FBP - Series 2, Post 1: Stakeholder Engagement in Vision and Strategy Alignment
II. Collaborative Planning as a Catalyst for Growth, Post 1: Stakeholder Engagement in Vision and Strategy Alignment
It’s time to kick off the second half of the Finance Business Partnering blogpost series. Collaborative Planning is the main theme and in the first post I’ll discuss stakeholder engagement. I’ll explore how a modern mindset in finance can drive business transformation through effective stakeholder management.
Before going to today’s blogpost, a reminder on the structure of the FBP series:
I. Strategic Alignment through Finance Business Partnering
The Evolving Role of Finance (9 October 2023)
https://www.roosimagi.com/p/fbp-series-1-post-1-the-evolving
Collaborative Tools and Strategies for Finance Business Partnering (20 October 2023) https://www.roosimagi.com/p/fbp-series-1-post-2-collaborative
Strategic Implications of Finance Business Partnering (3 November 2023)
https://www.roosimagi.com/p/fbp-series-1-post-3-strategic-implications
II. Collaborative Planning as a Catalyst for Growth
Stakeholder Engagement in Vision and Strategy Alignment (today)
Sustainable Growth through Collaborative Financial Planning (1 December 2023)
Being Directionally Correct: Navigating Business Constraints
1. Introduction: The Evolving Landscape of Strategic Finance
The world of finance is undergoing rapid change, characterized by its shift away from traditional roles. In this modern era, finance professionals are no longer viewed merely as number jockeys or scorekeepers. Instead, they stand at the forefront of strategic decision-making, playing a pivotal role in steering organizations towards sustainable growth and innovation.
Earlier this week Pigment released their topical research report “The Office of the CFO in 2024.” The report highlights that 64% of finance leaders feel the pressure to evolve their role beyond number crunching to be more dynamic, forward-thinking, integrated with business strategy:
Finance leaders are clearly being asked to take on more work. They are now expected to be a part of key business initiatives, whether that be mergers and acquisitions, or sustainability responsibilities.
In this ever-evolving landscape, it is paramount for finance professionals to adapt to these differing expectations regarding their role. Achieving this means equipping themselves with the tools, insights, and strategies necessary to maintain the agility, precision, and forward-thinking approach required in today’s complex financial ecosystem.
Central to the concept on finance transformation and unlocking business value is stakeholder engagement. Finance professionals need to be proactive partners and strategists. They are the few in any organization that have a 360 degree view of the business and are equipped to act as the bridge between an organization's vision and its operational reality, aligning various stakeholders and interest to drive collective success.
In today’s post I’ll explore the various angles of stakeholder engagement in this new era of strategic finance. I’ll utilize resources such as the ”Elevating Finance Business Partnerships: Unlocking Their Potential” and “Finance 5.0 - Becoming Human Again in a Fearful Age of Tech” podcasts as well as books from ”Reinventing Organizations” by Frederic Laloux to ”Thinking in Systems” by Donella Meadows, to examine how finance professionals can effectively navigate the new paradigm.
Let’s see how the principles of systems thinking, agile methodologies, and a human-centric approach are reshaping the finance function, making it more responsive, innovative, and aligned with broader business goals. Sounds good, doesn’t it?
I hope by the end you’ll see better how stakeholder engagement is at the core of shaping the future of finance, and how embracing this role we can unlock business growth through strategic alignment.
2. The Agile FP&A: From Reactive to Proactive
The FP&A transformation is underscored in the Pigment’s “The Office of the CFO in 2024" report, illustrating a fundamental shift towards agility and strategic partnership.
Adding another resource, the “Elevating Finance Business Partnerships: Unlocking Their Potential“ podcast points at the growing need for finance teams to anticipate business needs, drive strategy, and influence outcomes proactively. This change is not just about speed and responsiveness; it's about taking on a role of solving business problems.
