The role of the CFO has evolved dramatically in recent years asthe business landscape has become more dynamic, competitive, andcomplex. It's no longer enough for a CFO to focus on thetraditional responsibilities of protecting the financial securityof the firm and identifying ways to foster growth. Today, CFOs areexpected to play a broader and more strategic role by helping todefine and shape the future vision of their companies, particularlyas new technologies create opportunities to transform marketsectors in the blink of an eye. Central to this is the need forCFOs to serve as champions of organizational innovation.

This emphasis on technology innovation tends to be uncharteredterritory for many CFOs. The topic is, by nature, somewhat nebulousand hard to measure—which means it can feel contradictory to ourresponsibilities as financial stewards of the business. However,CFOs are naturally equipped to find an appropriate balance betweenpromoting innovation and making 'safe' financial decisions byensuring that investments are connected to outcomes and that theoutcomes are focused on growth and an improved clientexperience.

I've had the opportunity to put these skills to the test as CFOat The Depository Trust & Clearing Corporation (DTCC). Over thepast few years, we have been experimenting with the latest fintechinnovations, such as blockchain technology, applied machine learning, and robotic process automation (RPA). Thesetechnologies have the potential to transform how DTCC supportsglobal markets and mitigates risk for the financial servicesindustry.

Innovation in finance technologies has become a touchstone forour business, and I've made it a priority to be connected to everystep of the solution-development lifecycle. From this experience,I've learned a few important lessons that have enabled me toprotect the business while also promoting ideas that may have thepotential to steer the organization in a new direction.

To preserve their organization's financial strength, whileimproving agility in rapidly changing marketplaces, financeexecutives need to:

 1. Lean into, and then break up, theunknown.

CFOs typically thrive on order and precision, but embracing theunknown can lead to professional growth and business success.That's been my experience over the years as I've moved from myearly days as an auditor at PwC to running DTCC's clearing,settlement, and asset servicing businesses, to eventually beingappointed CFO.

Over this professional journey, I have learned the importance ofeffective project management. Setting up checkpoints to mark aninitiative's incremental successes or setbacks helps make theunknown elements of something like technology innovation moremanageable. As an example, my firm is committed to moving processesto the cloud, including some of the most critical tasks we performfor our clients. However, while our enthusiasm for cloud computingremains strong, we've had to modify those plans based on thecurrent maturity of the technology. By creating guardrails andcheckpoints, we were able to identify gaps with the technologyearly on and switch course quickly to maintain the highest level ofsecurity and resiliency for our clients.

Leveraging flexible approaches to project management may alsohelp increase the CFO's comfort with innovation. The EnterpriseAgile methodology, for instance, has become popular across businesssectors because it enables organizations to explore new ideasfaster, iterate based on regular feedback, empower front-lineemployees to make decisions, and experiment and fail fast.

Another aspect of Enterprise Agile project management, which isparticularly important during the innovation cycle, is the conceptof a minimum viable product (MVP)—that is, developing a product indiscrete, predefined phases and collecting client feedback alongthe way. Such an incremental approach mitigates thefinancial risk of having to fully fund an initiative that has anuncertain destination. If an Agile project's periodic check-indetermines that some aspect of it has veered off-course, the teamcan be redirected before spending any more resources heading in thewrong direction.

2. Seek balance.

Within the organizational parameters for successful innovation,CFOs should promote a balanced portfolio of projects. In aggregate,the company's initiatives should be diversified in both risk andfinancial return.

The CFO should separate projects into buckets of 'must do'initiatives, 'flexible' projects, and 'fragile' investments.Projects labeled 'must do' have a predictable return on investment(ROI) and are generally a safe bet. 'Flexible' initiatives arethose that the project team can adapt as they go. 'Fragile'investments are the high-risk, high-return initiatives. CFOs canguide the organization toward the right balance across itstechnology investment portfolio, to support both stability andgrowth. Allocating sufficient resources to each group ofprojects—must do, flexible, and fragile—ensures that riskierinitiatives have the safety net they need to either get under wayor fail.

CFOs can also develop systems for the organization to use tomeasure the success of both individual projects and the overallportfolio. In addition, we can build processes to bettercommunicate results internally and to clients. Our position givesus the platform and credibility to help stakeholders understandeach initiative's expected (or achieved) bottom line.

3. Utilize our bird's-eye view to define and advocatefor innovation.

CFOs are like the eagles of the organization. We have abird's-eye view across the entire business, but we can also divedeep into the financials to understand opportunities that may notbe obvious or clear from the outside.

It's important for CFOs to capitalize on this unique vantagepoint by helping define what innovation should look like in ourorganizations. We are well-positioned to make recommendations onboth certain and uncertain investments, as well as to serve as akey voice when it comes to prioritizing initiatives. In myexperience, organizations don't lack for good ideas, but manystruggle to say "no" or "not now" when it comes to fundinginitiatives, especially those that are considered exciting becausethey are grounded in innovation.

The CFO can serve as the honest broker in the room because wedon't have skin in the game. Our focus is on ensuring theorganization gets value for its investments and generates ROI overthe long term. Board members appreciate hearing from the CFO as theunbiased voice in the room.

The better we understand how our organizations invest ininnovation, the stronger we will be as advocates for theseprojects. To play this role effectively, however, a CFO must beinvolved in the innovation cycle from the very beginning, in orderto help shape the business case, focus the collective attention onbusiness outcomes, and—as an initiative progresses—provide counselon correcting course as external dynamics or client needsevolve.

4. Encourage a culture of creativity and selectiverisk-taking.

A culture of experimentation and discovery can thrive only if itcomes from the top. CFOs need to foster an environment ofinnovation, across both the corporate finance function and thecompany at large, through our words as well as ourproject-investment decisions. When we endorse innovative butriskier endeavors, we're sending a powerful message that willresonate with our colleagues at all levels of the organization.

Creating a culture of experimentation and constant learning is acritical culture shift for a company, but it is essential toencourage employees to flex their innovation muscles, thinkcreatively about challenges, and reimagine processes to achievebusiness objectives more efficiently.

Better yet, by providing support for innovative initiatives,CFOs can change the perception of our position from that of apotential obstacle to funding exciting projects, to the financialenabler of creative ideas.

5. Take the long view.

The ultimate goal of a CFO is to encourage the financial growthof the business. Although it may be easier to focus exclusively onquarter-by-quarter results, we need to regularly take a step backto see the big picture. When we do, we may see that the value of aparticular long-term investment is exactly what our organizationneeds to grow and modernize.

CFOs often live by the numbers: It's our job to understand thepotential financial implications and risks of differentorganizational decisions. On the surface, this responsibility mayseem like it could curtail our support for innovation, but theopposite is true. A risky project with a winding path to successmay set off alarm bells within the CFO's quantitative nature. Butcompanies must innovate if they want to gain a competitive edge orachieve an unexpected return.

The most successful CFOs are those of us who can take the longview and see the potential of different initiatives, then establisha numbers-oriented framework to make the implementation ofinnovative ideas less risky and more viable in the short term.

Susan Cosgrove isCFO of The Depository Trust & Clearing Corporation (DTCC), thepremier post-trade infrastructure organization for the globalfinancial markets. Prior to serving as CFO, Cosgrove led several ofDTCC's businesses covering clearance, settlement, and assetservicing.