How to create a resilient finance function
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
How do we create a resilient finance function capable of not only managing but driving change? In this post, we’ll explore what it takes to be ready for Finance Function 5.0.
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The only constant is change. Have you heard that said before?
Shouldn’t we then get used to the idea of change and - more importantly - shouldn’t we start to take control of it, rather than have it have control of us?
We need to learn how to become drivers of change rather than acceptors of it. The ability to adapt and thrive is not a “nice to have”, it’s now a necessity.
Why is change so hard? Because it’s in our wiring. Our brains are designed to be resistant to change. We’re preprogrammed to be more afraid of losing something than we are eager to gain something. That makes being open and positive about change difficult from the start.
The key is, first, to accept change as inevitable. And then to think of change as positive and something we can, and are capable of being, in charge of.
So how do we do it?
Allow every finance professional to become a change agent
The finance function is at the beating heart of the company.
While Finance Function 5.0 is still responsible for managing the company's resources and also needs to be agile, adaptable, and ready for the inevitable change that may come its way.
Not only that but with the availability and access to data, information, and analytics, the finance function should be driving the changes necessary to survive and thrive by making strategic recommendations to the ExCo thereby influencing the direction of the business model.
Building Resiliency into Finance Function 5.0
Overcoming the challenges posed by today’s business environment, like changing regulations, technology developments and disruptions, and shifting customer demands is key to success.
How can we be resilient in the face of all these changes?
Empower technology-enablement
Finance function resiliency needs to be enabled by technology. What’s even more important is developing the skills and capabilities of your finance professionals so they can confidently use new technology.
Advanced analytics, machine learning, and artificial intelligence (to create predictive models and drive real-time insights) will be revolutionary to Finance Function 5.0, especially as humans and machines become more interdependent. Using the insights gleaned from these tools can help identify key opportunities and advance warning of threats.
Putting this data in the hands of strategic decision-makers can drive better decision-making leading to positive change that Finance Function 5.0 has orchestrated.
Make data-driven decisions
Technology is only one part of this story.
To make the finance function resilient, finance professionals need to be properly trained on how to use analytics and how to drive insights gleaned from raw data.
To do this, they need to be given the autonomy and authority to make strategically-relevant decisions and allowed to be change agents within the organization.
Finance Function 5.0 is a key strategic partner to the business and finance professionals need to be seen, and thought of, as business partners, not simply bookkeepers.
By developing your finance professionals’ ability to use and interpret data, they will become involved in strategic decision-making, and they will be able to influence the direction of the business - thereby driving change.
Persuasive, risk management-savvy communication
Finance Function 5.0 is about identifying and providing timely and accurate information to decision-makers.
So, finance professionals must be able to produce reports quickly and accurately but more than that they need to be able to identify emerging risks and be proactive in managing them, as well as develop contingency plans and be able to execute them in the event of a crisis.
By having this oversight they can build the trust of the board. To do this they need access to the insights that drive better decision-making.
Most important is then the capacity to communicate effectively with decision-makers and provide them with the information they need to make informed decisions.
Use change as an opportunity to give yourself a competitive advantage
The above three points each require a significant amount of technology enablement and - crucially - the right training to turn each and every finance professional into a change agent but Finance Function 5.0 is more about embracing change and leveraging it as an opportunity rather than a threat to drive change within the organization and thereby making it more resilient.
We can achieve this by being confident in managing risk, providing timely and accurate information, adapting to changing business models by actively driving it forward, and expertly navigating the challenges and uncertainties for the next time we need to pivot to a “new normal”.
Finance Function 5.0 means being proactive, not reactive, being viewed as strategic partners to the business, and being involved in strategic decision-making.
What do you think? What would you like to see your finance function do to be more resilient? Let us know in the comments and start the conversation.
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Anders Liu-Lindberg is the co-founder and a partner at Business Partnering Institute and the owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 11,000 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 240,000+ followers and more than 290,000+ subscribers to my blog. I am also an advisory board member at Born Capital where I help identify and grow the next big thing in #CFOTech. Finally, I'm a member of the board of directors at PACE - Profitability Analytics Center of Excellence where I support the development of new analytics frameworks that can improve profitability in companies around the world.
QuickBooks Certified Pro-Advisor, XERO Advisor, MSS, M. Com (Accounting), CMA (Final),
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1yYou allude to the interdependence of human and AI, Anders. I think a big part of the new step is going to be about getting the best out of both and the best out of the relationship. For example, embracing AI for the more repetitive tasks to enable more stakeholder engagement in the decision-making process. Or getting a more rounded perspective of how each decision has a knock-on impact on different parts of the business.
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1yWell said.
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1yI had an interesting discussion about the fact that resilience was also linked to "letting go", and in particular letting go of the perfection. We're used to want 100% correct, 100% efficient, 100% clean solutions while sometimes, our work requires an 80/20 approach. Hence the resistance to change: a new, better but not perfect solution will be seen with defiance vs the old