By Johannes Vogel, group member since March 2018.
As in general strategy-definition processes, functional strategies should use the current status quo as a starting point. But they should also assess megatrends that impact the industry or the company specifically, as well as innovation topics relevant to the team.
By taking a position on megatrends such as “the rise of algorithms”, “knowledge economy”, “digital transformation,” or “war for talent,” the team can explore what they mean in terms of opportunities and chances for growth or differentiation. This may trigger new approaches and potentially more experimental ways to execute projects, or how to organize client-facing work or talent development and recruiting processes.
The same holds true for innovation. As innovative technologies are reaching maturity levels relevant for corporations, new opportunities (and of course, risks) open up to take advantage of these advances for better ways of running finance processes.
Examples of innovative technologies for finance include:
– Transactional finance processes executed by robotic process automation (RPA) tools
– AI-powered cognitive computing, for providing analysis or decision support using advanced analytics tools
– Data visualization programs
– Improved ways of working together by using collaboration tools
Some of the resources for up-to-date information on technological innovation I use are the FSN website (thanks @Gary Simon), Gartner, Forrester, as well as CFO.com and BARC(German language only). See also my post, “Digital – should CFOs be bothered?” for more examples of innovation for the CFO domain.
Finance strategy requirements
The results of the review of innovation opportunities, megatrends, and the status quo are summarized in a requirements list, just as you would for a business requirements analysisin the context of IT projects. You may want to adopt a more agile format in which you summarize requirements as “user stories,” which have the advantage of being specific and user-context sensitive. The requirements are collected and categorized. Typical categories are “content,” “process,” “functional and technology,” “organizational,” and “people/culture/change.” The categorized requirements list is passed back to the stakeholders for validation and serves as the starting point of the next steps in the finance strategy development work.
Finance strategy dimensions
The core of a finance strategy should include “thrust areas” – that is, specific topical themes with specific relevance to the future development of the finance team or the company at large, as well as a vision and mission statement. This statement summarizes the core purpose and intention of the finance organization in clear language. In addition, each strategic thrust area can be further broken down by defining success factors and activities, KPIs to measure progress, tools, and methods. To complete the finance strategy, the statement should describe the future finance operating model and organization, and the changes foreseen. Finally, the to-be state summarizes how the finance team will be organized in terms of processes supported, organizational structure, and roles, as well as technologies employed.
Find here the link to part 1 of this series: The CFO’s Strategy Playbook – Seven Key Elements and to part 2 The CFO’s Strategy Playbook – Context, Objectives, and Governance.
If you are interested in sharing your views or experience on Finance strategies, please leave a comment. Do you have alternative approaches? Has defining your Finance strategy helped focus your transformation journey? For additional reasons, why companies are starting Finance strategy, please review my post on “How CFOs can start to define a new Finance strategy with 7 key questions”
First published on Digitalist Magazine.
Part 3 in this series looks at the importance of exploring and evaluating the larger trends in business and technology as an essential element of strategy planning.
Source: Generation CFO LI Group