Why do we think transformation will make finance better?
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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This seems like a fair question to ask, doesn’t it? But we can’t make do with this one question. We first have to ask, “What is finance?” and then define its transformation. If we don’t do this, how do we know what we’re transforming, and even more importantly, into what? There is a third challenge to meet as well. Is the transformation going to deliver something that is better than what we have today?
What we’re trying to do is to change perspectives on finance, to explore if there’s a different route to take than the current transformation paradigm. I described this paradigm in last week’s article “Let’s change perspectives on finance.”
To change perspectives, we must challenge the status quo and the structures of finance and transformation. The best way to do that is to ask basic questions and come up with new answers. Let’s try that and see where it takes us. I couldn’t do this just on my own, so I solicited help from all of you. Here’s what you said.
What is finance and what should it be transformed into?
I asked a simple question: “What is Finance, or to be more precise the finance function?” I got a lot of responses and you can see all of them below. So what are the key points?
Read for yourself and post in the comments your perspectives on the quotes and add your own comment on what finance is. ?
“The purpose of the Finance function is to provide timely financial information to measure, predict, and support the organization in meeting its financial goals while unlocking business opportunities and mitigating risk. The output of the Finance function must deliver financial insights to business leaders in areas such as profitability, cash flow, or revenue performance and influence business behavior and strategic choice to deliver returns to shareholders.” – Kazeem Jaffer
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“Finance is a player coach that never gets substituted and happens to have the whistle.” – Mzonjani Nkomo
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“I would say Finance is an organization's Vector Evaluator” – Colin Hudson
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“In my perspective, finance is a means to drive your vision and objectives which requires building momentum at all stages to uplift the masses. It has a deeper impact than is not limited to just data recording and analytics. What it brings value to our products and services which translate into monetary with practical measures depending on the demand and supply trend. Some benefit from it and some lose its value due to a lack of financial understanding in the long run. The motto is whatever wealth has been garnered needs to be utilized and distributed equally to fulfill the social needs. For eg. Follow 80/20 rule and cashout 80% for your operational expenses and reserve 20% for future needs during slowdown instead looking for avenues for borrowings to meet your needs at that juncture.” – Imran Mohammed
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“Economics talks about the "allocation" of scarce resources between competing needs/wants of individual households, firms and government, while Finance talks about "how to raise funds" or the "source" of the scarce resources for meeting the needs/wants of individual households, firms and the government.” – Emmanuel Afimia
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“If we embody business like an automobile, then Finance function is like a navigation system which helps business in navigating through their journey by constantly giving data, insights where business is standing, how much journey traversed, how much is balance, what are alternative routes, etc.” – Rajnish Jha
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“Finance is the ''engine room'' of every organization or entity. When the engine functions well, the whole vehicle also does. Relating that to an organization means finance has very important roles. From Supporting sales, decision support, scenarios planning, business partnering, cash flow management, risk management, budget and reporting etc. Summarily, when the finance function plays its role effectively, the whole organization is happy.” – Franklin Okafor
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“Finance is a consequence of what has been done in a business or non-business activity” – Andi Saputra
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“A compass for the business to optimal decision making.” – Juan Carlos Camarena Gamez
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“Finance is the means and the ends” Nishant Agarwal
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“Financial markets exist to match those who have funds with those who need funding in order to innovate, grow, provide employment and enhance the wellbeing of society. Primary markets do this matching directly. Secondary markets make the matching process easier by reducing the risks of an investment in primary markets (e.g. by providing exit options for primary investors).” Robert Brown
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“[Finance is the] Lifeblood of business - Partnering, helping achieve strategic goals and maximize value without compromising on morality and ethics.” – Meera Venugopalan?