Proactiveness demands an FP&A function that is agile, one that can adapt to changing business landscapes and needs. As proactiveness is as a buzzword as any, then think are you bringing to the table topics and new angles without being specifically asked to do so?
The Elevating Finance podcast emphasizes the importance of building strong relationships across different business units, understanding the nuances of each department, and leveraging this knowledge to influence decision-making. By this FP&A transforms itself from a support function into a strategic partner, where their insights and analyses directly impact business outcomes.
Moreover, the adoption of new technologies and data analytics tools plays a critical role in this transition. By harnessing these tools, FP&A teams can provide more accurate forecasts, deeper analytical insights, and more effective scenario planning, all of which are essential in a rapidly evolving business environment.
In conclusion, the shift towards an agile and proactive FP&A is not just a trend; it's a strategic imperative. In order to be a real partner and not just the scorekeepers, FP&A professionals need to take a proactive stance and think of themselves as strategic partners. This chapter in finance's evolution is about enabling FP&A teams to be ahead of the curve, driving the business forward rather than merely scrambling to keep up.
3. Systems Thinking in Strategic Finance
In an era where finance is rapidly evolving, embracing Systems Thinking offers a powerful framework for finance professionals to adopt a proactive, agile stance and position themselves as strategic partners. Systems Thinking, as detailed in “The Fifth Discipline” by Peter Senge and “Thinking in Systems“ by Donella Meadows, enables a deeper understanding of the complex dynamics within organizations, moving beyond mere number reporting.
Systems Thinking involves viewing problems and solutions in the context of the whole system, recognizing the interconnections and interdependencies of various business functions. This holistic view is crucial for finance professionals to understand how actions in one area can affect the whole system, leading to more effective decision-making and strategy formulation. Taking on a systems thinking mindset, finance professionals are able to step outside the traditional backward looking stance.
Drawing insights from “The Fifth Discipline,” Systems Thinking encourages finance professionals to look beyond isolated incidents and understand underlying patterns within the organization. This perspective is essential for finance teams to anticipate the broader implications of financial decisions and align their strategies with the organization's overall objectives.
“Thinking in Systems“ further emphasizes the importance of recognizing and influencing systemic structures to achieve desired outcomes. By applying these principles, finance teams can better comprehend how changes in one part of the business impact the entire organization, thereby enhancing their ability to engage stakeholders effectively and drive strategic value.
The role of Systems Thinking in stakeholder engagement is also highlighted in the “Elevating Finance Business Partnerships: Unlocking Their Potential“ podcast. Here, the focus is on taking the time for relationship building in order to understand the broader business implications to connect financial metrics to the real outcomes. Systems Thinking enables finance professionals to go beyond surface-level analysis and integrate financial insights with broader business strategies.
Adopting Systems Thinking in finance is not just about problem-solving; it's about fostering a culture of holistic understanding and strategic foresight. It encourages finance professionals to view their role within the larger context of the organization, understanding how their decisions fit into and impact the overall system.
In summary, Systems Thinking opens up a world of possibilities for finance professionals to innovate and strategically align their functions with organizational goals. By moving beyond conventional wisdom and understanding complex organizational dynamics, finance professionals can provide solutions that are not only effective but also integral to the organization's success and its stakeholders’ objectives.
4. Data Literacy and Digital Transformation
In order to stay on top of the rapid developments, data literacy is a cornerstone skill. Technological skills are at the foundation on top of which to be able to offer the value adding insights to business. Without foundational skills, finance professional have neither the time nor the capacity to bring out the insights.
Data literacy, in its essence, is the ability to read, understand, create, and communicate data as information. As we have more and more data flowing in and made available, the ability to effectively interpret and leverage this data is crucial. Finance professionals who are adept at data literacy can transform raw data into actionable insights, shape the data for their benefit, driving strategic decisions based on a deeper understanding of business.
