034: Developing a Better Strategy for a World with Challenges

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Every organization needs a strategy in which is often a choice about what to do and how resources should be allocated. How can we best support that strategy? And how can we help to ensure the organization is achieving the results they're expecting? This topic is so important now, based on what we have seen in 2020, and how we will solve problems going forward. Please enjoy the episode. Welcome to the finance leader, podcast or leadership is bigger than the numbers. I am your host. Stephen McLain. This is the podcast for developing leaders in finance and accounting. This is episode number 34. And today, I would discuss how we can as finance and accounting professionals best support the organizational strategy. And I'm going to talk about four areas. Number one, we should be using the right metrics. Number two, how should we best allocate our resources?

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Number three, we should be evaluating our results. And number four, we should ensure we are having the right discussions around the organization. Winston Churchill said, however beautiful the strategy, you should occasionally look at the results. How can we best support the strategy as finance and accounting professionals? First, we should probably review what strategy is now without being too academic? In the most simple terms, here are a few components of strategy that are critical to us. Number one, what's our target market? And who are our customers? Number two, what's our product and service offerings? Number three, how is our business structured? Number four, how do we allocate resources? And finally, strategy is how we will transform the business? Are we able to change when it's necessary? Now remember, vision is where we want to go. But strategy is how we're going to get there.

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Strategy is about who our customers are the allocation of resources, how we are structured, what priorities we have, how can we better align?

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And also what changes do we need to make? Why is strategy important strategy often seems complex, and also who is responsible for strategy? Well, we all are responsible. But we all don't understand what strategy is and how it works.

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Because we don't talk strategy enough. And we don't link our activities to the strategy very well, every task should link even indirectly to strategy execution. Now, this is why I talk about effective communication and for leaders to prioritize time is precious, and let's not waste it on the wrong tasks, working on the wrong tasks that don't help us execute our strategy. Now, 2020 is a very special year, we have seen things different this year, the economy is not the same, the business environment is not the same. We have to approach our businesses in our organizations differently if we're going to survive. And even if we're going to grow, we normally would not change our strategy, we would just let it play itself out and then evaluate, because under normal economic conditions, we would have a lot more time and also a lot more ability to absorb bad decisions. But this is not normal. evaluating your strategy and figuring out how we can best support it through critical analysis and using our influence to ensure our organization's survival and success is key, we have to be very proactive. So I want to take us through four areas to consider when supporting the strategy. Now our role of finance and accounting professionals is critical. We can help senior leaders in the C suite executives execute and plan to figure out if we are in fact executing that strategy properly. Now, number one, we must be using the right metrics.

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And also consider how we're measuring and analyzing those metrics. How can you best measure how the strategy is working? It's not so obvious.

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Sometimes the profit and loss statement definitely tells us a story about the business. But what additional metrics help us understand the customer better and how we used our available resources, you may have to partner with people around the company to really dig in to these metrics, and also do the analytical testing to ensure that the company is achieving a strategy, choose the best metrics based on your industry and niche and any other special factors regarding what you do. I would also recommend as you look at the profit loss statement, it's important to look at the top line of course year over year, but also what are the key expense lines in your business that can really tell a story and also tell us a little bit more about what's going on.

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Now. It depends on what your niche is. There are certain expense lines that are going to tell you a lot of detail and also point out whether you're going to To be successful, or whether you're going to survive or not. So dig into those lines and also dig into those additional metrics that don't show up on the profit and loss statement. Number two, how should we best allocate our resources? And of course, resources can be people, it can be money, intellectual property, and any other assets that we have. What are our assumptions?

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When it comes to resource allocation, every resource must be linked to the strategy. Now what is the purpose of using the resource now, I'm also going to recommend that not only you look at year over year, but you should also be looking back the last few years. And what I say next is not probably going to be accepted very widely. But I believe that as you go through your budget process, that I believe that every year department leaders, those that are responsible for their budgets must justify that budget. And I believe that you should start at zero and build from zero and link every budget item to that strategy, I don't think we should be assuming that you're going to get the same budget, some organizations will put out guidance and say, we're just going to be flat year over year, I believe that that is going to be an error going forward, that we need to make sure that each budget line, each item that we're going to put in that budget for that department should be linked to the strategy. And you must start from zero every time you must ensure whatever you're putting in that budget, whether it be training dollars, how to research a new service offering or product offering that I believe that you should be putting in that justification.

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If you're going to be doing travel in the future. Why is that travel important? Why is that training important? Why is that new software important? How does it link to the strategy?

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How does it help us survive into the future, I don't think we should be making those same decisions about being flat year over year, because that's what governments do. And I believe that we can do better, we can be a little bit more proactive and figure out that the money that we're going to spend doesn't fact support that strategy.

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execution is critical. It's important, we're living in a different time, we're living under different conditions. And we're probably not going to see changes anytime soon, we're going to have to get used to being more flexible, and also a little bit more proactive and not make that assumption that we're going to get the same money in each department just like we used to in prior years, you must defend every request for funds, and must figure out how it supports the strategy.

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And number three, we must be evaluating results. So how did we do? Did we achieve our expectations? If not, then what prevented us from accomplishing it if you're not achieving the expected results? Now, what can you do? What can you do differently? How can you do better analysis? How can you work with the department leaders? And how can you present results that can influence department leaders, senior leaders about making changes that unnecessary, I believe that you probably have to go back to your metrics, and how you allocate resources, and also what the target market was.

