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...