Category Archives: Strategy and “Big Picture” Focus

Eight Steps for Leading Change

John P. Kotter of Harvard Business School has written extensively on change in articles and books, including Leading Change (Harvard Business School Press, 1996) and The Heart of Change (Harvard Business School Press, 2002).

In Leading Change, Kotter lists eight reasons why organizations can fail in their transformation efforts (pp. 4-14):

  1. “Allowing too much complacency.”
  2. “Failing to create a sufficiently powerful guiding coalition.”
  3. “Underestimating the power of vision.”
  4. “Undercommunicating the vision by a factor of 10 (or 100 or even 1,000).”
  5. “Permitting obstacles to block the vision.”
  6. “Failing to create short-term wins.”
  7. “Declaring victory too soon.”
  8. “Neglecting to anchor changes firmly in the corporate culture.”

According to The Heart of Change (pp. 2-3), making big leaps forward (rather than mere continual and gradual improvement) is essential. In addition, changes must focus primarily on behavior, with strategy, systems, and culture secondary. Change is about influencing feelings more than providing analysis to impact thoughts. Corresponding to the eight categories of failure, here are the eight key steps for creating effective change (pp. 3-6):

  1. Create a sense of urgency, which “gets people off the couch, out of a bunker, and ready to move” (p 3).
  2. Put together a qualified and effective guiding team.
  3. Create a vision and set of strategies.
  4. Communicate “simple, heartfelt messages sent through many unclogged channels” (p. 4).
  5. Provide empowerment, not by “handing out” power, but by removing obstacles.
  6. Create short-term wins to produce momentum. Otherwise, “the cynics and skeptics can sink any effort” (p. 5).
  7. Don’t try to do too much at once, but don’t lose momentum by letting up and quitting too soon.
  8. Behave consistently to create a culture that helps change stick.

As opposed to the pattern of “Analysis-Think-Change,” much more frequently the progression is “See-Feel-Change” (The Heart of Change, p. 11).

In conclusion, Jack Welch once reportedly said, “You’ve got to talk about change every second of the day” (p. 14). The world is constantly changing, and one can either choose to effectively lead the process of change or let change sneak up by surprise.

See the Big Picture to Position Yourself as CFO Material

The Journal of Accountancy ran a rather thorough article detailing skill sets, thought processes, and behavior patterns that are helpful toward achieving the CFO role. Although perhaps dated in some respects, the article has a number of worthwhile insights, and here is a summary:

  • Priority #1 for an aspiring CFO is understanding strategy. See the “big picture” of how the organization creates value in the marketplace.
  • The CFO is the CEO’s right hand. If you aspire to this role, make sure the CEO knows it. Demonstrate that you can think like a member of the board of directors and that you take seriously what the board thinks, just as the CEO does.
  • Go beyond numbers and accounting. In addition to technical acumen, develop “soft” and “people” skills.
  • “Look for what the market wants rather than what you want.”
  • “Focus on the job content and reporting relationship.” Don’t worry too much about your title as you develop your career, strengthen your skill sets, and work on achieving your goals.
  • Have a positive attitude, ask questions, and demonstrate willingness to get involved with other teams in the organization.
  • The CFO must understand operations and technology. This is a persistent theme throughout much of the literature on the topic of CFO skill sets.
  • Decision-making and CPA or MBA skill sets are advantageous for differentiating your candidacy for the CFO role, possibly even more so than specific industry experience. That said, breaking into a new industry requires lots of time and hard work.
  • Getting some corporate treasury or controller experience is important, as opposed to exclusively focusing on public accounting. However, working in public accounting for awhile can strengthen accounting and regulatory compliance skill sets.
  • “Organizations typically want to hire a CFO who’s been a CFO.” Therefore, an aspiring CFO must develop a strategy for effective positioning as CFO material.
  • Do research on an organization before interviewing, determine the company’s needs, and based on what you learn, put together a proposal demonstrating your ability to be on senior management’s problem-solver team.
  • Be a self-starter, and study your organization, industry, competition, and benchmarks.
  • Be a team and consensus builder who can operate cross-functionally.
  • Seek out opportunities to broaden your horizons and skill sets by taking initiative and participating in various types of roles and projects in your organization.
  • Maintain your reputation and integrity. You must be loyal and trustworthy.
  • “Self-confidence is persuasive to your superiors.”

