So you think you can innovate?

Dec 19, 2016
In this final article in my five-part series on the Finance department‘s transformative journey, we get close to the heart of what Finance should be in a digital world: a true business partner. Once the data, the insights, the processes and the tools are in place, Finance is ready to take up its role as an enabler of innovation and transformation. However, being a business partner isn’t just about data and tools. A fool with a tool is still a fool, isn’t he? Partnering is about establishing connections and interaction between people. To do so, one needs empathy, creativity, analytical skills and transformational skills. I don’t mean to stereotype Finance professionals, but these skills are rarely attributed to them.

Time to close the talent gap

Rather than mainly delivering reports, Finance should be much more involved in outlining the direction of the organization. Building on the insights that they can deliver, Finance departments must then help to define a clear roadmap for achieving the company’s goals. That means breaking with their disposition to conservatism and with hiring only ‘traditional’ financial profiles. On the bright side, I’ve noticed that many CFOs are aware of the talent gap that needs to be bridged. Unfortunately, this change is happening very slowly. So the challenge will be to either attract these new, hybrid professionals or to develop the necessary skills internally – and quickly, before other departments step up to support the business with creative and future-oriented thinking.
Once the right skill set has been developed, it is time to co-create with the business. Finance should empower the business through new insights that go way beyond the traditional month-end closing results, facilitating a better understanding of upcoming risks and issues. Finance’s ambition should be to help the business to become more agile and to break down the silos that risk steering the organization off course.

Insights for growth

If Finance establishes a strong partnership with the business, it can play a pivotal role in ensuring that the organization makes the right trade-offs. By providing the relevant insights to different stakeholders, Finance can contribute to better alignment within the organization and hence stimulate profitable growth.

Let me illustrate that with an example. For many organizations, operational excellence and customer experience are equally crucial to stay competitive in today’s business context. That’s why multiple initiatives and projects are being launched to improve the company’s performance along both axes. However, the more you stretch one axis, the more you risk performing poorly on the other, i.e. the better you do in terms of operational excellence, the more likely it is that the customer experience will suffer, and vice versa. The KPIs for monitoring both type of projects are very often misaligned, or are even counterproductive. This reflects the organizational silos that are each reaching their own targets but not supporting shared goals.

Balancing operational excellence and customer experience

That’s where Finance can add enormous value. By taking profitability insights into account, operational excellence and customer experience can be much better balanced to deliver long-term growth. In practice, this would mean that Finance takes on a more active role in supporting Supply Chain, for example, by delivering cost-to-serve insights that fuel the Sales and Operations Planning (S&OP) process. But that’s just one aspect of it.
This article is the final article of a series of 6. After setting the scene of why CFOs need to transform the finance role, I dove deeper into the 5 challenges CFOs are facing today. I also shared some of my findings in the report `Fast Forward Transformation or Back to Basics?

In a future series of articles we will dive deeper into the topic of Finance performing the balancing act between operational excellence and customer experience. So stay tuned!

Author: Thierry Bruyneel. You can connect with Thierry on LinkedIn.