A Mindset For The Future of Finance
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
This is the newsletter "Here's the Future of FP&A and Business Partnering" which has more than 28,000 subscribers. You can subscribe as well to receive new articles straight in your inbox every Monday and the occasional Saturday.
I was recently interviewed for the CFO 4.0 podcast about my view on Finance Function 4.0. It was a great conversation with Hannah Munro. You can listen to the podcast here.
The Finance Function is undergoing a major transition - one that is already changing how Finance professionals work, and how Finance is positioned within organizations.
The mass adoption of technologies such as automation and machine learning is now very close. Indeed, many of the world's largest companies have already completely transformed their Finance Functions, making use of these new technologies to drive huge efficiencies.
The Finance Function creates value
But the Future of Finance isn't just about making things faster or cheaper. It's also about expanding the potential of finance and the professionals working within it by redrawing the boundaries of the field. In the Future of Finance, professionals aren't relied upon to carry out technical accounting tasks, or much of the nuts-and-bolts work of daily operations. Instead, they are valued for their insight and their strategic thought and work at the intersections of every business function.
This represents a huge shift in mindset: that Finance should be treated not as a cost center, but as a profit driver.
The five key assumptions
To achieve that mindset shift, both Finance professionals and other business leaders need to adapt their understandings of the role that Finance plays within an organization. Five key assumptions underpin the old operating model for the Finance Function, all of which are now shifting to reflect the realities of modern business.
Finance is a cost to be minimized: This has long been the predominant outlook amongst business leaders. With the intelligent use of technology, we can easily drive efficiencies in the Finance Function, for example by automating technical accounting tasks. But software can only do so much, and the pursuit of cost savings at the expense of growth and creativity is a recipe for failure. So today, rather than asking 'how do we reduce the cost of Finance?', we should be asking 'how do we maximize the business value that we create as a company?'
Finance is there to explain our performance: Of course, this remains a fundamental responsibility of any Finance department. But in forward-thinking businesses, Finance professionals are spending less of their time working on reports, and more of it translating that information into actionable insight. Today, the Finance Function doesn't just explain past performance - it works inter-departmentally to ensure that performance is constantly improving.
Finance helps us eliminate risk: Efficient risk management is a fundamental precept of business. But the successful organizations are not those that avoid risk, but rather those that understand which risks to take. Many people still see Finance as the organizational Scrooge, keeping the purse strings tight. But now, modern Finance Functions are helping their organizations to tune and hone their risk appetite, ensuring that they are nimble enough to seize the opportunity as it arises.
Finance creates value through data and reporting: True - but, as we've explored (and as we discuss in detail in our series on the Finance Function 4.0), much of this work now requires comparatively little human involvement. In the Future of Finance, the Finance Function is creating value not by producing reports, but by using its knowledge to create insight that drives real-world outcomes.
Finance professionals succeed by reaching their objectives: This mindset comes directly from the old, tick-box attitude to career development. In the Future of Finance, the focus turns away from paper-pushing and firmly towards relationship-building. In modern Finance, as in modern business at large, we succeed when we help others to succeed too.
Enabling the shift
So as Finance professionals, and as business leaders, how do we put our Finance Functions on the path to the Future of Finance?
The most immediate step we can take, and the thing I encourage you to do today, is to look carefully at the way you spend your time. Traditionally, Finance professionals are likely to spend about 30% of their working week on activities that we might class as Impact, Influence, and Insight - three of the pillars of the modern Finance Function. The vast majority of their time, the remaining 70%, will be taken up with reporting, analysis, data, and associated tasks.
In the Future of Finance, that arrangement is going to be inverted. Modern Finance professionals will spend 70% or more of their time on developing and delivering insight, building relationships and influence, and creating measurable impact within and outside their organizations.
Over the next few days, make a mental note of how your working time is accounted for. Are you spending your time working under the old operating model - or are you and your business transitioning to the Future of Finance?
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This was the first article in my new series "The Mindset For The Future of Finance". If you want to learn more about one of the key roles of the future "finance business partner" you can check out my recent series "The personality of a business partner" below.
If you want to hear from other business partners talking about their career journey and energize them about business partnering, check out some of the interviews below.
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To learn more about how to become a business partner you can read my ten-article series "Becoming a business partner" below.
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.
You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box”?where you set the ambition for your transformation. You should join the?Finance Business Partner Forum?which is part of the Business Partnering Institute's online community where we will continue to discuss this topic and you can click here to follow me on?Twitter.
All Successful Business Partners Are "Leaders"?(the last article in the series about our new capability model)
Should We Keep Talking About Business Partnering??(part of a 17-article series where we deep-dive on the WHY, WHAT, and HOW of business partnering by putting it on a formula)
Everyone Can Adopt A Business Partnering Mindset?(part of a six-article series about FP&A Business Partnering)
From Business Partner To Working Within The Business?(part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)
Is Your Product Optimized For Value Creation??(part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)
How Business Partners Turn Analysis To Insight?(part of case study series where I interview business partners about how they drive value creation using real cases)
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 9,500 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 60.000+ followers.
I coach business leaders for Financial, Spiritual and Relationship Success in Career & Business to Lead Life of Purpose
3 年Very valid pointers and really actionable items.