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Everything we talked about already should be on the table, everything that you have in your business, every resource, every metric, everything you're trying to do to achieve that strategy needs to be on the table if you haven't achieved the results.

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Now, this is also assuming that you have spelled out what results that you're looking for.

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And that's going to take another separate discussion to ensure that you have that recorded and you know what you're looking for that should be very critical to your vision and also spelled out very clearly in the organizational strategy. Now finally, we need to make sure we are having the right discussion.

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I believe that organizations aren't having the discussions that they need to you must have their discussions around strategy and the metrics and how resources are allocated, you must match the resources allocated to the results that were achieved. Most companies again, are not having the right discussion around strategy, you have to continue to be flexible for necessary change that what discussions should you be having right now to help support that strategy, department heads and other senior leaders may not be having these critical discussions. Now this is why I advocate for us to partner with senior leaders and the C suite executives around the company to ensure we're having those critical discussions around our resources in around the results to ensure we are having the best plan going forward and how we can solve problems better. This entire process is going to be very important due to what we have faced this year in 2020.

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And we need to relook our strategy. Never be complacent, just like I spoke about in Episode 33. Don't get complacent about the strategy. Otherwise you may face failure going forward, it will be expected that we be more creative and get ahead of our problems. Our strategy will be critical our product and service offerings.

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require different thinking our target customers may be different, our resources are critical. And how we use them may very well determine our success or failure. Now those organizations that are flexible and ready to adapt, will be more successful and will be able to survive, we used to stick to our strategy. But we may not have that luxury anymore. If we want to survive and grow in uncertain times. And we're not sure when things are going to be improve, or things are going to get better, or the economy is going to be a little different. We are still facing the effects of a global pandemic, governments have been required to stimulate the global economy to ensure capital is available. All of this requires us to think differently. global brands have gone bankrupt, small family businesses have failed, and people are out of work, we have to think differently, we have to approach things differently. We have to look at how we can best support the strategy, we have to think differently every day, we have to relook at our priorities. And we have to relook at what tasks we are doing. How can we best support the strategy to keep our organization going through a global pandemic, just incredibly challenging times. Now, when is this all going to change? We don't know. No one knows once we get a handle on the pandemic, and once we are able to move forward with businesses being able to stimulate the economy, instead of the continuing injection of capital from governments into the system, then we may be able to get a handle on this once we have been able to interact the same that we did, which we may never happen. And maybe years before we can interact the same way that we did before 2020. Before the pandemic hit globally, it may take a while. So that's why I'm encouraging you to make sure you are thinking differently, you are approaching your duties differently. We are taking our role as finance and accounting professionals very seriously that we are approaching it in a different capacity. I know that all this year, you have been challenged and you have looked at these things we need to stimulate and look at our models and our projections, we need to continue to look at the metrics we are using. The analytical testing that we're doing are the product and service lines really going to be there should we be looking at different things. I have talked about this in the last couple of episodes, particularly about turning around a failing team and an organization and also how to build out a long term sustainable business. Also, in Episode 31, I talked about how we can leverage financial analysis to grow the business, we need to continue to think differently, not be complacent in our duties and to relook the tasks and the priorities that we have. And also to be able to reach out to senior leaders and figure out how to solve problems because that's how it's going to be we have the data we have the numbers, we can see what's happening in our organization.

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So for an easy one today, what are you doing to best support a strategy, it could be as easily as prioritizing your tasks and requirements better, I want you to talk with your team about how they can best support their counterparts in the company. Now let's move forward and be proactive continually. I have a free guide for you. It's called the leadership growth blueprint for finance and accounting managers. In the guide I talked about three leadership areas communication, team growth, and empowerment. Plus a few recommendations around challenges with the systems you are probably using to complete your work. The link to the guide is in the episode description.

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Or you can go to Stephen McLain calm. Please use it to help you with a few leadership wins today. Thank you. And this episode is sponsored by my new online course offering through finance leader Academy is called Advanced your finance and accounting career developing a promotion strategy that will set you apart. Are you having difficulty getting recognition from your leadership, despite all the hard work you pour into your job in your organization.

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This course helps you analyze what you bring to the organization how you can set yourself apart from your peers through high visibility work, and developing your leadership skills plus how you can devise a strategy to move ahead. You can go to Stephen McLain calm for more details. Today, I talked about how we can best support the strategy and I talked about these four areas. Number one, we should be using the right metrics. Number two, how should we best allocate our resources?

00:14:37.828 --> 00:15:22.798
Number three, we should be evaluating the results. And four, we should be ensuring we are having the right discussions around the company. The next week, I'll be talking about how we can make our spreadsheets a better tool. This will not be a technical discussion. It's about leaders talking about an expectation about how our analysis tools can be used in a better way. It's always about leadership. In this forum, I hope you enjoyed the finance leader podcast. I'm dedicated to helping you grow your leadership. I hope you enjoyed the show. You can get this episode wherever you find podcasts. Until next time, you can check out more resources at Stephen McLain calm and sign up for my updates so you don't miss an episode of the show. And now go be your team. And I'll see you next time. Thank you

034: Developing a Better Strategy for a World with Challenges

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