Converting R&D Strategies Into Short Term Goals To Evaluate Performance

CFO As Strategic Partner

Corporate scorekeeping is one of the basic expectations from a CFO. They are playing a pivotal role in defining the corporate strategy and also taking part in implementing the same. It is very
essential for the CFOs to understand the business to deliver new expectations. Meanwhile, they must also ensure that strategic decisions taken by the management are in line with the stake
holder expectations in terms of corporate growth and value creation.

The Future Of Forecasting

Fast changing market environment and volatility has posed huge challenge to many CFOs, in terms of forecasting business results and other financial parameters. Clear understanding of the market conditions that could impact the forecasting and business performance is the key. One has to identify all environment variables that could impact forecasting both positively and
negatively. Once the impacting variables/scenarios are identified, one needs to quantify the possible impact and corresponding risk mitigating mechanism. While choosing the risk mitigating mechanism, CFOs have to strike the balance between the cost of risk mitigation
vs possible impact and take diligent decision. When the market is too volatile one needs to keep the options open to take advantage of the favourable market conditions.

Driving Better Business Results

Finance teams generally point the possible impact of corporate decisions on the results thus being stamped by business people as “Problem Pointers” or “Hurdles in decision making”. Finance team and the business team should work  with a collaborative approach instead of
just being a whistle blower. Their understanding of business, ability to articulate the impact of the corporate decisions on the end results and more importantly take part in problem resolution will make them closure to business teams.

"When The Market Is Volatile One Need To Keep The Options Open To Take Advantage Of  The Favourable Market Condition"

Budgeting For Innovation

Budgeting for innovation, allocation and measurement of the progress has been the challenge in many R&D driven organisation for quite some time. CFOs are generally posed with questions on what is the right amount of budget allocation for R&D, which projects to be
taken up and how to evaluate the utilisation. R&D budgets need to be defined based on  technological changes in the market, future growth prospects in the given business segments, cost reductions expected by the customer over a period of time, and cost effective solutions. Over all R&D strategy needs to be understood and they have to be divided into specific short term goals. Ex: evaluation of alternate raw materials to reduce the cost of production by XX%
or Changing the design to reduce the foot print of the equipment by XX% etc. When R&D goals  are divided into short term measurable goals and budget are allocated then it’s easier to evaluate the periodic performance with the objectives and take decisions on continuation.