Time to revamp your month-end close #1
When January hits I always get a surge in sales of my implementation guides as the New Year resolutions are kick-off. So, I am busy updating these to meet demand. I will share with you extracts from these implementation guides.
If you do not adopt these two mantras, you may as well be on holiday.
Importance of embracing abandonment
Management guru Peter Drucker , whom I consider to be the Leonardo de Vinci of management, frequently used the word ‘abandonment’. It is one of the top ten gifts Drucker gave us all. He said,
“Don’t tell me what you’re doing. Tell me what you’ve stopped doing.”
Abandonment is thus the key to a fast month-end.
Peter Drucker observed in one organisation that the first Monday of every month is set aside for “abandonment meetings at every management level.” Each session targets a different area so that everything is reviewed over a year. This process would work well in the finance team except we should meet once a week to discuss at least two abandonments each week!
The act of abandonment gives the finance team a tremendous sense of relief, for it stops the past from haunting the future. It takes courage and conviction from the CFO. Knowing when to abandon and having the courage to do so are important leadership attributes. In order for this implementation guide to work, there needs to be an adoption of:
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The importance of challenging the status quo
Far too often, we have accepted antiquated and anti-lean practices within the corporate accounting repertoire as the status quo. If the medical profession used our approach, they would still be using leeches (well, they still do, I understand, in special cases). The medical profession regularly has breakthrough conferences, and many practising surgeons in that field attend and adopt the new procedure. This should be the corporate finance model.
In an interview called The Lost Interview, Steve Jobs was asked, “As a 22-year-old worth $10m, and a 25-year-old worth $100m, how did he get his business acumen.” He said he began to realise that most business was pretty straightforward. He talked about when Apple had their first computerised manufacturing plant for the Apple II, and the accountant sent Steve Jobs his first standard costing report. Jobs asked, “Why do we have a standard cost and not an actual cost?” The response was, “That's just how it’s done”. He soon realized that the reason was the accounting system. When that was fixed, standard costing reports vanished.
In business, Jobs believes that few managers think deeply about why things are done. He came up with this quote, which should be on every wall and in front of every workstation in the finance teamwork area.
Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped into living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown your own inner voice.”
If this is the year you want to embrace abandonment and challenge the status quo we better carry on the dialogue. Your next step is to buy the implementation guide "Fast close: A Guide to Rapid Month-end and Year-end Reporting – Implementation Guide (120 page PDF whitepaper + electronic templates)".