The digital transformation (and it’s still a transformation, not a status quo by any means) in finance is not just about adopting new technologies; it's about fundamentally rethinking how these technologies can enhance financial analysis, forecasting, and strategic planning. Modern tools can unlock finance potential by enabling faster turnaround times, more accurate predictions, (financial) risk understanding, and scenario planning. However, the effectiveness of these tools hinges on the data literacy of those who wield them and their capacity to understand what can be fixed with better tools and where we need to change the underlying processes.
The “Finance 5.0“ podcast brought an additional dimension to this conversation, focusing on the human aspect in the age of technology. It emphasizes that while technology is a powerful enabler, the real value lies in how finance professionals use these tools to generate insights and guide business strategy. This human-centric approach in finance 5.0 aligns perfectly with the need for data literacy, as it places finance professionals at the center of technological adoption, ensuring that these tools are used in a way that is strategic, insightful, and aligned with business goals.
However, as the Pigment research indicates, we both
53% stating outright that they do not have the requisite tools needed to conduct long-term growth planning.
while there is a clear focus to integrate digital tools into finance functions. This integration requires finance teams not only to be comfortable with technology but to be proficient in translating data into meaningful narratives. Data storytelling is invaluable in stakeholder engagement, where financial insights need to be communicated clearly and compellingly to inform decisions across the organization. Finance cannot say that “here are the numbers, we are neutral”. Finance needs to use the tools they have at hand and the data storytelling skills they can learn to take a real value adding stance in their business interactions.
In conclusion, the path to digital transformation in finance is paved with data. As finance professionals enhance their data literacy, including not forgetting the data storytelling step, they equip themselves to play a more pivotal role in driving business strategy and innovation.
5. Automation for Strategic Advantage
Jumping from data literacy to the tools needed, integration of automation into finance functions is more than a trend; it's a strategic transformation reshaping the function.
“The Office of the CFO in 2024“ report highlights how automation is rapidly becoming a staple in finance, not just for efficiency but as a key driver of strategic value:
While finance teams are being asked to take on more than ever, their
resources are not increasing. Striking the balance between automation and an organization’s most important asset — its people — is key for the future of finance.The concept of “doing more with less” is not about burdening an already stretched workforce. It’s about amplifying human capabilities with the power of automation, empowering everyone to propel the business forward.
Automation in finance goes beyond simplifying repetitive tasks. It's about redefining the role of finance professionals, freeing them from the confines of traditional, time-consuming processes, and empowering them to focus on higher-value activities. By automating routine tasks like data entry, report generation, and basic analysis, finance teams can allocate more time and resources to strategic analysis, business forecasting, and proactive advisory roles.
The insights from the “Finance 5.0“ podcast further illuminate this transformation. The podcast discusses how the integration of technology and automation in finance is not just about operational efficiency but about creating a foundation for strategic growth and innovation. It emphasizes the importance of understanding the potential of these technologies and using them to not only automate existing processes but to reimagine them entirely.
Moreover, automation presents an opportunity for finance professionals to enhance their skill sets, focusing on areas such as strategic thinking, data interpretation, and business acumen. In this way, automation is not replacing the finance professional but elevating their role, allowing them to become more integral to business strategy and decision-making. By embracing automation, finance teams can leverage technology not just for operational efficiency but as a tool for strategic advantage, driving innovation and business growth.
6. Navigating Business Model Evolution
Stepping further outside the traditional finance roles, the modern strategic finance is taking a role in navigating and influencing business model evolution. The insights from “The Office of the CFO in 2024“ echo this role and the concept is further explored in “Reinventing Organizations“ by Frederic Laloux and “Team Topologies,“ two resources that provide a framework for understanding and engaging with organizational paradigms effectively.
In today's dynamic business environment, organizations are constantly exploring new business models to stay competitive and relevant. Finance professionals, with their unique perspective on the organization's financial health and strategic direction, are ideally positioned to influence these decisions. They play a key role in assessing the financial viability of new business models, understanding the implications of strategic shifts, and ensuring that these changes align with the organization's long-term goals.
