How CFOs can avoid the 'innovator's dilemma'

That was the topic of Fortuneâ€s Emerging CFO virtual event on Wednesday, presented in partnership with Workday (a CFO Daily sponsor). David Duncan, advisor, speaker, and author of “The Secret Lives of Customers,†told Fortuneâ€s Geoff Colvin that thereâ€s a universal challenge every big, successful company faces. 

“It relates to the need to balance investing in the core business with investing in new disruptive innovation that might look quite different from what made them successful up to this point,†Duncan said. And for companies that forgo the path of disruptive innovation and technology, it can wind up being a costly mistake. In a recent article by Colvin, he compared the diverging paths that made Microsoft a $3 trillion powerhouse and flatlined Intel. 

CFOs have the “power to decide to prioritize innovation if they have the right setup in their companies,†Duncan said. In a reference to the famous Clay Christensen book, he also noted that avoiding “innovatorâ€s dilemma†requires having the right set of conversations around the table, he said. The CEO and CFO have a critical role to play in assessing where the company is today and aligning everyone on a strategy of where you think the future is headed. And that gives you the conviction to start making investments in that direction, Duncan said.

Another piece of advice from Duncan: “Once you have that strategic clarity on the direction you want to go, itâ€s important to set up mechanisms in the organization to pursue different types of innovation with different rules and metrics, give them labels and also have accountability.â€

Partnerships can also foster innovation and help companies stay competitive. During the session, Claire Rauh McDonough, CFO of Rivian, explained that the electric vehicle manufacturer and Volkswagen Group launched their new joint venture. Itâ€s known as Rivian and Volkswagen Group Technologies, with a total deal size of up to $5.8 billion. Rivian is contributing its software development team and core software stack, as well as its electrical hardware, McDonough said. Thereâ€s a “really exciting innovation roadmap thatâ€s yet to come as we work now on the development and utilizing those proven technologies today in their vehicles,†she said. 

Antonio Carlos Garcia, EVP and CFO of Embraer, said the Brazilian aerospace company is “quite successful right now with all of our business units.†For example, it delivered 59 jets in Q3, representing a 37% increase year over year. Embraer, currently the worldâ€s third-largest aircraft manufacturer, has been powering ahead, while competitor Boeing has been facing serious headwinds. 

Garcia said that at big companies there can be a lot of innovation, but CFOs have a central role in determining what creates value—and what doesnâ€t. 

Have a good weekend.

Sheryl Estrada
sheryl.estrada@fortune.com

Leaderboard

Some notable moves this week:

Kelly Steckelberg was appointed CFO of Australian unicorn Canva, a developer of creative design software, effective Nov. 26. Steckelberg resigned from video conferencing platform Zoom in August after seven years as the companyâ€s CFO, staying on until last month to help with the transition. She oversaw Zoomâ€s 2019 IPO as finance chief, so her hire is largely viewed as a step toward going public.

Ken Cook was named CFO of The Wendyâ€s Company (Nasdaq: WEN), effective Dec. 2. Cook will succeed Gunther Plosch who has served as CFO since 2016 and will depart the company at the end of the year. Cook most recently served as head of financial planning and analysis at United Parcel Service (UPS). In prior roles at UPS, Cook served as CFO for the U.S. Domestic segment, and previously held leadership roles in investor relations and treasury, and served as CFO of South Asia.

Michael J. Grau will resign as EVP and CFO of Madison Square Garden Entertainment (NYSE: MSGE), which operates its namesake sports arena, Radio City Music Hall, the Beacon Theatre, and the Chicago Theatre, effective Nov. 20. Grau was appointed to the role in February and started his tenure in April. He will be succeeded by Lee Weinberg, who will serve as interim CFO. Weinberg has served as SVP of business and financial operations since the companyâ€s spin-off from Sphere Entertainment in April 2023.  

Rick Goldberg was appointed CFO of S&P Global Commodity Insights, a division of S&P Global (NYSE: SPGI), effective Nov. 1. Goldberg joined the company in August 2011 and most recently served as CFO of S&P Global Market Intelligence, a position he had held since July. He also recently stepped into the CFO role for the companyâ€s newly created chief client office, a move initiated by new CEO and president Martina Cheung. 

Glenn Eisenberg will retire as CFO of Labcorp (NYSE: LH), a laboratory services company, effective Dec. 2. After spending 10 years in the role, he will remain at the company as a special advisor to the CEO through April 2025 to assist with the transition. He will be succeeded by Julia Wang, who will also serve as an executive vice president. She most recently served as CFO of global oncology company BeiGene, now known as BeOne Mediciones. 

Michael Abrams was named CFO of NRx Pharmaceuticals, Inc. (Nasdaq: NRXP), a clinical-stage biopharmaceutical company. Abrams succeeds interim CFO Richard Narido, who will continue to support the companyâ€s financial function and other projects. Abrams has almost three decades of experience as an executive officer, investment banker, director, and senior advisor, which includes serving as the CFO of Arch Therapeutics, RiseIT Solutions, and FitLife Brands. 

Steve Rasche will step down as EVP and CFO of natural gas company Spire (NYSE: SR), effective Jan. 1. Rasche, who joined the company in 2009 and became CFO in 2013, will continue to serve as a senior advisor until his retirement on April 1. He will be succeeded by Adam Woodard, who has held the roles of VP and treasurer at the company since 2018 and also became CFO of Spireâ€s utility business a year later.  

Big Deal

Hereâ€s a new report by Fortuneâ€s Leo Schwartz: “SEC Chair Gary Gensler resigns, leaves legacy of division and crypto feuds.â€

U.S. Securities and Exchange Commission Chair Gary Gensler announced Thursday on X that he would step down from his position on Jan. 20, the date of President-elect Donald Trumpâ€s inauguration.

Schwartz writes: “Since entering office in April 2021, Gensler has battled with industry groups across Wall Street, pursuing an aggressive campaign of rule-making and enforcement actions that often put him at odds with the companies his agency was overseeing. Gensler was appointed by President Joe Biden. It is customary for agency heads to step down after the election of a president from the other party.â€

Going deeper

Here are four Fortune weekend reads:

“The CEO of Anthropic blasts VC Marc Andreessenâ€s argument that AI shouldnâ€t be regulated because itâ€s ‘just mathâ€â€ by Kali Hays

“Google stock hammered after DOJ calls for Chrome sale†by Greg McKenna

“Why Robinhood is spending $300 million to buy a wealth management platform†by Alicia Adamczyk 

“Walking more could add as much as 11 years to your life, study says. Hereâ€s how†by Ani Freedman

Overheard

“The thing about Steve was that he cared deeply about his people. Granted, he could be meticulous and demanding at times, even to the point of being called ‘tyrannical.’ But above all else, he was a kind, respectful, and compassionate leader. It was these traits that made him great, not his lapses into screaming and obscenities.â€

—Shalini Govil-Pai, VP and general manager of TV at Google, writes about the cofounder and former CEO of Apple Inc. in a new Fortune opinion piece, “I worked with Steve Jobs. Hereâ€s what heâ€d say about todayâ€s leadership style.â€