Research from CIMA (the Chartered Institute of Management Accountants) and the American Institute of CPAs (AICPA) has found that CFOs, play a vital and growing role in driving advancements in many companies.
Add another duty to the expanding role of Chief Financial Officers (CFOs): Innovation catalyst. New research from CIMA (the Chartered Institute of Management Accountants) and the American Institute of CPAs (AICPA) finds that management accountants, led by the CFO, play a vital and growing role in driving advancements at some of the world’s most innovative companies.
In these businesses, the CFO and finance team are deeply embedded in the process of innovation and have a clear framework to let new ideas take shape. They partner early with other departments to identify concepts with market potential, replace rigid financial metrics with staged measurements to avoid eliminating ideas too soon, and accept that failure is a tolerable outcome for projects along the path to commercialisation.
These conclusions are captured in a new Chartered Global Management Accountant (CGMA) report, ‚”Managing Innovation: Harnessing the power of finance,‚” and based on interviews with global finance leaders at companies including Coca-Cola, Royal Dutch Shell and BT Group.
The role of finance in all of this is multifaceted, Royal Dutch Shell CFO Simon Henry FCMA, CGMA, explains in the report. He says: ‚”A finance function needs to be able to understand the business well enough to know what is a worthwhile activity but also, in this part of the business, to have a bit more of an open mind. It is less mechanistic and has the ability to live with ambiguity, to identify risk and to manage it.‚”
Says Samantha Louis, regional director of CIMA Africa: ‚”There’s an art to innovation but there needs to be some science that goes with that: understanding the forward-looking side of strategy, being able to scope the opportunity. In all these areas, the management accountant is really critical. Whether it’s a new product, process or business model, the management accountant can help assess the results, evaluate how things have gone and learn lessons.
‚”The definition of innovation is broadening. Once deemed the exclusive province of R&D departments, it is now widely accepted as a fundamental part of every aspect of business. It is not only about disruptive technologies that can change our lives: innovation can also be evolutionary as well as revolutionary, incremental as well as radical. It is also not just about new products and services and can as easily be new processes, models and methods.
‚”Innovation is vital, but it isn’t easy. It is disruptive to an existing business, uncertain in its outcomes, and requires a strong appetite for risk. While CFOs are not expected to be originators of breakthrough innovation, they do need to create an environment that ensures great ideas are spotted, encouraged, financed and delivered: balancing the risk, while commercialising an innovation, is the real challenge for CFOs today.‚”
It is clear from the research that the most successful companies work to create an innovation-centric mindset, putting this at the heart of the business and fostering a culture where ideas can flourish. Says Louis, ‚”in fact it appears the most successful companies provide a range of incentives to encourage innovation from all employees, not just those in R&D. These could be encouraging employees to devote a proportion of work time to projects or research outside of core responsibilities, or employee ideas schemes, which involve peer review.
‚”This requires finance to have a different mind-set for early-stage projects, because the premature application of too many KPIs and metrics can kill off a good idea quickly.‚”
The report recommends five areas where finance professionals should take action:
¬∑ Create an innovation-centric mindset. Finance needs to transform itself into a business partner that can help innovation teams succeed. Promoting an innovative culture throughout the organisation, where thinking goes beyond the status quo, can deliver tangible results and enhance competitive advantage. Do this by developing a framework in which innovation can thrive and accept that sometimes projects will fail.
¬∑ Nurture creativity. There can be a clash of cultures between those responsible for coming up with ideas and the finance professionals, particularly when early-stage ideas are prematurely tested against traditional finance metrics. More sympathetic approaches can help, such as the creation of ring fenced budgets with more relaxed criteria for early-stage innovations. Finance must learn to work in an environment where uncertainty is part of the process.
¬∑ Prepare the path to profits. Being able to find the path to profits when an innovation moves forward to implementation is a key capability of management accountants. Building cash flow models, advising on financing, understanding costs and allocating resources are ways in which management accountants can bring rigour to commercialisation of ideas.
¬∑ Match metrics to the stage of development. Companies must be aware of the danger of trying to apply operational metrics to early-stage innovations. A staged approach to measurement allows an innovative idea room to breathe. Finance can contribute to this by creating stage-gates for innovation where the idea can be challenged and refined to prepare it for the next stage of investment.
¬∑ Take a balanced view on innovation risk. Companies increasingly employ a portfolio of strategies to drive innovation. Management accountants should seek to create an opportunity framework that promotes clarity, transparency and discipline across the total innovation portfolio. Companies, which excel in this portfolio management are often the most successful businesses in the world.
Innovation requires finance professionals to develop strategic skills alongside functional competencies and this means proactively supporting the innovation strategy while managing the associated risks.
Says Louis: ‚”Management accounting training helps finance professionals to develop these strategic skills, however, learning how to apply these skills to the different stages of the innovation cycle can still be a challenge even for experienced finance professionals.‚”
Prepare for deepfake impact
Is the world as we know it ready for the real impact of deepfake? CAREY VAN VLAANDEREN, CEO at ESET SA, digs deeper
Deepfake technology is rapidly becoming easier and quicker to create and it’s opening a door into a new form of cybercrime. Although it’s still mostly seen as relatively harmful or even humorous, this craze could take a more sinister turn in the future and be at the heart of political scandals, cybercrime, or even unimaginable concepts involving fake videos. And it won’t be just public figures that bear the brunt.
A deepfake is the technique of human-image synthesis based on artificial intelligence to create fake content either from scratch or using existing video designed to replicate the look and sound of a real human. Such videos can look incredibly real and currently many of these videos involve celebrities or public figures saying something outrageous or untrue.
