3 Ways to Help Your Finance Team Add More Value

For your team to develop these abilities, it will take some time. They will need to be better politicians in the workplace,and master these three critical skills. Are you ready to learn how to do it? Let’s begin.

To get this started, let’s make an assumption. The assumption is that the finance team members you are targeting to “tell us why and drive it” have core financial analysis skills. They can put together a discounted cash flow, read and interpret financial statements, prepare financial models, and do “what if” analysis. They can access the necessary data, and run models to twist and cut it.

The skills of facilitation, teamwork, communication, and driving strategy are tougher to get your arms around. I call these the non-traditional finance skills. There are several ways to develop them. For me, the start came with my role as a cost accountant. I had the necessary mundane assignments of explaining different operations variances, but I was also very lucky. As a cost accountant, I was a new product development committee member. It’s where I learned the inner workings of Sales, Marketing, Operations, R&D, and Quality Assurance.

In this role, I was able to learn how things work, and develop a foundation of institutional knowledge required to understand why certain decisions are made. After I developed it, I focused on these 3 skills to get my seat at the table:

1. Understand the Business ModelTo get your seat at the table, you need to know and understand how the organization structure, purpose, products, services, customers, strategic partnerships, and supply chain come together to create and deliver value. Crunching numbers and sitting in your cube will help, but ultimately Finance leaders need to get their people out of their chairs. Whenever possible, your finance team members need to volunteer or “be volunteered” to work on cross functional projects that boost their business acumen. A few ways to get this done are to have them travel on sales calls, work in production, or complete job rotation assignments. Give your best and brightest people assignments that will stretch them well beyond their comfort zone.

2. Build and Sustain RelationshipsHave you ever been in this position? You’ve been asked to find out why the average selling price is down this month. So…you head over to marketing and sales and talk to the people in the know. They divulge something that makes you scratch your head. You go to a cross functional meeting, and the subject comes up. You repeat what you heard, and the sales and marketing team feels that you threw them under the bus. Nice work.

To become a valued team member, you have to help colleagues achieve. If they come to you with an idea, work with them to figure out a way to get it done. It’s easy to say no. An example that is commonly seen is when a sales person wants to close a large deal, but there are some credit terms that need to be worked through. If you follow the letter of the law, you just say no. However, if you come up with an idea on how they can get 80% of the way there instead of no, you now have that person’s trust. The help you gave will spread like wild fire through the sales department, and they will view you as a problem solver – not a stop sign. Your seat at the table has been reserved.

3. Communicate and Drive ChangeIn Accounting 101, they tell students to be barometers, not thermometers. OK, that’s fine. However, there is so much more. The barometer needs to tell the business leaders more than which direction they are headed. Leaders want to know why they are headed in a certain direction, what can be done to keep it that way or change it, and finally, whether or not it’s sustainable. Can someone provide this insightful analysis from cubicle land? Heck no. Finance people need to master skills 1 & 2. The third, communicating and driving change is actually a powerful reward for mastering the first two. You now have the ability to influence decisions, achieve consensus, and drive change across the business. Your toolbox is well stocked!

Developing these three competencies will earn Finance a seat at the table. It takes effort, skill, and sometimes a complete change of outlook. When it’s done well, Finance earns a respected and valued role in establishing strategy, and the responsibility for owning the results of the business.

Why We Don’t Grow Our Business – Leadership Mindset

We generally ask business teams we are working with, the question: “Why can’t you grow?” The answers are captured and filed away for future reference. We codified the data into subject matter that fell into three categories – Leadership Mindset, Organizational Skillset, and Operational Toolset. In our previous article we defined these “SETS “. In this article we will explore the major factors that prevent a growth mindset and some remedies.

Chapter 2. Leadership Mindset

By leadership, we mean that level in the organization responsible for the profit and loss of a business, and those who provide guidance and direction to the growth project teams. They are generally made up of business, marketing, and technical management. They control budgets and allocate resources. They report up through one or more functional vice presidents reporting directly to the CEO. The factors below best describe the leadership behavior that – in the minds of the project teams – are the primary causes for growth failure.