“Reinventing Organizations” offers valuable insights into how organizations can evolve beyond traditional structures to more fluid, adaptive models. This evolution requires a deep understanding of the systemic interdependencies within an organization, a skill that finance professionals must develop to effectively contribute to business model innovation. By understanding these interdependencies, finance teams can provide strategic insights that help align new business models with the organization’s vision and objectives.
Incorporating insights from “Team Topologies,“ it's important for finance professionals to understand and apply effective team interaction modes and manage team cognitive loads from software development. By adopting collaborative, X-as-a-Service, or facilitating roles, finance teams can enhance their interaction with other departments, offering strategic financial insight and guidance. Managing cognitive load, a key principle from “Team Topologies,“ helps finance teams streamline their processes and focus on high-impact strategic activities. This approach ensures that finance professionals are not overwhelmed by operational details, enabling them to contribute more effectively to discussions around business model innovation and strategic planning.
Moreover, applying the concept of clear team boundaries, as advocated in “Team Topologies,“ assists finance teams navigating business model changes. Clearly defined roles and responsibilities within the finance function foster more efficient and focused interactions with other business units. This clarity aids finance professionals in providing targeted financial insights and support, aligning closely with organizational goals and contributing significantly to business model evolution. By leveraging these team dynamics and structures, finance teams can transition from traditional roles to become integral strategic partners, adept at steering the organization through the complex landscape of business model innovation.
Similarly, “Reinventing Organizations” emphasizes the importance of effective team structures and interactions within an organization. For finance professionals, understanding and adapting to these structures is crucial in navigating business model changes. They must collaborate closely with various teams, providing financial insights and guidance to support the organization's strategic initiatives.
Furthermore, effective stakeholder engagement is critical in this process. Finance professionals must communicate complex financial implications in a clear and concise manner, ensuring that stakeholders across the organization understand the financial and strategic impact of proposed changes. This communication is key to building consensus and driving successful implementation of new business models.
In conclusion, as organizations continue to explore new business models in response to changing market conditions, the finance function's role in guiding this evolution becomes increasingly vital. By leveraging insights from organizational theories and maintaining a strong focus on stakeholder engagement, finance professionals can effectively contribute to business model innovation and strategic growth.
7. Cultivating a Learning Culture in Finance Teams
In order to stay on top of the evolving expectations and capabilities, cultivating a learning culture within finance teams is essential. This need for continuous learning and adaptability is highlighted in “The Office of the CFO in 2024,“ which underscores the importance of developing teams that are agile, knowledgeable, and responsive. The principles set forth in “The Fifth Discipline” and “Thinking in Systems“ offer valuable guidance in building such a culture within finance teams.
“The Fifth Discipline“ introduces the concept of a learning organization, where continuous learning is integral to the organization's DNA. A learning culture encourages finance professionals to stay abreast of new trends, technologies, and regulatory changes, ensuring that their strategies and solutions remain relevant and effective. This culture also fosters an environment where feedback, creative problem-solving and innovative thinking are encouraged, enabling finance teams to develop more effective and strategic responses to challenges.
“Thinking in Systems“ complements this by providing a framework for understanding the interconnected nature of organizational systems. By fostering systems thinking within finance teams, professionals can better understand how their decisions impact the broader organization and its stakeholders. This understanding is crucial for effective decision-making and strategic planning, as it allows finance teams to anticipate and respond to the ripple effects of their actions across the organization.
Moreover, the Pigment research emphasizes the need for finance professionals to be lifelong learners, constantly updating their skills and knowledge to keep pace with the evolving business environment. This continuous learning is not limited to technical skills; it also includes developing soft skills such as communication, leadership, and strategic thinking. These skills are essential for effective stakeholder engagement, enabling finance professionals to convey complex financial information in a clear, concise, and impactful manner.
Cultivating a learning culture within finance teams also involves embracing new technologies and methodologies. By staying at the forefront of technological advancements, finance teams can leverage these tools to enhance efficiency, accuracy, and strategic insights. This approach aligns with the need for finance functions to be more than just number crunchers; they must be strategic advisors who can provide valuable insights and guidance to the business.
