Did We Miss A Golden Opportunity To Change Finance?

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It has been a tough quarter for most finance people around the world. The clouds are slowly clearing, and we start to get visibility into what the rest of 2020 will look like. We might ask: What did we learn? What has changed in Finance?

For the past months, we have been publishing tips and tricks for finance professionals to get ahead of the crisis. We have also explored how senior finance leaders have managed the situation.  

The overall picture we see it that most Finance organizations have adapted well to the situation and played a key role in navigating companies through the crisis by quickly adapting scenario planning, more frequent reporting and driving cost-out initiatives.

However, when you ask whether it will change how they operate in the future, most Finance organizations expect to fall back to the same processes and cadence as before. As change readiness in most organizations is now really high, we might ask ourselves, if we are missing a big opportunity to change before normality returns?

In this article, we explore what the crisis has taught us and what changes we might see in the future.  

What did we learn from the crisis? 

For starters, we learned that finance professionals are busier than ever in times of crisis. We also learned that their top three activities were forecasting, scenario modeling, and cash flow initiatives. We then set out to explore four hypotheses on how Finance could get ahead of the crisis. 

1. Successfully run crisis performance management
2. Build team capacity to survive the crisis
3. Drive change initiatives across the company and realize value
4. Planning for 2021 and more broadly the next normal 

To validate these hypotheses, we spoke to several senior finance leaders about how they had handled the crisis. Below are the condensed insights. 

Successfully run crisis performance management 

To do this well you must go through four stages and the first one starts even before the crisis hits.

• Prepare before the crisis hit by creating a flexible reporting landscape that can cater for changes in the business environment. If all you have is a static planning system you will likely be scrambling at the beginning of the crisis.
• Crisis mode as soon as the crisis hit. Find out what is important and what needs to change. Be prepared to go from a monthly cycle to a weekly or even daily cycle. Be prepared to also help customers and suppliers as needed.
• Business partnering is the key when you finally got the seat at the table. All eyes were likely on you when the crisis broke out so hopefully, you were able to provide actionable insights that could get the company safely through the crisis.
• Re-engineer and get ready for the Next Normal. Business will not run as usual for many months still. You must get creative in your deal-making and be prepared to exploit opportunities as they appear. 

How did you succeed with running crisis performance management in your company? 

Build team capacity to survive the crisis 

To do this well you must understand what gives energy to yourself and your team and be prepared to engage in energizing activities regularly. Here is a quick summary of energy management.

The senior leaders we spoke to provided us with practical examples of how they had kept their teams energized. Note that none of them felt like their teams had been stressed out despite the extreme circumstances.

How did you keep your team energized (or how did your team leader keep you energized) during the crisis? 

Drive change initiatives across the company and realize value 

Here is another simple five-step process that our senior finance leaders followed to master change during the crisis.

1. First, they reviewed existing initiatives to see if these were still relevant
2. Then they ran scenario analysis on the initiatives to see if they were enough
3. If not enough, they found new initiatives to bolster cash and margins
4. Once decisions were made, they became catalysts for execution
5. If they were doing fine, they started to help customers and suppliers where possible 

What did you do to manage change in your company? 

Planning for 2021 and more broadly the next normal 

Lastly, we tried to start looking ahead. How to manage the upcoming planning season with very limited visibility? You would think that everyone would get creative, however, in our dialogues with senior leaders that did not seem to be the case. Still, it led us to realize that the planning process had been modernized even the budget process was not abandoned. Here is how we now look at the planning process.

• Generate numbers by taking a mixed approach to numbers that are within your control i.e. OPEX and SG&A and what you cannot control i.e. Sales
• Discuss numbers in what could be termed as the classic budget process, where individual business units and departments discuss with corporate about their input. This input is both challenged by corporate and combined with scenario modeling. In the end, corporate will decide if what has been submitted is enough to reach the strategic ambition and usually overlay the numbers with certain corporate activities.
• Execute numbers by cascading targets back to the units, which typically are stretched due to the corporate overlay. In addition, companies usually run a rolling forecast process and a separate investment process to ensure resources can be allocated to projects throughout the year. 

