Time to take a breather - a finance function perspective
Too much to do, too little time, too little investment. Time to call a pause.
Over the weekend I watched a programme celebrating 70 years of the British Queen’s reign. Early in the film Queen Elizabeth says:
Change has become a constant, managing it has become an expanding discipline. The way we embrace it defines our future.
That was a quote from 2012 that is repeated much later in the same programme. Yet here we are in 2022 seemingly engaged in endless, I’d argue almost pointless, discussions about the need for change and our collective response to change. (Note: perhaps I’m not reading widely enough but…)
In that context., and somewhat depressingly, I read Brian Sommer’s thoughts about three reports surrounding the finance function which he labels as procrastinating.
Brian’s story could have been written many times over in the nearly 30 years since I left the accounting profession. For my sins, I’ve made many of the same arguments that he enunciates. Among the less than handful of business related conversations I’ve had the last year, I’ve been struck by just how little has changed.
But on this reading I realised there are four vital points about the apparent resistance to change that should be recognised in the discourse on this topic.
In his analysis, Brian notes finance folk under constant pressure yet makes the assumption that the coming generation of digital native finance folk will somehow reject the past in favour of a cloud based future. How? That question is largely unanswered.
The second problem comes in the fact that significant past technology investments never provided the breakthrough benefits claimed by ERP. Who writes those cheques? Finance people. How many of those, having been stung once, twice or perhaps three or more times would be willing to make fresh bets on yet more technology?
Third, it is the natural tendency for finance chiefs to be the cautious guardians of cost. They are the people to whom business looks to find, question and mandate cost savings. Anyone who has spent time in finance learns that cost reduction is an expected part of the finance DNA. It’s how you easily explain the outsourcing of rote functions to low cost economies. It’s how finance avoids risky investment.
Finally, the relentless to-ing and fro-ing of legislative change almost always has an impact on the finance function. You see that in payroll, taxation of every stripe and local regulation. Multiply that by as many states in the USA and/or nation states with which a firm deals and you quickly see almost unimaginable complexity knocking on the finance function door.
Taking those factors together, you end up with a culture that has a fear of change, juxtaposed by the need to maintain the stability that is expected of the finance function. And, as the cartoon I stole from Timo Elliott at the top of this story points out, culture eats technology.
At this point you might be thinking that I’m an apologist for finance chiefs. I’m not. I’m simply pointing out what I have seen as a series of interweaving constants over five plus decades of either being part of or observing the workings of finance.
The only places I’ve seen breakthroughs occur is where the people running finance were in a position where their authority was unassailable and they had the 100% backing of the firm’s owners coupled to a workforce in tune with leaders’ vision. In all cases I have seen, that was outside the gaze of public scrutiny. That’s not to say it doesn’t happen elsewhere. It’s just that I’ve never seen it except in the context I describe.
The tragedy is that while many finance executives know they have a central role to play in the future, it is incredibly difficult for them to get from underneath the legacy of the past.
How might this paradox be solved? I see many consultants and analysts talking about culture change as though it is some sort of medical procedure involving heart surgery without the benefit of anaesthetic. It’s that cruel.
In response I say that it’s time to give finance leaders the breathing space they need to recast their functions in purposeful ways and without at least some of the daily distractions that accompany their positions. In turn that means upskilling functions that are immediate candidates for automation so that the deep institutional knowledge of the business can be better used, leaving leaders the brain space to think, plan, and get the mentorship they need to bring transformative change that’s visible and valuable.
None of that is easy for anyone involved in those types of change. But, it is possible, nay essential for finance to emerge as the business partner to which many aspire. It just requires one step: a recognition that time and space matter for leaders to formulate and make good decisions. That’s a conversation I don’t hear so often.