In conclusion, fostering a learning culture within finance teams is crucial for adapting to the rapidly changing business world. By embracing the principles of continuous learning, systems thinking, and technological adaptability, finance professionals can ensure they remain relevant, effective, and strategically aligned with the needs of their stakeholders and the market.
8. Conclusion: Integrating Stakeholder Engagement into Strategic Finance
In order to be able to align business to the vision and strategy of the company, finance professionals need to have the skills as well as behaviors needed to successfully engage with their stakeholders. Drawing on some recent research, podcasts and more fundamental books, it’s apparent that finance professionals need and can adopt a proactive, learning-oriented approach to elevate their roles for business success.
The transformation from a traditional, reactive finance function to an agile and proactive strategic partner is a significant shift in the mindset of finance teams. As highlighted in the post, FP&A professionals are expected to be (and if not yet expected, need to put themselves) at the forefront of strategic decision-making, guiding organizations through the complex landscape.
This shift necessitates a deeper understanding of and engagement with various stakeholders, ensuring that financial plans are not standalone artifacts, but aligned with broader organizational goals. In order to gauge your success in stakeholder engagement and proactiveness, assign yourself a KPI of “time spent away from the desk”.
The adoption of systems thinking, as advocated in “The Fifth Discipline“ and “Thinking in Systems,“ equips finance professionals with the tools and frameworks to approach problems innovatively and holistically. By this we are able to understand the business context, the feedback loops and how financial and operational decisions impact each other.
Furthermore, data literacy and the embracing of digital transformation have emerged as crucial competencies. As the Pigment research emphasizes, the ability to navigate and leverage technological advancements is vital for finance teams to provide accurate, timely, and strategic insights. Automation, as a tool for strategic advantage, further empowers finance professionals to focus on value-added activities and strategic initiatives. When you spend all your time in data manipulation to finalize the reports, you are hardpressed to step out of the mindset of the number’s police or scorekeeper as you haven’t had the chance to thing beyond the numbers. Embrace automation to be able to add real value.
The cultivation of a learning culture within finance teams is essential in this rapidly changing environment. Continuous learning, adaptability, and the embrace of technological advancements ensure that finance professionals remain relevant, effective, and strategically aligned with both organizational objectives and stakeholder needs.
In essence, integrating stakeholder engagement into strategic finance is not merely about enhancing communication; it's about reshaping the finance function's role within the organization. It involves a shift towards a more collaborative, insightful, and proactive approach, where finance teams know when they need to bring topics on the table without being requested or asked so that they become key players in driving business strategy and innovation.
In an era of rapid change and complexity, the role of finance professionals as strategic partners is increasingly critical. The future of finance is one where its influence extends far beyond the financials. It is a future where finance is a key driver of strategic initiatives, a catalyst for innovation, and a guardian of organizational integrity (systems thinking) and sustainability. As finance professionals embrace this expanded role, their impact on business strategy and overall organizational success will be more significant than ever before.
How do you understand whether you’re successful in your endeavours? Ask, is business excited to speak with you?
As every time, thanks for making it this far!
A reminder and what to expect:
I. Strategic Alignment through Finance Business Partnering
The Evolving Role of Finance (9 October 2023)
https://www.roosimagi.com/p/fbp-series-1-post-1-the-evolving
Collaborative Tools and Strategies for Finance Business Partnering (20 October 2023) https://www.roosimagi.com/p/fbp-series-1-post-2-collaborative
Strategic Implications of Finance Business Partnering (3 November 2023)
https://www.roosimagi.com/p/fbp-series-1-post-3-strategic-implications
II. Collaborative Planning as a Catalyst for Growth
Stakeholder Engagement in Vision and Strategy Alignment (today)
Sustainable Growth through Collaborative Financial Planning (1 December 2023)
Being Directionally Correct: Navigating Business Constraints