New research shows a huge increase in the creation of deepfake videos, with the number online almost doubling in the last nine months alone. Deepfakes are increasing in quality at a swift rate, too. This video showing Bill Hader morphing effortlessly between Tom Cruise and Seth Rogan is just one example of how authentic these videos are looking, as well as sounding. If you search YouTube for the term ‘deepfake’ it will make you realise we are viewing the tip of the iceberg as to what is to come.
In fact, we have already seen deepfake technology used for fraud, where a deepfaked voice was reportedly used to scam a CEO out of a large sum of cash. It is believed the CEO of an unnamed UK firm thought he was on the phone to his boss and followed the orders to immediately transfer €220,000 (roughly US$244,000) to a Hungarian supplier’s bank account. If it was this easy to influence someone by just asking them to do it over the phone, then surely we will need better security in place to mitigate this threat.
Fooling the naked eye
We have also seen apps making DeepNudes where apps were able to turn any clothed person into a topless photo in seconds. Although, luckily, this particular app has now been taken offline, what if this comes back in another form with a vengeance and is able to create convincingly authentic-looking video?
There is also evidence that the production of these videos is becoming a lucrative business especially in the pornography industry. The BBC says “96% of these videos are of female celebrities having their likenesses swapped into sexually explicit videos – without their knowledge or consent”.
A recent Californian bill has taken a leap of faith and made it illegal to create a pornographic deepfake of someone without their consent with a penalty of up to $150,000. But chances are that no legislation will be enough to deter some people from fabricating the videos.
To be sure, an article from The Economist discusses that in order to make a convincing enough deepfake you would need a serious amount of video footage and/or voice recordings in order to make even a short deepfake clip.
Having said that, In the not-too-distant future, it may be entirely possible to take just a few short Instagram stories to create a deepfake that is believed by the majority of their followers online or by anyone else who knows them. We may see some unimaginable videos appearing of people closer to home – the boss, our colleagues, our peers, our family. Additionally, deepfakes may also be used for bullying in schools, the office or even further afield.
Furthermore, cybercriminals will definitely use such technology to spearphish victims. Deepfakes keep getting cheaper to create and become near-impossible to detect with the human eye alone. As a result, alt that fakery could very easily muddy the water between fact and fiction, which in turn could force us to not trust anything – even when presented with what our senses are telling us to believe.
Heading off the very real threat
So, what can be done to prepare us for this threat? First, we need to better educate people that deepfakes exist, how they work and the potential damage they can cause. We will all need to learn to treat even the most realistic videos we see that they could be a total fabrication.
Secondly, technology desperately needs to develop better detection of deepfakes. There is already research going into it, but it’s nowhere near where it should be yet. Although machine learning is at the heart of creating them in the first place, there needs to be something in place that acts as the antidote being able to detect them without relying on human eyes alone.
Finally, social media platforms need to realize there is a huge potential threat with the impact of deepfakes because when you mix a shocking video with social media, the outcome tends to spread very rapidly and potentially could have a detrimental impact on society.
A career in data science – or your money back
The Explore Data Science Academy is offering high demand skills courses – and guarantees employment for trainees
The Explore Data Science Academy (EDSA) has announced several new courses in 2020 that it says will radically change the shape of data science education in South Africa.
Comprising Data Science, Data Engineering, Data Analytics and Machine Learning, each six-month course provides vital digital skills that are in high demand in the market place. The full time, fully immersive courses each cost R60 000 including VAT.
The courses are differentiated from any other available by the fact that EDSA has introduced a money back promise if it cannot place the candidate in a job within six months of graduation and at a minimum annual starting salary of R240 000.
“For South Africans with drive and aptitude, this is the perfect opportunity to launch a career in what has been called the sexiest career of the 21stcentury,” says Explore founder Shaun Dippnall.
Dippnall and his team are betting on the explosive demand for data science skills locally and globally.
“There is a massive supply-demand gap in the area of data science and our universities and colleges are struggling to keep up with the rapid growth and changing nature of specific digital skills being demanded by companies.
“We are offering specifically a work ready opportunity in a highly skills deficient sector, and one which guarantees employment thereafter.”
The latter is particularly pertinent to young South Africans – a segment which currently faces a 30 percent unemployment rate.
“If you have skills in either Data Science, Data Engineering, Data Analytics or Machine Learning, you will find work locally, even globally. We’re confident of that,” says Dippnall.
EDSA is part of the larger Explore organisation and has for the past two years offered young people an opportunity to be trained as data scientists and embark on careers in a fast-growing sector of the economy.
In its first year of operation, EDSA trained 100 learners as data scientists in a fully sponsored, full-time 12-month course. In year two, this number increased to 400.
“Because we are connected with hundreds of employers and have an excellent understanding of the skills they need, our current placement rate is over 90 percent of the students we’ve taught,” Dippnall says. “These learners can earn an average of R360 000 annually, hence our offer of your money back if there is no employment at a minimum annual salary of R240k within six months.
“With one of the highest youth unemployment rates in the world – recently announced as a national emergency by the President – it is important that institutions teach skills that are in demand and where learners can earn a healthy living afterwards.”
There are qualifying criteria, however. Candidates need to live in close proximity (within one hour commuting distance), or be prepared to live, in either Johannesburg or Cape Town, and need to be between the ages of 18 and 55.
“Our application process is very tough. We’ll test for aptitude and attitude using the qualifying framework we’ve built over the years. If you’re smart enough, you’ll be accepted,” says Dippnall.
To find out more, visit http://www.explore-datascience.net.