Over the last year the innovation movement has picked up a lot of speed, and the community of corporations and startups sharing innovation strategies is growing. In March, PepsiCo (PEP) and Mondelez International (MDLZ) started an exchange program in which groups of employees were sent to work at smaller companies to observe and learn how they innovate and ideate, in hopes of capturing some of the off-the-wall creativity and fast execution that has worked so well for many startups.
So far, however, innovation has been more focused on external elements improving the customer experience or creating a new product or service.
The other, equally important half of the innovation equation is internal—optimizing operations such as payments, cash flow, technology, workforce, data insights, and finance, among others. These aren’t always the most glamorous parts of the business, but they’re certainly some of the more essential. Among those internal business operations, finance is one of the most important and could benefit immensely from shared strategies between startups and corporations.
Corporations are embracing the startup mentality, and within finance that means acknowledging that cash is no longer king and that digital payments can provide a valuable competitive edge. As always, it’s easier said than done.
Corporations have traditionally invested in robust finance and accounts payable departments, which operate predominately in paper. According to recent research we conducted with Ardent Partners, only 55 percent of companies are using electronic payment methods. With digital, payments can be made much quicker, which can free up new working capital that can be used to fund growth opportunities.
Startups should take a page from the corporate playbook and establish a structured finance system, meticulously tracking each dollar. In the startup world, growth is rapid and sometimes even unexpected. Who knows when venture capital will become an opportunity or when an IPO will become a viable option? To seize either of those opportunities, finance needs to be airtight.
From the finance perspective, every company’s mantra, regardless of size, should be to capture, report, and optimize. In the grand scheme of things, innovation needs to be inward and outward—creating great products and services while also helping to reach optimal efficiency and seize opportunities for growth.