The Finance Function keeps the score
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
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Every business is playing to win - in fact, that is axiomatic to business itself.
We all understand that the purpose of our organization is to operate to the best of its ability within its given market and to generate the greatest possible value for all its stakeholders.
Of course, what that value looks like will vary depending on the nature of the organization. In every business, though, at least some of the scorecards will be kept by the Finance Function.
How do you know if you're winning?
It's our role to track progress and to provide reliable data and insight to inform stakeholders about the position and success of the business when measured against given benchmarks.
But there are some crucial first principles that we must attend to first. In particular, what are the benchmarks that we are measuring against? What does 'winning' actually look like? And how can we be confident that the information we are gathering and presenting is accurate, reliable, and useful?
Reassurance through systems
The key to reliable scorekeeping can be found in well-designed management systems. Carefully-considered systems enable us to produce a 'single source of truth' regarding the position of the business and, provided that those systems are agreed upon and have buy-in from every organizational stakeholder, they form the foundation of all reporting and forecasting.
There is a range of established frameworks by which those management systems might be developed.
Roger Martin , the celebrated strategist, has written extensively about the three key categories of a management system. He refers to these as systems that:
This is one example of a framework for management systems. While it is a particularly well-considered one, the most important principle is simply to develop a system at all. Any system is better than no system because it enables the standardization of work and therefore the ability for the organization to understand itself better.
We win or lose together
Finally, we must remember that every function within an organization is interconnected and interdependent. Our wins and losses are not siloed or individual, but rather shared with and contingent on the success and failure of the business as a whole.
Interdependence is the watchword for modern business, and the Finance Function is uniquely placed to act as the key nexus of understanding. Remember: we win and lose together!
This was the seventh and final article in my new series "The Finance Function of the Future". You can read the previous articles below.
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While you await future articles you can read my latest series about the "Data to impact journey" below.
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Anders Liu-Lindberg ?is the co-founder and a partner at?Business Partnering Institute ?and the owner of the largest?group dedicated to Finance Business Partnering ?on LinkedIn with more than 11,000 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 130,000+ followers and close to 215,000 subscribers to my blog. I am also an advisory board member at?Born Capital ?where I help identify and grow the next big thing in?#CFOTech . Finally, I'm a member of the board of directors at?PACE - Profitability Analytics Center of Excellence ?where I support the development of new analytics frameworks that can improve profitability in companies around the world.
Helping Finance Managers of ‘busy’ SMEs improve profits | Turnaround 'busy' loss-makers | Improve profits of the already profitable | A proven step-by-step process | 90-day projects | Training & Coaching throughout |
1 年"What does 'winning' actually look like? And how can we be confident that the information we are gathering and presenting is accurate, reliable, and useful?" That's a key question. And particularly the last word "USEFUL". We have ways of testing and confirming accuracy and reliability - but 'useful' is something else. Because 'useful' means it helps someone (normally someone else) achieve their aim or task. But if it didn't help them. they would tell you, wouldn't they? My personal experience is OFTEN NOT: they accept what they get - because that's what they're used to receiving. My realisation of this came when I moved from being a Finance Manager, providing regular monthly accounts and reports - to being the General Manager of a loss-making division - tasked with turning it around. Quickly I realised that information which I had been responsible for providing - was very little help in pinpointing what needed done differently - to improve the performance and turn-around that business . Why had no-one 'complained' before? Because that's what they're used to receiving. ??
Senior Financial Accountant @ Agricultural Bank of China | Financial Analysis, Budgeting |CERT IFR.
1 年As usual, an informative insight! Thanks Anders Liu-Lindberg .
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1 年Love this