Why Your Organization Should Lead with Strategic Finance

Michael Huthwaite - Wednesday, June 10, 2015

In a previous article, we touched upon the three most common use cases for Strategic Finance (Long Range Planning, Acquisition/Investment Screening and Treasury/Risk modeling).  In this article, we want to shift the focus to the people directly impacted by your organization's Strategic Finance efforts. 

It's important to start by realizing that Strategic Finance addresses a leadership activity and not a management process, per se.  What's the difference?  Well, perhaps another way to frame this question is by asking what's the difference between a good manager and a good leader? 

The attributes of a good manager are often based around the ability to institute control, assign accountability, and establish reliability.  On the other hand, the attributes of a good leader are often viewed as a visionary with the ability to attract a following and most importantly identify significant business opportunities.  

Needless to say, establishing an environment where the two personas can flourish on their own, yet communicate effectively and efficiently and you have a winning organization on your hands.

So lets take a deeper look into the leadership traits that maximize your organization's Strategic Finance efforts.

Influence Peers

Being a visionary starts with influencing peers.  Whether your idea is a simple correction in course or a game changing idea, its not going to take root unless you can influence your peers.  That's because good ideas have a snow ball effect.  Effective communication, presentation and analysis of alternatives is critical. 

Peer teams exist in various forms and are often networked throughout the organization.  These teams are often no bigger than 5-15 people.  Winning approval of your peer team strengthens your ideas as the message moves throughout the organization.

Motivate & Incentivize

Good leaders understand the need to motivate and incentivize.  If your followers are going to embrace your ideas they need to see a direct benefit.  This often includes both monetary and non-monetary benefits.  Because Strategic Finance efforts focus on setting targets, its critical to let managers establish how they are going to reach those targets as part of a separate exercise.  Do this by aligning the same value creation metrics for your managers as you do for the organization.  This will ensure that your managers focus on what is truly important for the company, while at the same time empowering managers to manage.  In most cases, the ultimate metric should be rooted in sustainable growth in free cash flow.  This is the basis for Strategic Finance and therefore should be the impetus behind your analyses. 

Build Consensus

Leaders do more than just influence and motivate, they also listen.  Rarely does a leader have all the right ideas and this is why comparing alternative perspectives is so critical.  Inviting peers to establish a dialog in an environment where alternative assumptions can be challenged and debated with the hope of establishing consensus is extremely high-value analyses. 

This means inviting peers to evaluate a financial model that in most cases was never built by them yet requires their ability to quickly navigate and evaluate highly dynamic driver based relationships across multiple financial statements. 

About FinanceSeer

FinanceSeer is a financial modeling solution that is purpose-built for Strategic Finance.  We sit on top of operational planning tools to focus the analyses on the use cases that are relevant to Strategic Finance and the leaders who take part in the discussion. 

We understand that leadership and management are complementary activities that both thrive as discrete yet interconnected activities. 


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