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“Finance is the lifeline of a business. How the finance functions are applied determines the success or otherwise of a business venture.” – Deborah Joseph
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“Finance is an information processing unit which uses financial and non-financial information as input, it performs the mathematical, statistical and logical operation and provides decisions about wealth maximization.” – Hemant Desai
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“Managing of funds...” – Jagadeesh B
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“Finance is essential - you won't survive without it - it is the lifeblood, or heart, of an organization. ? When it works well it is often taken for granted and you might mistakenly believe you can manage without it - you wonder why are there so many in finance and what are they all doing?!? If finance isn't working well it can go wrong really quickly and repairing the damage done can be a costly exercise.? Sometimes the damage is irreparable - fatal. ? When finance is really performing and is recognized as adding value, appreciated, has a seat at the table it can be like rocket fuel - taking an organization to new heights, accelerating progress and success. Finance is exciting.” – Susan Chriodain
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“Finance is the co-pilot to the business partner pilot and capable of taking over control when needed.” – Shiva Vilayanur
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“Finance is the tool, or you could say the means to transform your vision or goals in reality.” – Eduardo de Souza Silva
My perspective on these quotes is that some of them speak about what finance is today, whereas others speak about what it should become. I don’t think many CEOs or business functions today would agree that finance steers the business. They can probably all agree that finance holds the whistle although some probably wouldn’t listen even if we blew it.
Now we know what finance is, how can transformation improve it?
In simple terms, transformation is supposed to increase our capacity to drive the business to make better decisions. It should help us improve the relationships with business stakeholders to the extent that we never have to blow the whistle. No matter how much we want to change perspective on finance, it doesn’t change the fact that companies are made up of decisions and the ability to execute the decisions.
The question we should explore in future articles is the HOW. ?
To that end, we can try and redefine and change perspectives on finance as much as we want. I’d be curious to learn your answers to these questions too. I’ve been writing a lot about this and tried to give answers in a more traditional way. Trying now to change perspectives could be a way to see some radically different answers. Are you ready to see what happens?
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This was the second article in my new series on how to change perspectives on Finance. You can read the previous article(s) below.
If you want to learn about the changes that are happening in Finance and Accounting these years then I have few recent articles for you that you might find relevant. Check them out below!
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.
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 and a partner at the?Business Partnering Institute ?and owner of the largest?group dedicated to Finance Business Partnering ?on LinkedIn with close to 10,000 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 60.000+ followers and 140.000+ subscribers to my blog. Recently I became an advisory board member at?Born Capital ?to help identify and grow the next big thing in #CFOTech.
This is Veerabrahmam, Actively looking for Bigdata Development roles like AWS Developer|Pyspark|Google cloud Engineer|Java Developer role|Azure.
3 年Thanks for sharing
Fractional Finance Director | Process Automation Evangelist | Transforming the Finance Function
3 年Anders Liu-Lindberg very diverse and interesting collection of perspectives worth contemplating for the future finance function of any organization, thanks for sharing. From my point of view, where most companies fall short is in attempting to maintain the old ways of doing things (operational processes, outdated legal entity / chart of accounts structures, etc.) and new ways of promoting more efficiency are usually stifled by the politics of the long-established managers who are in fear of losing the clout they've built in the organization over time. What are your perspectives on how innovative finance teams can overcome this political inertia?
Vice President at Big Horn Managers, Ltd.
3 年Wall sets the trends. https://www.dhirubhai.net/posts/mrs-linda-veri-azzara-3b243419b_offshore-companies-dont-have-to-pay-us-cgt-activity-6841386529592619008-gC0Z/
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 |
3 年I wonder would a better way to define what 'Finance' currently is/does in an organisation is rather than start by asking its Finance professionals (who generally think it does great things), start by asking it's Commercial and Operational managers? (I'm reminded of the line from the Robert Burns poem - which goes something like... "Oh would someone the gift to give us - to see ourselves as others see us"!!) If 'others' view became the starting point - and we could jointly agree, with them, what the 'transformed' (finish) state would be like - we would perhaps have a better view of exactly what the 'transformation' needed be - and clear checkpoints to know whether it had been achieved or not.
Director - LMS Advisory, Advising SME's on Growth, Strategic Planning, Maximising Profit & Cashflow. Financial enabler. AI/Tech enthusiast | LMS | KeepMyBooks | WihseFP |Cerebiz |
3 年Some great quotes here Anders Liu-Lindberg . I would love to see these same questions posed to CEO's and other business leaders, and see how their describe their own finance functions or what they expect from their finance functions. I am sure they would be slightly different but equally enlightening!