· “Too Little, Too Late” – ignoring the time factor.
· “Beware the Cannibals” – fear of losing control of the current business.
· “Stuck in Today” – inward focus with a silo structure.

These growth failure factors are not independent of each other and also not independent of both skillset and toolset issues, however they cry out loudly for fixing. We will examine the factors one-by-one and suggest approaches for changing leadership mindset that causes these behaviors. Survey tools and workshops can help leadership teams to both identify their growth mindset and impact on growth success rates. as well as engaging implementation mechanisms to transform leadership mindset into one that fosters and drives business growth.

“Too Little, Too Late”: Many projects take too long from concept to commercialization. Too many projects result in under resourcing with people working on too many projects. Teams spend too much time getting to and through gates. One team said, “It takes longer to get a meeting with the growth board than it does to do the work necessary to meet the stage requirements”. Actually they kept score and counted 57 elapsed days waiting for meetings to get through the first two gates vs. about 55 elapsed days of the team’s actual work time. The project was eventually rejected for fear of potential cannibalization of existing products. Later a competitor entered the market with a new offering similar but not as robust as the one rejected. The top three remedies are:

1. Prioritize what you work on. Resource to win, and if necessary reduce the bets to those that are most critical to success. The key is to require robust project charters with clear goals, defined business impact, required resources, and criteria for success. Quality of the concept description is a good barometer. If they can’t describe it, they don’t have a valid concept.

2. Simplify your process. Over the past several years most have added and added to process when they should be simplifying. You only need three decision points: the first after a robust market validation to clearly define the opportunity to enable the business case; the second after business case generation leading to product development; and third following product development leading to launch. Utilize coaches rather than process facilitators. Coaches take up less time, cost less, and focus primarily on content and getting results.

3. Utilize multi-functional teams, particularly technical and commercial. Often time is lost by poor communications between technical and marketing. Join them at the hip and save valuable time. Increase project leader’s communication capability. Decision makers need to know what they are deciding before reaching the decision points, and teams need to know the issues.

“Beware the Cannibals”: Many times growth initiatives fail at the same time existing businesses begin to lose growth, share, price, and position. Leadership focus is on the existing business attempting to blunt or forestall the tailspin. Growth resourcing grinds slowly and budgets are trimmed to the bare minimum. The fear of product cannibalism takes on an even greater influence in business decisions. The key here is to innovate with fewer, safer, faster, and simpler projects. Forget the homerun and start hitting singles. Demonstrate you can grow again.

1. Focus is king. Prioritize on the basis of speed, agility, and simplicity. Select the top few you can afford to resource for success. Generate charters that reflect the new growth strategy. Set timelines tight. Get technical on board to help set product specifications that can be developed quickly.

2. Invest in high quality upfront market validation. You need to get it right the first time. It is critical that you get a good understanding of value (price they will pay) and impact on existing business during this part of the process. Build your business case before investing in any technical development. Don’t waste what few resources you have. Evaluate the impact of the business case on your business strategy.

3. Get a few key customers involved early. Risk the fear of disclosure for early adoption. Naturally you would not do this if working on a homerun. Accelerate ramp up by using your sales force and key distributors more aggressively. They could use this as an offensive weapon against the price pressures of their current situation. Move your project teams on to the next set quickly. Repeat, repeat, and repeat until you have blunted the competitive erosion, and then begin to engage the bigger ticket concepts.

“Stuck in Today”: We dug into the main causes of inward focus and came up with one major issue – stuck in today’s business model. “We know who are customers are, what our customers want, and will pay for. If something changes they will let us know”. This head-in-the-sand attitude is one of the most difficult to address because it assumes your customers are in the same place you are and if not, they will let you know so you can react. Leaders who behave this way don’t recognize they have a problem until it is too late to act. An outgrowth of inward focus is the silo structure usually manifested in functional organizations not in sync that result in misaligned priorities across the business.

1. Recognize that you may not know what your customers need because they may not know what their customers want. Thus, you will need to learn the larger market unmet needs, and the current gaps in your customer’s value proposition, and consider aiming your value proposition at the customer’s customer. Do not fall into the trap creating internally generated product concepts, or even worse new products until you have completed building the market analytics.

