Ep. 189: Bruno Pešec - Management Accountants as Partners (Not Roadblocks) to Innovation

Connect with Bruno: https://www.pesec.no/

Full Episode Transcript:
Adam (00:05):

Welcome back to Count Me In, the podcast that explores the world of business from the management accounting perspective. I'm Adam Larson, and our guest today is Bruno Pešec. As you've probably noticed, we talk quite a bit about innovation here at Count Me In. After all, it's the mechanism for how companies create new products and services to drive profitable growth. Bruno is an engineer by training and an expert in helping companies think systematically about where continuous improvement ends and how robust innovation begins. His insight about how management accountants fit into the picture can often upend conventional wisdom, which makes this a discussion you do not want to miss. Let's get started.

Adam (00:53):

Bruno, thank you so much for coming on the podcast today. Really appreciate having you on as we discuss innovation within the corporate sector. And one thing I wanted to kind of start with is, you know, we've gone through almost two, three years of a global pandemic and organizations are really struggling to keep afloat, whether keep afloat, figuring how to use hybrid work from home, not work from home. Where does innovation sit in the midst of all this, as we're trying to restructure what the world looks like as we go forward?

Bruno (01:22):

So Adam first happy to be here. And second, great opening question. If I might add what I really well, I want to say what I really love about the last three years, but that's a wrong choice of words. So I will rather say what has became obvious in the last three years are good and bad habits in handling disruption and not just innovation, those companies and business leaders that were innovative before all these big changes happened, fared better, not because they had the best ideas or they had the coolest products, but because the process of innovation is the process of handling uncertainty. So they developed a skillset and capabilities that allowed them to handle this uncertainty. And innovation is one of those words. You know, you ask 10 people what it means you're gonna get 20 definitions. So I'm not here to tell you or your audience, what is the definition of innovation, but I want to share what is my take on innovation?

Bruno (02:24):

So whomever is listening that they know what am, what am I actually thinking when I use those words. So in the broadest terms, I consider innovation to be something new that creates value. Something new, not to the history of mankind, but new to your customers and to your organization. That's enough to qualify as new and value must be two by directional. So it needs to create value for the customers. Something that we have gradually gotten better at, but it also must create value for the organization. What sense does it make to create new product services and business models? If they drive you out of business? And this is where our accounting friends are very, very useful, sometimes maybe underappreciated, but back to your question. So the companies that were already innovative before they coped much, much easier in this disruptive periods, why? Because they were able to actually go back to their customers and learn how did their reality change, how people were buying and using your product could have changed overnight, just look at hospitality industry.

Bruno (03:34):

So everything dramatically changed. Incumbents, like big hotel chains or even smaller motel chains. They were just adjusting to what happened with Airbnb, booking, hotels.com and all these disruptors and bomb. Then COVID came and suddenly the whole industry was flipped upside down. And those that actually managed to stay afloat, they used a lot of different tactics, basically repurposing the whole venues for something else. So that, that was a good example of how did they handle disruption? What I've especially seen the companies that didn't handle it well, did all the same things. One, they tried to weather the storm. They said, okay, this is going to blow away in three months, six months, nine months, two years, three years, who knows how long, but they basically said we have our fat, we have our supplies. We have our business, let's just try to weather the storm.

Bruno (04:32):

Basically put our hand heads into the sand. That did not work. The only thing that we have seen is that all our projections were pretty much wrong. What we expected to be weeks than months turned into, well, we are in the third year, but we have a war that kind of is even more disruptive. So people are looking more to that. Another thing is besides trying to weather the storm was ignoring the changes in reality. So kind of just assuming that the strategy you had before the business model you had before the product portfolio you had before that it's still valid and kind of trying to keep optimizing that, you know, sending people home, working from home, hoping that will be lower operational expenses, but still keep the same revenue that did not work out so well.

Bruno (05:24):

And the third one was a failing to adjust the leadership mode. So what was really and remains very important in this period are leaders that are also able to provide this emotional and psychological safety. So kind of the leader doesn't need to have all the answers that's sometimes not even desirable, but the leader should always be able to say, I'm here for you. We gonna figure it out together. And those that were not able to kind of maintain that, that were not able to direct their crew in the right direction. No, the people suffered a lot emotionally, then that spills over into family spills over then back to the company on the performance. So these are kind of the things that I will highlight just at the top of the pile.

Adam (06:12):

For sure. Yeah. There's a lot, that's at the top of the pile and I'm sure more trickles down as we get into the conversation. So you start with what you kind of talked about, you know, where you kind of have to adapt leaders have to adapt. People have to adapt. The company needs to adapt companies that were innovating before have to continue innovating. They're probably a better set. So what about, you know, when you look at innovation like some, and you said something new that creates value is your definition of innovation, which I think is a great definition, but those outcomes, they can't be guaranteed. So how do you measure it? How do you measure that within an organization, especially when you have all these new factors, there's a lot of new things, a lot of new things that could create value are happening right now. So how do you measure all of those elements?

Bruno (06:58):

Yeah. Yeah. So Adam, I mean, I could probably be talking about this question for days, but we don't have days. So I'm going to focus on a couple of things. You nail the problem straight on the head. So what is specific for innovation is that no one can guarantee outcomes. Like it doesn't matter if you do everything by the book, if you follow the best innovation processes, you can still end up with a product service or even the whole failed project that there was no return on investment. But what we do have in control is the expense side, the organization side, the work side, what ideas do we select? What ideas do we prioritize over others? How do we fund these ideas? How do we control these ideas? What people do we put on them, et cetera, et cetera, et cetera.

Bruno (07:54):

So...