This is a long list, and it’s only a summary of some of the many points within the article. These ideas can help an aspiring CFO understand how to become positioned for the role through undertaking career development initiatives.

Create a Company Dashboard

How can a finance professional provide timely and relevant information for business decision makers? In a previous post we looked at some steps for creating a company wiki for organization-wide knowledge sharing. Another routine and systematic tool for business information sharing is a dashboard. The CPA Journal recently ran an article about Developing Dashboards for Performance Management, and here are some highlights from the article:

  • Dashboards focus on goals. Managers have the responsibility to achieve business objectives, and they can make the best decisions when they have concise, periodic updates about defined organizational metrics.
  • Dashboards provide a quick visual glimpse into key performance metrics. The authors suggest having four to seven metrics on the dashboard to avoid information overload.
  • Dashboards can highlight financial as well as non-financial elements of business performance. The balanced scorecard approach, for example, assesses a company on the dimensions of financial, customer, internal processes, and learning and growth.
  • Dashboards should be user-oriented. Will the dashboard be used for reporting strategic, analytical, or operational information? This depends on the needs of the users. Also, the design and formatting should be tailored based on the type of user.
  • In choosing a dashboard technology platform, consider that ERP systems such as SAP and Oracle have built-in reporting and analysis modules. Alternatively, data can be drawn from databases into Excel to develop dashboards that can automatically refresh periodically. Excel dashboards can be developed from scratch, templates can be purchased, or skilled consultants can develop dashboards. 
  • The dashboard development process includes defining the objective and the metrics, seeking user input, building and testing the initial dashboard, publishing the dashboard, and monitoring its use.
  • Dashboard design elements can highlight important information, communicate information concisely, and engage users. The concept of “gestalt” can help balance various design elements to tie together the “big picture” with the details of the dashboard.

Dashboard development is a good skill for finance professionals to add to the professional toolkit. In addition to developing dashboards to share and analyze key performance indicators, a trusted go-to finance professional can provide decision support to help senior management use broad sources of information, including dashboard metrics, to steer the company in the right direction.

Lessons from a CFO: Operations, Technology, and Innovation

With the rise of technology and the rapid pace of change in the world, the role of the CFO is clearly being transformed. The traditional “sweet spots” for top finance executives are broadening beyond accounting and finance toward operations, technology, and innovation.

Lon Searle, CFO of YESCO which makes custom electric signs, provided some glimpses into his role in a recently published Forbes interview. Here is a summary of some of his points:

  • CFOs are becoming more focused on operations and supporting every department of the organization through financial analysis: “In manufacturing, the CFO has to get out on the shop floor and understand the operations and the product the company is making; he or she has to move the ball down the field in a way that provides value to the company.”
  • Understanding and working with information technology is an important part of the CFO’s role: “The CFO position is gaining a systems focus – it works with IT and financial analysis that can help every department.”
  • CFOs can serve as coaches for the finance staff as well as other functions in the organization: “I help train the financial staff, train the sales staff to lease to our customers, and even train our franchisees to help with financial decisions and funding decisions.”
  • Understanding international business is increasingly important for CFOs: “I also get involved in global shipping and interactions – getting letters of credit for our customers to ship products all over the world and deciding whether to hedge the currency risk in transactions. We’re a global company but not that large, so to be involved in that is surprising to me, given my career path. But it’s really a global economy now, and almost any CFO should be involved in those decisions and that research. It’s interesting and challenging, too.”
  • CFOs can help drive innovation in the organization: “CFOs can be a driving influence, spreading ideas throughout the company, helping employees cross-fertilize and see things from a different perspective. It’s a great position to be in. It’s unfortunate that some financial officers just see themselves as keepers of the books and not champions of innovation.”

Operations, technology, and innovation are broad categories for a financial professional to have on the radar, in addition to developing coaching skills and international acumen. The path toward the CFO role includes gaining professional knowledge and experience in these areas. These are helpful ideas to consider in mapping out a career development plan.

Step Number One for Creating Positive Change

No organization is perfect. Every business has room for improvement. Even the best companies have to constantly reinvent themselves in order to stay ahead within a rapidly changing marketplace.

