Finance chiefs hesitate to spend money on innovation too, says Edward Hess, professor at the University of Virginia Darden School of Business. "It's hard to budget and plan for high failure rates, and CFOs tend to be uncomfortable with uncertainty," says Hess. "If you're playing the operational excellence game, you strive for 99 percent defect free," he says. "If you're playing the innovation game, 90 percent of your [projects] are going to fail. You're going to be running a portfolio of initiatives. That's much, much harder."

"CFOs are kind of caught in a quandary," says Mark Zawacki, founder of Milestone Group and 650 Labs, a consultancy that helps large multinationals understand how Silicon Valley companies are disrupting their industries. "When businesses are struggling, there isn't money to innovate, and when they're doing well, they don't naturally think of putting more money into the innovation process." 

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Keywords: innovation initiatives, research & development, talent development, new-product development, business models