2. Open your thinking to new and different business models including building increased service into your value proposition. Understanding real value is fairly straightforward, and begins with interviews that utilize an outcomes approach, and focus on the entire value adding chain values beyond how they value your existing product.

3. Incorporate “Market Driven” across the entire organization. Break away from a product forward strategy limitation. With a business orientation aimed at specific markets, resource allocation can be more clearly defined, and all functions can know their role in achieving a common market back strategy and innovation process. Decisions are driven by your emphasis on meeting customer values, how you go to market, and how you position your business in the competitive arena.

If you recall from Chapter 1, our thesis is that all growth barriers arise from either or all of Leadership Mindset, Organizational Skillset, and Operational Toolset. In Chapter 3 of “Why We Can’t Grow Our Business”, we will address Organizational Skillset in more detail as a basis for successful growth. Stay Tuned!

Social Capital Is Value Which Your Business May Be Missing

“People who like what they do, do it better”. This is what Henry Engelhardt had as his philosophy when he started Admiral Insurance in 1993. He wanted to enjoy work. He recognised that if his staff were happy and enjoyed work too, there would be better productivity, so he set to work with a company philosophy putting happy staff at the centre of his business model.

One initiative to promote this philosophy is to have a business team called the Ministry of Fun, a team dedicated to organising weekly social activities for staff, such as come to work in fancy dress days, such as Superhero Day, nights out, or computer game tournaments in lunch breaks.

For 14 years in a row, Admiral Insurance has been in the 100 Best Places to Work in the UK. The business has grown to a $5.6billion valuation, is in the UK’s FTSE 100 stocks and has 7000 staff across Europe and India.

ARE YOU MISSING OUT ON SOCIAL CAPITAL?
Venture capital, human capital, financial capital, leveraging, share offerings are all sources of value that are utilised in business. And, yet, businesses can still miss out on a key source of capital to help them grow – Social Capital!

The Admiral Insurance story is one of a deliberate culture setting out to build and use strong Social Capital.

Work is, and always has been, one of the most defining aspects of our lives. It might be where we meet people, excite ourselves and feel at our most creative and innovative. It could also be where we can feel our most frustrated, exasperated and taken for granted.

With the average worker now spending over 90,000 hours at work in a lifetime, the workplace has become a “centre of meaning, membership, and mutual support “, and of friendship. Indeed, many people count some work colleagues as good friends.

Work organisations are inherently social. Many organisations depend upon the goodwill of staff members, and on their cooperation with customers and each other, to achieve the goals and mission of the business. The 2016 Edelman Trust Barometer shows that the trust of the majority cannot be taken for granted.

Failure to acknowledge Social Capital and to build an environment to cultivate it may mean that your business is missing out on this vital form of capital and the opportunity to advance to the next level.

WHAT IS SOCIAL CAPITAL?
Social Capital is the sum of goodwill and potential resources available to individuals and groups stemming from their networks of relationships.

When the members of networks have established some level of knowledge and trust, it brings them to a level of commitment to each other and a desire to exchange resources with each other, and this provides a context in which innovation can flourish. People have the desire to do things for and with others within their social networks. People tend to do things to help and encourage those in their same social network, creating a cycle of mutually beneficial reciprocity.

Like monetary capital, Social Capital has some value. It can be accumulated, invested and exploited, through deposits and withdrawals. The Ministry of Fun initiatives at Admiral Insurance are examples of ‘building deposits’ of Social Capital with the staff.

The outcomes of Social Capital are:
• Exchange and Reciprocity – “I’ll scratch your back, because I can trust you to scratch mine, when I need it”
• Good spirits
• Follow through – a willingness to go the extra mile with those in your network
• Trust overcoming uncertainty – it is far easier to come to an agreement with someone with whom you have a positive connection than with a stranger. There is a banking adage that says, “A relationship is worth one basis point”.
• Team Identity, even ‘team pride’

The ‘value’ of Social Capital can be seen by imagining a workplace where Social Capital was missing, one where:
• competition trumped cooperation
• there was little trust, with too much suspicion, whispering and cynicism
• there was little willingness to:
o share information, or to share it in a timely manner
o share resources
o assist each other
• business units stay stovepiped within their silos

