By Mitch Ornstein, Managing Director

Salo recently sponsored a daylong professional development session for Finance Executives International (FEI) Chicago. Robert Wolcott, Co-Founder & Executive Director of the Kellogg Innovation Network (KIN) and Clinical Professor of Entrepreneurship & Innovation at the Kellogg School of Management, Northwestern University in Chicago, spoke about how companies could be innovative in an era of change.

I came away with three insights I’d like to share—plus a book recommendation.

1. Don’t measure the rate of failure, manage the cost of learning.

To remain innovative, companies must give employees the latitude to fail. Experimentation and learning keep our businesses competitive. It can be difficult, however, for those of us in finance and accounting to reconcile the cost. We want to see positive returns, not money lost on failed attempts.

As Wolcott pointed out, however, measuring ROI over the long term often paints a more positive picture. A team may fail 10 times, but if the cost ultimately leads to a valuable return, those individual losses may be worth it.

2. Build a sailing ship, not an immovable fortress.

In accounting, we’re always looking for ways to streamline and boost efficiency. Keep in mind, however, that the more structured your organization, the harder it is to pivot.

Kodak, for instance, was so solidly built for a film-driven world that when digital photography took over, the company died with the industry. Fuji, on the other hand, is growing strong in the medical imaging field. Not only did the folks at Fuji see an opportunity, their internal structures and processes were flexible enough to seize it.

3. Be a fast second.

Those who are first to market have to make all the mistakes—and pay for them. Instead, let someone else fund the initial learning, then get in there and do it better. Second iterations are not only less costly; they often have more staying power. They’re the “next gen” everyone wants.

Your turn to think outside the box.

Many of our clients are trying to crack the code on innovation. So, where do you start?

Read broadly, attend events and network with people outside of your industry. Take a wide-angle view as you look for opportunities and synergies for your current business. Give your team permission to try new things, even if they don’t all work out. And when you have a winner, be flexible and decisive enough to go for it.

Take the next step

Read: I recommend Professor Wolcott’s book

Grow from Within: Mastering Corporate Entrepreneurship and Innovation.