with the traditional process design project. 

The unique properties of highly fluorinated materials are thus expected to continue inspire chemists, offer new research tools for the life sciences, and contribute to the emergence of new diagnostic and therapeutic innovations. Pharmaceutical development involves increasing complexity and heavy regulatory, financial, and other constraints, and time. Managing such complexity... 

A study that examines how REACH could be devised or implemented to promote innovation in the chemical sector is lacking. Decisionmaking under REACH will need to address this lack of company-and sector-specific business impact assessment data. In particular, regulators will need to account for the distribution of business management risk between companies, across sectors and through supply chains. Otherwise the financial and management hurdles... 

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