HOW IS SOCIAL CAPITAL DIFFERENT FROM HUMAN CAPITAL?
Social Capital differs from Human Capital (as in HCM). Human capital may be said to be focussed on the education, experience and abilities of an employee for a particular role or pathway. It is a main focus of HR and managers, who are trying to hire, develop, performance-manage, promote and retain their talent pool. There may be some overlap between Human and Social Capital depending on how a business’s culture, employee engagement and wellbeing are defined. Many businesses choose to invest in the happiness and well-being of their employees because this investment indirectly benefits the bottom line by cultivating a happier, more energetic workforce.

IS SOCIAL CAPITAL THE SAME AS EMOTIONAL INTELLIGENCE?
When Billy Aydlett became the 7th principal in 6 years at Leataata Floyd Elementary, a school with a long history of dysfunction in a low-income part of Sacramento USA, he quickly discovered that the young students were not going to be able to make progress on the academics until they had gotten help with their social and emotional issues.

However, although Aydlett had risen through teaching ranks to become principal, he was a socially awkward man who confessed to being “awful” at ordinary human encounters, so he attended social-emotional training. Since beginning the emotional-literacy work, Aydlett said he had become more aware of interpersonal dynamics, and even made going on a vacation with his wife a priority – something he had never bothered to do before. (“I didn’t see the point in that kind of connectedness,” he admitted. “But I’ve learned that it’s important.”)

Emotional Intelligence is the ability to recognise emotions in oneself and in others, to be able to harness and manage them. They are the individual skills that are used by each person to build his or her Social Capital within work or other networks.

The experience of Mr Aydlett shows that building social connections does not come naturally for many people, even successful ones!

Deliberate action needs to be undertaken to foster Social Capital across the staff in a business. Some may be able to make flourishing connections naturally, for example “She’s a ‘people-person'”, but many are not able to do it on their own.

HOW IS SOCIAL CAPITAL OBTAINED?
Social Capital is built by the types and frequency of social interactions. Staff need fresh, shared experiences and face-to-face interactions to keep Social Capital flourishing.

Attending an event together gives a shared experience, which creates their own unique narrative/stories amongst attendees.

“Do you remember when we went xxxing? Wasn’t it great!? Wasn’t it funny when yyy completely messed up? And wasn’t zzz surprising in how she blitzed it!?”

This helps develop ties and bonds, and begins trust between participants.

Team building events can be very useful. If you have met someone from the business at an event, the ice is broken. The next time that you meet them, you are further along the path than with a stranger and better positioned to ask for a favour.

Most team building falls flat because it is a one-time activity, done and then forgotten. The challenge is to keep creating opportunities for people to connect and interact in meaningful ways, outside of regular meetings or training.

BENEFITS OF SOCIAL CAPITAL
Social Capital offers advantage to businesses iv. Here is a listing of the kinds of effects achievable through deliberately helping staff to build Social Capital.

RESOURCE SHARING
Team members have more certainty about how their peers will respond to requests for help. They can drive at unique solutions due to more certainty of a favourable response.

The resources available to individuals via his or her social networks within a business or industry are very wide ranging. The type of resources that someone else could provide include:
• Offering to use their influence,
• Providing their time,
• Accessing some of their budget dollars,
• Providing advice,
• Connecting an idea with the right person,
• Offering support,
• Giving (privileged) information,
• Sharing space and tools,
• Releasing a worker to join a project team,
• Providing an introduction to the right person,
• Giving a testimonial concerning another’s abilities,
• Smoothing access to higher echelons, sponsors or approving bodies,
• Gaining opportunities for advancement and development, or
• Simply rolling up their sleeves to pitch in when a deadline looms.

INNOVATION
Those who define Social Capital claim that it can influence innovation. How so?

It can provide an excited environment full of positivity, collaboration and willingness. It can also provide ‘casual collisions’, whereby unexpected encounters may connect diverse ideas. Roman Philosopher Seneca defined luck as what happens when preparation meets opportunity. Sports commentators can be heard to regularly say that great teams or sports people ‘create their own luck’, which probably means that they show a mixture of being more polished, less clumsy, displaying a commanding, professional presence and competence.

