A question that gives continuous sleepless nights to Founders and CXOs is often this – Where is my next 10x top-line growth going to come from? And generally this soul searching leads them to the same conclusion every time –Sales Channel expansion through increased sales targets, aggressive new-market exploration, and enhanced marketing spending.
This approach, though, creates some pertinent challenges for the CEOs :
- Instinct, not Insight-driven growth: “When all you have is a hammer, everything looks like a nail”. Instinct-driven sales forecasts and sales efforts lead to companies doing the same. This deprives the organization of an opportunity to innovate using a data-driven, customer-centric approach.
- Risk of structural collapse: The rapidly expanding operations make organizational structures and processes exponentially susceptible to caving in, creating a downward spiral. The activities outpace the system capacities creating chaos and confusion. Alas, how often have we heard stories of promising startups going bust because of this!
- Promises not kept: Due to the mismatch between the leadership aspirations and operational capabilities, organizations often have to backtrack on their commitments to investors and stakeholders. Frequent target revisions due to improper financial planning at the outset of sales cycles and high attrition rates due to employee dissatisfaction are a few undesirable by-products a CEO would undoubtedly want to avoid. An inability to honour the commitments destroys brands and puts the organization on the perdition road.
These challenges are faced by established organizations and young startups alike. Even reputable global brands are not immune to value and brand destruction in the wake of mindless growth.
Can these challenges be mitigated?
Based on our close observation of the market, the answer is YES, but with a caveat. The differentiating factor between a successful and unsuccessful organisation is as simple as asking – Where do the CXOs of these organizations put their horse? Successful companies prioritise systems and processes, making their organization resilient to changes and equipped for growth, thereby putting the proverbial horse before the cart. They ensure the muscle to pull the weight is created before the cart is loaded.
“Horse before Cart '' is a mindset which begins by accepting these challenges are natural in an organization’s growth journey and need to be not just weathered but conquered.
“The thing is continuity of strategic direction and continuous improvement in how you do things are absolutely consistent with each other. In fact, they’re mutually reinforcing.” – Michael Porter, strategy guru.
Which Department is best suited for this Job?
Balancing hyper-growth with capability building can be a task tough to master. Across small and large organisations, we hear buzzwords like Finance-driven transformation and data-centric management. When implemented on the ground, these words are revolutionary in their nature and intentional in their design.
The trick, then, is to find the correct department with a mix of high strategic impact and transformative mindset and the right skills to consume and master data and drive ownership and accountability for actions. It is interesting to observe how across industries, finance departments are driving these initiatives, acting as Horse-masters – tending, training and turning miniature ponies into warhorses.
No longer are the nerdy bookkeepers and number jugglers at the basement of your office building. CFOs and Controllers have gone much ahead of the traditional accounting and reporting functions. They are today sitting on the saddle, holding the reins, and riding the horse at a fast pace. Based on Deloitte’s CFO Signals survey, 47% of 172 CFOs from large North American companies, most with more than $1 billion in revenue, said they were either responsible for direct strategic planning (35%) or through someone who reports to them (12%). In addition, 36 percent of CFOs indicated they had responsibility for IT, with 30 percent citing direct reporting. What about the finance departments makes them so suited for growth enablement roles?
- Data Mavericks The Finance departments have historically been close to organizational data – both financial and operational – from managing and recording scribes in ancient Egypt to the sophisticated ERP owners of today. This puts the finance wizards in an advantageous position – one where they can comfortably use data across business areas and generate meaningful insights. Finance can easily take on the additional responsibility of an insight provider in addition to the traditional reporting tasks. Finance function, thus, is fundamental to an Insight over Instinct approach to decision making.
- Insight Builders Finance functions are increasingly being looked at for insight-driven management – from creating and reporting business KPIs to providing insights on improvement opportunities. As stated in the previous point, the finance function sits on an oi of data with the skills necessary to drill it. The CFOs across the board has recognized this – in around one-third of organizations, finance departments are already spending 30% of their time delivering business insights, and more than 83% of all organizations want to do more (based on an online poll conducted by Deloitte within the global Finance community).
- Strategic Business Partners Organizations looking to grow ought to utilize the business partnering capabilities of Finance, creating a ‘2-in-a-box’ approach to sales growth. As articulated by Brian Worell, CFO of Baker Hughes, “Finance is not sitting there forecasting or doing cost analysis. They’re looking at how to commercialize our data assets.”
- Trusted Advisors Sustainable hyper-growth demands intervention at all levels of the organizational hierarchy. Due to their grasp of the ground reality through operational proximity and their understanding of organizational strategy at the Boardroom level, finance functions are in a perfect position to catalyze all levels of an organization. The data-driven mindset trickles down to all tiers – making organizations supercharged for growth.
- Automation Flagships Finance departments are perfect candidates to drive results using automation. They act as automation testbeds in organizations – simplifying, standardizing and automating operations. This proof-of-concept approach not just helps in instilling the transformation and efficiency of DNA but also brings about robust processes that can be replicated and scaled.
A process, not a people-driven approach to business, will set the future winners apart from the rest of the pack. Your success in Industry 4.0 will be determined by how well your organization turns scattered data points into a web of interconnected insights. Using Finance departments as the hub of this data wheel, organizations will be able to improve efficiencies, drive sales and enhance stakeholder value. Reimagining tomorrow's business would require extraordinary leadership and an out-of-the-box approach from the Board, keeping in mind the First Principle – put the Horse first, always!