A few years ago, a huge FMCG conglomerate held a high priority global forum for their European Marketing Directors to [clears throat] ‘foster a culture of digital excellence’.
Gingerly sidestepping the fact that ‘cultures of digital excellence’ aren’t ‘fostered’ by ‘high priority global forums’, it was striking that no-one in attendance chose to address the biggest obstacle in that particular room. In this instance, it wasn’t a lack of knowledge, or the wrong global marketing structure. It was the fact that all of the marketers taking part continued to have their bonuses awarded based on Millward Brown Link Test results for their TV ads.
This is not to say that those marketers didn’t care about digital innovation, but they sure as hell weren’t going to prioritise it over their traditional media activities. We’re back to Business 101 here: what gets incentivised gets done. You don’t stand a chance of driving meaningful innovation if you’re not answering the ‘why bother?’ question in your financial planning as much as you are in the other elements of your operational strategy.
This question (‘why bother?’) is one of the big ones, and we’ll likely return to it many times in this blog over the coming months. It’s big because change is hard. Without strong, business-wide motivation, it is almost certain to fail.
Changing incentive structures is also hard, not least because in most businesses it’s a political and legal minefield. But this is also true of financial governance more broadly. Cash is always king. Consider agile development. The type of financial planning that agile requires is often as iterative as the development process itself. Great, until you realise that many Finance departments in big businesses find it as easy to budget for, and sign off, a multi-million dollar sum as they do a much smaller amount. Their process is waterfall-like from beginning to end. So a shift to agile creates more work for Finance; Finance responds by creating inertia that reduces the likelihood of agile projects succeeding.
The answer to issues like this isn’t just to find a sympathetic CFO (although that’s a start). Finance teams need to be incentivised to develop their structures and operating models to keep pace with organisational ambitions. Hidden obstacles such as rewards and budgeting processes need identifying, acknowledging and addressing at Board level. Transitions need to be planned and actively managed across a business over years rather than weeks and months. And all this needs to be done with as much openness as possible, in a way that evolves the dialogue that surrounds money within the organisation.
It’s not easy, but there is hope. In our experience there are hordes of frustrated heroes in most Finance teams – people who recognise that their role isn’t so much to follow the money as to help the money follow the business. It might just be time to find them, and put them to work.
Image: D-Face – United State of America