IMPACTING EMPLOYEE ENGAGEMENT
For the last 5 years, the Gallup organisation has found that the percentage of US employees who are unengaged has remained steady at 70%. This is despite concerted efforts by executives in those years to drive engagement higher than 30% in business.

Gallup defines an engaged employee as, “[They] are involved in, enthusiastic about and committed to their work. Gallup’s extensive research shows that employee engagement is strongly connected to business outcomes essential to an organization’s financial success, such as productivity, profitability and customer engagement. Engaged employees drive the innovation, growth and revenue that their companies need.”

Using this definition, we can surmise that 70% unengaged employees have low involvement, low enthusiasm and low commitment to the business and its profitability, and this effects its bottom line.

Clearly, something needs to be done about increasing staff engagement and involvement, and one way to impact this is have an active Social Capital building, through events, training and team building/team bonding activities.

HEALTH IMPACTS
Social Capital can also impact employee health, with positive benefits for those who have Social Capital and negative risks for those low in it or without it.

A 5 year study of 65,000 Finnish Public Servants ending in 2005 showed that men with low Social Capital had a 40-60% higher risk of chronic hypertension (high blood pressure) compared to their peer males who had high Social Capital. They also had risks of an unhealthy lifestyle involving alcohol and obesity.

Interestingly, no association between workplace Social Capital and hypertension was found for women. Is this because of the natural inclination of women to socialise?

LEARNING
It turns out that happiness and learning are tied very closely together. Trying new things with your staff can generate good vibes among employees, which in turn benefits the business itself.

Positive or happy experiences activate the learning process. The ideal state of learning is called flow, when you lose yourself entirely in an activity. Flow happens when you’re so engaged in what you’re doing, that you lose track of time.

These are merely a sample of the positive outcomes available to business managers who choose to provide a positive culture and deliberately assist all staff to build Social Capital. Staff will call upon colleagues to gain access to resources that they would not otherwise have… and then reciprocate.

THE CHANGING NATURE OF WORK
In the past, we commuted to a workplace, committed to a single/or a few employers, knew work colleagues well for years and disconnected from work when we went home. Success was achieved via isolated effort through personal drive, ambition and competition.

According to Seth Godin (blogging and marketing genius), the old paradigm of a commute to rows of cubicles, with meetings behind closed doors, is all too expensive and slow. There is going to be a huge focus on finding the essential people and outsourcing the rest. It will be a high-stress, high-speed, high-flexibility way of working, with your efforts auctioned off to the lowest bidder.

Futurists predict that billions will be connected by mobile services in the cloud, working flexibly, surrounded by digital bots, assistants and learning machines. Success will be achieved through the combination of mastery, to stand out from the ‘crowd’, and connectivity, leveraging what the ‘crowd’ brings. Therefore, having a deliberate strategy to build Social Capital is a strong means of growing and leveraging connections.

The Deloitte Institute of Innovation and Entrepreneurship says that in a future increasingly defined by innovation (the capacity to combine and connect know-how), both competencies and networks will be key. It’s in this synthesis from the diverse members of the network that real innovative possibilities lie. So, whom you choose to connect with, and to whom they are connected, will be one of the defining aspects of future working life.

Workplace management, says Godin, will mean managing a tribe, creating a movement and operating in teams, sometimes in person, often online, dispersed throughout global time zones. Therefore, leaders will have to find new ways to help everyone feel like they ‘belong’.

SUMMARY
Social Capital will not disappear along with your dedicated workstation, but it will be ever evolving.

For some, building and using Social Capital is natural, but for many it is not. Deliberate interventions, such as team building activities, need to be undertaken… and repeated.

Consider these questions too. What happens to the networks when someone leaves the business? And, similarly, how does a new hire develop any relationships or break into existing networks?

Choosing regular activities that are unique and slightly outside of people’s comfort zones can encourage them to gel together for the first time or in new ways, building connections from which they can draw resources – Social Capital!

What are you going to do to build and leverage Social Capital in your business?