Nudging the CFO
Bryan Whitefield
I empower leaders to cultivate high-performance teams making faster and better decisions | Recognised expert in strategy and risk | Expert facilitator and trainer and sought-after mentor | MAICD, MRMIA & CCRO
Can you make a difference with measurement if the culture of your organisation is one that does not respect, let alone crave data? In my experience it is tough to go hard against the grain of an organisation’s culture. The better way is to nudge it.
How might you nudge it? Culture change can start from outside the executive team but ultimately it has to be adopted by a key executive and then the whole executive. So no better place to start than with the strategic risks of your organisation.
How do you start? One way is to approach the CFO and ask them how they view the strategic risk profile of the organisation affecting decisions about the balance sheet. That is, how much capital is being tied up because of the burden of risk. The burden that falls upon decision makers that leads them to hold something in reserve in case things don’t turn out as planned.
The next question to ask is what would it mean to the CFO if they had more certainty about the financial risk of the strategic risk profile. If capital could potentially be freed up. Or if they could explain with more evidence to the executive and the board why their advice is to hold a certain level of reserves.
If the answers are positive, then together choose one of the organisation’s strategic risks that has uncertain financial impact that the CFO would like to be more certain about and start Escaping the Matrix!; my blog about using statistical methods to better understand risks subjectively placed on the risk matrix.
An example for an airline like Qantas or Virgin before COVID would be the risk of a new entrant into the profitable domestic market. On the face of it, hard to estimate. However, there is data you could seek out. How many airlines in the world have the financial capacity, the fleet capacity (or more likely over capacity), the trend in regulation of the industry. Once things are in a new normal for the airline industry, they will have plenty of data about financial shocks and different strategies with which to respond!
So go give your CFO a nudge with something that really speaks to them.
Stay safe and adapt – with better measurement!
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Bryan Whitefield works with strategic leaders across all sectors to help organisations harness uncertainty – uncertainty is the strategic leader’s best friend. He is the author of DECIDE: How to Manage the Risk in Your Decision Making and Winning Conversations: How to turn red tape into blue ribbon. He is the designer of the Risk Culture: Build Your Tribe of Advocates Program for support functions and the Persuasive Adviser Program for internal advisers. Both can be booked individually or in-house. For more information about Bryan, please click here.
Senior Backend Software Expert. Transforming Scalability With Better Tools & Reporting
4 年I wonder what the background of those leading such an organisation would be? I agree with the "nudge" observation. Some people make the mistake of thinking the data simply has be presented - rather than moulded into a story that lets those with non numeric skills appreciate underlying truths..
Managing Director at Davmar Enterprises Australia Pty Ltd
4 年Good call Brian and will look forward to further comments, actions. What culture overall and what is culture relating to CM & BC etc? How many times do you only get 2/3 of a company attending RM , CM , BC and CM training and Scenario based Tests? I believe we need to nudge the CEO to ensure he / she leads their teams to get involved. Plenty of work needed in the nudging. David Martin