Business professional who care about their organization’s success must identify key steps to effectively manage change. Whether the matter is a problem to be solved or a proactive initiative to keep the business on the cutting edge, the best approach is to take ownership.

Senior leaders hire employees to solve problems. Employees do not exist in the organization so that they can delegate tasks and problems for the boss to handle. Sometimes an employee will be able to identify a problem that needs solved or an initiative to pursue, but the challenge becomes presenting an effective business case that gets to the root of the matter, initiatives a path forward, and assigns authority to the appropriate parties.

If there is a hole in my roof it does no good for me to say, “Someone needs to fix that hole in the roof. I hope someone comes along soon before it rains, or else we’re all going to get wet.” Rather, I must identify a solution: Either I can obtain the needed supplies, get up on the roof, and get my hands dirty; or I can identify and pay a competent repair person to do this for me.

In the same way, when an employee sees a “hole in the roof” within the business, it does no good to tell the boss that the problem needs solved and leave it at that. Absent a solutions-oriented approach, this only provides the employee with a reputation of being negative or a nag. Rather, the employee should lay out the problem, provide well-research options for potential solutions, and then ask for the boss to sign-off on pursuing the most feasible solution. This process can take time in soliciting input, but the boss needs to know all along that the employee fully intends to take ownership and handle the matter to completion.

The final proposal to solve the problem and drive change might involve spending time, money, or other resources. Whatever it means, the employees must take initiative and own the matter through to completion. Managers will appreciate and start relying upon those rare employees who do not try to pass the monkey onto the boss’s back.

The Future of Your Work

TIME ran a series of ten features regarding the future of work. In formulating a career development plan it is imperative to begin visualizing how work life might look in the future in light of rapid global changes. Here are a few summarized conclusions from TIME‘s articles:

  • “We will see a more flexible, more freelance, more collaborative and far less secure work world. It will be run by a generation with new values — and women will increasingly be at the controls.”
  • Not surprisingly, one of the best sectors into the future will continue to be technology. Entrepreneurs will set the tone for which specific areas thrive and dominate within the broader tech landscape.
  • Debate rages about the role of business schools in inculcating managerial ethics. One way or another, the importance of business ethics – and the consequences for diverging from paths of integrity – will not wane into the future.
  • As a cost-savings measure, companies will increasingly expect employees to contribute more toward paying for their benefits. Many companies started their benefit plans when the ratio of young workers to retirees was much higher. Now that the ratio is reversing, companies have to adjust accordingly and trim back benefits expenditures for employees and retirees alike.
  • Rather than the old traditional “up or out” model of career advancement, some companies are adopting a “lattice” model. Employees can “dial up” or “dial down” to different roles and enjoy more flexibility. Implementing telecommuting and other forms of flexible work arrangements can even be financially compelling for companies.
  • Baby Boomers will have to keep working longer than anticipated rather than retiring due to not having enough retirement savings. This can have both positive and negative effects for the economy.
  • Women will continue to extend their influence in the workplace. Women have a distinct style focused on collaboration, managing risk cautiously, and looking into the future, as compared to their male counterparts who thrive on risk. With more women comes more emphasis on work-life balance and flexibility. Furthermore, “When a company gives employees freedom, it doesn’t just feel good or get shiny, happy workers — productivity goes up.”
  • Green jobs geared toward various environmental objectives will likely continue to gain traction.
  • Generation X management styles will increasingly emerge. Gen X will have to manage Gen Y. “Companies already want more short-term independent contractors and consultants and fewer traditional employees because contractors are cheaper. And seniority matters less and less as time goes on, because it’s about the past, not the future.” Collaboration among workers from various backgrounds who are spread all over the world will become increasingly common. Cross-cultural communication and motivation strategies will become paramount career skills to develop.
  • Manufacturing productivity continues to vastly increase, coupled with less domestic demand for manufacturing workers. “Highly skilled workers creating high-value products in high-stakes industries — that’s the sweet spot for manufacturing workers in coming years. … Ultimately, what’s endangered is not U.S. manufacturing. It is our deeply ingrained cultural image of the factory and its workers.
  • “In order to understand what your workplace is going to be like in five or 10 years, you need to think about what your work is going to be like. Here’s a clue: employers no longer need to pay you to drive to a building to sit and type. In fact, under pressure from an uncertain economy, bosses are discovering that there are a lot of reasons not to pay you to drive to a central location or even to pay you at all. And when work gets auctioned off to the lowest bidder, your job gets a lot more stressful. … So, are you essential? Most of the best jobs will be for people who manage customers, who organize fans, who do digital community management. … Some people will embrace this new high-stress, high-speed, high-flexibility way of work. We’ll go from a few days alone at home, maintaining the status quo, to urgent team sessions, sometimes in person, often online. … Work will mean managing a tribe, creating a movement and operating in teams to change the world. Anything less is going to be outsourced to someone a lot cheaper and a lot less privileged than you or me.”

