8/3/2019 Preparing for the Lean Finance Journey

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PREPARING FOR THELEAN FINANCE JOURNEYFOUR STEPS EVERY TRANSFORMATION

PLAN SHOULD HAVE

Copyright 2011 | Stephen G. Lynch | All Rights Reserved 1

GlobalFinance360

Every successful transformation initiative has its roots firmly grounded in a well conceivedand executed plan. As part of a lean finance initiative, finance leaders must make anobjective evaluation of their organization and its capacity to manage change if they are tosuccessfully launch and complete a transformation initiative. Here are four ways financeleaders can guide their transformation efforts:

Understand and Communicate the Need for Transformation

Lean finance organizations understand the need to keep their organization moving forward.With increased global competition and the attendant cost pressures, these organizationsrealize that continuous improvement is necessary to remain competitive. Transformationalfinance leaders have a holistic perspective on the role of their organization and how itenables the fulfillment of corporate strategy. There is a strong understanding of both thequantitative and qualitative measures defining finance performance and how theirorganizations current performance compares to best-in-class organizations. Thisinformation is used to understand the nature and extent of the change required.

A foundational element of any communication plan is the need to communicate a sense ofurgency, a burning platform that drives the need for change in finance. People involved inthe transformation effort need to understand why its important to experience short-termpain to achieve long-term gain. They need to understand how the transformation programwill support the broader corporate strategy and how they fit into the overall program.

Create a Guiding Coalition

No single individual can accomplish meaningful transformation on their own. Everytransformation effort at its core consists of three basic stakeholder groups: changestrategists, change implementers and change recipients.

1It takes a coordinated effort from

a number of individuals sharing a common vision and desire to create a better future todrive a transformation effort. The journey to lean finance requires leadership that can driveand embed change in their organization.

The individuals chosen for the guiding coalition can make or break the transformation effort.Based on the work on Harvard University professor John Kotter, there are four keyattributes that members of the coalition should posses:

2

Position Power The key leaders of the identified stakeholder groups should be part ofthe coalition. Its dangerous to leave out key individuals who can fuel resistance againstthe transformation program.

ExpertiseThe coalition should have the expertise needed to create comprehensive andholistic change, both in the finance organization and across the broader corporation.

CredibilityThe members should be seen by the organization at large as highly credibleindividuals. These people should have a track record of aligning their behaviors withtheir words, and have a track record of achieving meaningful transformation.

Leadership Different from managers, leaders are adept at shaping the vision andgetting people to buy into that vision. They can be trusted to guide the organizationthrough the transformation program. Leaders convey a credibility and track-record foraccomplishing meaningful change.

Leaders of

successful change

programs

understand that true

transformation

occurs in leaps, not

increments, andthat the

transformation

effort is holistic,

encompassing the

hard and soft levers

of organizational

change.

Transformational

leaders have a

critical role in

driving the

transformation

required to align the

finance organization

with corporate

strategy, enhance

the effectiveness of

service delivery and

drive cost out of theorganization so that

finance is a true

business partner in

the drive for value

creation.

Author: Stephen G. Lyn

8/3/2019 Preparing for the Lean Finance Journey

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Copyright 2011 | Stephen G. Lynch | All Rights Reserved 2

About Global Finance 360

Global Finance 360 covers the

world of corporate finance and

accounting and how these

activities are impacted by

globalization. Focus areas

include Finance Delivery

Strategy, Shared Services,Business Process Outsourcing,

Process Improvement and

Organizational Design.

Global Finance 360 is run by

Steve Lynch. Mr. Lynch is a

Principal in the Finance

Transformation practice of a

global consulting company. He

is responsible for the marketing,

sales and delivery of Finance

Transformation services in North

America and serves as a key

liaison for his companys global

Finance practice. He brings

more than 15 years of

experience advising global

companies on their service

delivery strategies and has

served over 60 clients in a

variety of industries including

consumer product and industrial

manufacturing, aerospace &

defense, transportation,

technology, entertainment and

financial services. He has also

served as a Controller in private

industry and as an auditor inpublic accounting.

Mr. Lynch is an active content

contributor on the topics of

FinanceTransformation andglobalization and has presented

at various forums including the

IQPC Shared Services &

Outsourcing conference. He can

be found on the web at

www.globalfinance360.com.

Contact Information:

Steve Lynch

Toll-free: +1.800.216.2512

Office: +1.719.481.2599

1042 W. Baptist Road

Suite 194

Colorado Springs, CO 80921

slynch@globalfinance360.com

www.globalfinance360.com

Assess the Maturity of the Existing Finance Organization

Transformational leaders understand that there are both hard and soft levers that drivefinance transformation efforts. Hard factors include processes, organizational structure andtechnology infrastructure. Soft factors include the values, beliefs and cultural norms thatguide behavior in the organization. Effective leaders evaluate and diagnosis the currentmaturity of their finance organization to develop a comprehensive understanding of needed

change.Assess Current Performance

Its impossible to drive effective transformation without first understanding the existingperformance. A central focus of this stage of transformation will involve the collection ofbaseline performance data and comparing the current performance to those of leadingcompanies in the form of benchmark data. By assessing current performance,transformational leaders can better understand their organization and identify the areas thatcan yield the greatest gains in the transformation program.

Assess Organizational Readiness for Transformation

In addition to understanding and documenting current performance, the transformationalleaders must take an objective look at their capacity for change. Factors to considerinclude:

Leadership capabilities for finance,

Program management capabilities

Existing initiatives that consume finance resources,

Budget available for the transformation program, and

Staff available for the transformation program,

By objectively analyzing the existing organizational capacity for change, lean financeleaders can properly structure and scope the transformation program to drive change andreduce the risk of transformation.

Plan for Organizational Resistance

Every transformation effort has resistance. As soon as an initiative is communicated to theorganization, resistance will form and that resistance will be both active and passive. Activeresistance is easy to identify and can be deal with quickly. Passive resistance is much moredifficult to identify and correct.

Leaders of a lean finance initiative need to understand, identify and remove the resistancethat threatens the transformation effort. This can be as simple as publically reinforcing thevision and intent to transform the organization. In extreme cases it can mean removing ofa key executive that has not personally and publically embraced the new vision of thefinance organization.

Conclusion

Leaders of successful transformation programs understand that true transformation occurs

in leaps, not increments, and that the transformation effort is holistic, encompassing thehard and soft levers of organizational change. There is a guiding coalition andcomprehensive plan to guide the transformation effort with a deliberate eye towardsidentifying and mitigating risk. Transformational finance leaders have a critical role indriving the transformation required to align the finance organization with corporate strategy,enhance the effectiveness of service delivery and drive cost out of the organization so thatfinance is a true business partner in the drive for value creation.

1Kanter, Rosabeth Moss, The Challenge of Organizational Change, New York, Macmillian Free Press, 1992, pg. 370

2Kotter, John, P. Leading Change, Boston, Harvard Business School Press, 1996, pg. 57