“Enterprise transformation…is not tweaking at the edges. It is creating a new organization, one that thinks and acts differently. It is a continuous process.”
I read Faisal Hoque’s Huffington Post article “Leadership Mandates for Business Transformation” and noted that the culture of business transformation – a trend we saw in small pockets a few years ago – is going mainstream. People are realizing that true enterprise transformation doesn’t come from small tweaks. Yet getting to that transformation can be uncomfortable, moving people outside their comfort zones, and it takes a senior leader to drive the transformation throughout the organization.
One of the patterns that has emerged in listening to the vision of the CFOs of companies using Tidemark is that they are seeking real business transformation, and they know finance has the opportunity to be the catalyst. These transformative CFOs are driving the change – starting with their own organization and setting an example for the rest of the business.
The transformation in finance is about elevating finance as a thought partner in the organization. To accomplish this, the CFO has to free her team from their traditional role as gatekeepers of the data, giving them the opportunity to spend time providing strategic analysis instead of generating reports.
Finance transformation doesn’t happen overnight. It requires a significant mindset change by both the finance team and their business partners. Three key areas need to be addressed to facilitate the transformation:
- Focus on the things that really matter
This sounds obvious, and yet according to a recent article on CFO.com, most traditional planning processes still focus on an “accounting-driven, forensic approach.” One of things we see among customers in the midst of transformation is a focus on the key business drivers (key means a few – not 100).This gives you a clear goal with huge impact. For most companies, these key drivers impact the vast majority of the operational and financial results. As you shift the focus to really understanding these drivers and how you can improve your forecast accuracy and predictability, you start to see a shift in the way the finance organization thinks.
Updating the plan for the latest revision isn’t about the mechanics of getting all the links updated anymore. Now it’s about understanding how your business really runs, and ensuring you can impact the drivers you need to achieve the results you want.
- Push business insight outside of finance
Getting finance to think differently isn’t enough if your goal is real business transformation. You have to transfer that different thought process to the rest of the organization and ensure they are armed with the right tools to understand what’s happening in the business and act on those insights.In the past, legacy systems have created a big stumbling block with tools that were designed for the few. Today, a convergence of several technology trends has opened up new options for getting more people involved. When finance empowers the rest of the organization to understand their own business performance, they free themselves from being the data jockeys and create an opportunity to drive more value to the business.
The CFO gets a secondary (and equally important) benefit from enabling the business to participate: more accurate forecasts. When you have the people involved in the day to day operations participating in the way you plan, you get much more meaningful information. It’s like the telephone game – the more transfer points you insert – the more diluted the message gets when it reaches its destination. By putting control in the hands of the people that are the most intimate with what’s happening, you ensure the message is received exactly the way it was intended.
- Nurture strategic thinking
Freeing finance doesn’t magically create business transformation – it just creates an environment where transformation is possible. To get there, the finance team has to step into the role of becoming a strategic business influencer.Because the finance team has been chained to their desks wrangling data for so long, the skill of collaborating with the business to provide strategic direction and thought leadership is a little rusty. The transformative CFO has to nurture opportunities for the team to provide this guidance and invest in developing and honing this skill.
Enterprises don’t have a choice anymore – transformation is required to remain competitive and deliver growth. As Hoque says, “Enterprises are beginning to understand that change is becoming a permanent way of life, that the status quo will never again be good enough and that the biggest risk is not taking a risk at all.”