What other trends for work and careers can we expect in coming years and decades? How should we respond? This is a significant theme I plan to explore in many future installments. Whether we like trends of rapid change, reality is reality. We can either complain about emerging patterns, or we can learn to work them to our advantage. The choice is ours. Let the planning and action begin.

When it Comes to Motivating Employees, Money is Only the Tip of the Iceberg

Everyone tries to get more for less. This is a foundational axiom of the economics profession. We allocate our scarce resources in a manner that we believe will maximize our satisfaction.

We might expect, as a corollary principle, that everyone wants to work less and get paid more. This is true to an extent, but it’s not quite that simple. Some people attain fulfillment out of their work. Indeed, many people would like to attain even more fulfillment out of their work. Thus, while money is important, it is often not the driving factor behind motivation. Furthermore, for those whose work is fulfilling, working less is not always the highest priority either.

The question then becomes, how does a business leader make employees’ work fulfilling for its own sake?

Many professionals are driven by a sense of personal achievement and success. When they start a new job they like the feeling that they are learning new skills and quickly contributing to a team. They like to be part of a bigger vision that will create new opportunities for growth, responsibility, and compensation (yes, including a larger paycheck).

Thus, the first step is for senior management to articulate and model a clearly defined vision. This can be captured in a vision statement about where the organization is headed. The organization should also have a mission statement that communicates what the enterprise is and what it does. Finally, the organization needs goals that help define the purpose for each function and role.

Helping the owners make more money for themselves isn’t the most compelling vision for most employees to latch onto. Employees enjoy listening to their favorite station, WIIFM: “What’s in it for me?” Senior management can best help themselves when they clearly define for employees what’s in it for them.

I suggest challenging employees to latch onto the company’s vision and to define their own goals and development plan within the organization. Management should not pretend to have the prerogative or role of owning the careers of the employees but should help the employees understand how they can fit into the team. Don’t make the environment conducive to the employees who prefer someone to hold their hand and spoon-feed them through the complexities and challenges of work life. Each employee has the ultimate personal stake in career development and should assume the burdens and rewards of the development process. This is the type of employee who can help the organization thrive.

Almost everybody wants to make more money. That’s no secret. However, satisfaction and motivation on the job is more complex than simply being able to expect increases in pay over time. Motivated professionals want the ability to demonstrate their value and earn their higher salaries. Employees will attain a sense of achievement if they know they are contributing to the vision and mission of the organization, staying on track with personal and organizational goals, and developing career skills to attain higher levels of professional success.

Planning for Change: Be Flexible and Responsive

Though it’s almost a cliche by now, the statement is true: Change is constant and rapid. The environment of constant change requires business managers to be flexible, attentive, and responsive. A recent CFO Magazine article, New Strategies Around Strategy, provides some insights that I summarize below:

  • Have a long-term plan to set forth the direction for your products, markets, and strategy.
  • Be flexible and nimble; based on changing factors in the marketplace, test the assumptions that went into your planning.
  • Have contingency plans in place so that you will be ready to quickly respond to changes in the marketplace.
  • Recognize that change is the “new normal,” and embrace the environment by taking calculated risks.
  • Information is vital for planning, especially historical insights about how businesses responded in challenging circumstances.
  • Write your long-term plan in pencil, not in ink. Keep an eraser handy.

Read the entire article for more details about flexibly budgeting and strategically planning.