All the senior finance leaders we spoke to did well in this crisis. They stepped up as business partners and delivered when it mattered most. However, they did not implement too much change and we must discuss if it was a missed opportunity or simply the art of the possible? 

What should change post the crisis? 

To try to understand what should change in Finance let us consider a few of the trends that are happening outside of Finance. 

• Remote work was the new reality for millions of workers, but will it also be the next normal? Tech giants have allowed their staff to work from home for the rest of the year and maybe even beyond. Should the same happen in Finance?
• Digitalization has been turbocharged by the crisis because physical was not an option and is likely here to stay. Did Finance manage to boost its own digital offering?
• Agility or agile has been a buzzword in the business world for long but the crisis has shown us that we need to be agile to always be ready for the next normal. How agile has the finance department become?
• Human interaction is redefined in a virtual world and video has been boosted to new heights. Will this way of working better suit the finance professional who typically shies away from the face to face interactions? 

As stated, the change readiness is high right now and Finance must consider exploiting this. Staff is ready for a new way of working, everyone has become digital natives overnight, management will continue to demand almost real-time info on what is going on in the business and the market, and all this is forcing Finance to step up human interaction with their stakeholders as this is where the value is created. Implementing change in this environment is like kicking in an open door. If Finance does not do it now we will likely never get it done! 

In our talks with the senior finance leaders we did hear some signs of change happening in each of these areas, however, nothing that could signal a major shift. Therefore, we will dig further into each of these trends in the coming month and try to develop a view on how they should change the finance function. 

If you have some thoughts you would like to share on any of these topics then reach out to Anders for a talk at [email protected] and we will include your views in the upcoming four articles. 

Not much changed during the crisis but that does not mean the opportunity is lost. We can still seize the moment and create the finance function of the future by tapping into these megatrends. The benefit? A more efficient and effective finance function that is driving value creation at an unseen pace. What is not to like about that?

This was the twelfth and final article in my series about "Crisis Management for Finance Professionals" and you can read previous articles below. Next week we will move to discuss "Finance Beyond The Crisis" and dig into how the four trends outlined in this article should change Finance.

15 Tips For Finance Professionals When In The Middle Of A Crisis

My 6 Finance Career Lessons From Times Of Crisis

30 Ways Finance Can Restore Shareholder Value Post A Crisis

How To Survive The Crisis Without Layoffs While Cutting Spend

Lost Your Job Due To Coronavirus? Here's How To Find A New One!

A Global Temperature Check Of Finance And Accounting

How Finance Gets Ahead Of The Crisis

How Finance Runs Crisis Performance Management

How Finance Can Create Human Capacity To Survive The Crisis And Beyond

How Finance Can Master Change In Times Of Crisis

Is The Budget Too Big To Fail Even In Crisis Times?

For more tips to help you through the crisis you can find more inspirational articles below.

How A LinkedIn Ad Turned Into To 10 Million Dollars

4 Reasons Why No One Implements Best Practices

Why Risk Management Is Supposed To Be Boring

3 Reasons Your Budget Is Already Outdated

How Finance Can Help When Business Is Bad

Who Holds The Key To Successful Cost Savings?

Don't Explain Yesterday, Predict Tomorrow!

Finance Needs A 20/20 View On The Business

Finance People - Adopt A Growth Mindset Or Die!

How Finance Masters Their Working Capital

How Business Partners Keep A Plan On Track

Model Me This. Model Me That. FP&A Can Model You Anything!

If you want to become a better business partner you should consider taking our online course "Business Partnering Explained - Value Creation Unlocked" to get a better handle on the role. It's accredited for 5.5 CPD hours.

Anders Liu-Lindberg is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 8,500 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 45.000+ followers.