Five Ways to Avoid Getting Ripped Off

In theory, the world would be a great place to work if everyone were honest, transparent, and competent. We would not have to waste time out of our busy workdays uncovering and dealing with mistakes, frauds, intrigues, scandals, shenanigans, and so forth. We could focus on what we’re really in business to do, which is satisfying customers’ demands efficiently and effectively.

In reality, we all know the world is different from this. Regrettably, life is not so straightforward. Work and business are complicated by the ever-present necessity to maintain situational awareness and never let our guard down. Without being paranoid or cynical, we understand reality — everyone in the business world is looking out for their own best interests, regardless of how positively or negatively this might affect you or your business.

In the spirit of managing risk, here are five tips for avoiding getting ripped off:

  1. Demonstrate due diligence. Sometimes prevention is the best cure. Effectively position yourself to give others the impression that you are watching over your interests with an eagle eye. In a situation of risk and uncertainty, demonstrate that you will do whatever it takes to dot all the i’s and cross all the t’s to ensure that you are not taken for a ride. At the same time, be careful to maintain the element of surprise and not divulge key facets of your due diligence strategy.
  2. Ask open-ended questions in a non-threatening manner. Take the lead on getting to the bottom of whatever matter you are handling. Know when to be laid-back and casual and when to lower the hammer. In certain situations, if you ask pointed questions or insinuate suspicions of wrongdoing up-front, you will often encounter stonewalling and defensiveness. It is better to give the other person an opportunity to voluntarily come clean if they have the impression that you are bargaining in good faith. If information is not forthcoming after a brief time period with the casual approach, more drastic steps can be pursued.
  3. Anticipate responses. Know the boundaries of what would constitute a legitimate explanation versus what you should consider an excuse, illegitimate rationalization, non sequitur, or plain old lie. Have follow up questions planned depending on what responses you receive. Also, anticipate that others you are dealing with will try to use the element of surprise to their own advantage. Expect the unexpected.
  4. Make sure you understand. Be alert for a “shark in the water” when you hear someone throw out expressions that are clearly intended to artfully baffle others. Some people are easy to manipulate, so don’t let yourself be one with the wool pulled over your eyes. Don’t take everything you hear at face value. Dig deeper, and don’t ignore red flags.
  5. Buy time. Issues arise over time. If you are dealing with a legitimate operator you will notice a pattern of competence, professionalism, and integrity. Take time to observe who you are dealing with, and realize that they are generally putting their best foot forward for you from the get-go. Always expect potential negative surprises, rarely positive ones, to surface later. If you have a negative taste in your mouth from the get-go in your dealings with someone, don’t expect it to get any better with time. Also realize there is a fine line between buying time and procrastinating. Depending on the scenario, if you wait around too long, issues can start to pile up and it can become increasingly difficult to navigate through the compounding complexity. Take enough time to work through due diligence and gain confidence, but once you’re ready to progress with a business deal or relationship, move forward.

Finally, it is important to recognize that we all will make mistakes in our dealings with others. Someone might try to rip you off and have some success, but don’t worry about it too much. Rather than getting discouraged or frustrated, learn from your mistakes and be wiser the next time you encounter similar situations.

The Number One Way to Gain Your Employer’s Trust

All of us have seen or heard of situations in which an agent (e.g., an employee) abuses the trust of his principal (e.g., the employer). Business theorists refer to this as an “agency problem,” the conflict of interest that exists when an agent looks out for his own interests above (and to the detriment of) the interests of his principal.

One of my mentors, a finance executive, once explained that he tried to manage the company’s money “as if it were my own.” He set a good example: Just as he would watch his own finances with eagle eyes, he paid careful attention to his employer’s money. By demonstrating a pattern of due professional care, he clearly demonstrated that he took his fiduciary responsibility seriously.

The best way to gain your employer’s trust starts with your own mindset: Treat your employer’s resources as if they were your own.

Your employer will trust you if you demonstrate a pattern of careful analysis and decision-making. You must exercise due diligence in small as well as large areas. Wisely manage resources that have been entrusted to you and areas of oversight that have been delegated to you.

Your ability to negotiate for a better stake in the future of the enterprise will be enhanced if you prove that you have the organization’s best interests at heart, not just your own best interests.