Product Ownership in FP&A: A New Mindset
Introduction
Based on reading lately books such as 'The Lean Startup,' 'Mythical-Man Month,' and 'High Growth Handbook,' I have become increasingly convinced of the need to view Financial Planning & Analysis (FP&A) as a product, rather than a project or regular activity. In this post, I aim to clarify my thinking on the main concepts of Lean Startup and it’s potential connection to FP&A, what is a product from FP&A perspective and how in the FP&A function we can utilize the principles for common benefit.
Section 1: FP&A and the Lean Startup Model
Despite its analytical prowess, FP&A often seems stuck in a reactive mode, lacking adaptability and connectivity with real business. As discussed in a previous post, agility is a valuable trait for FP&A.
The Lean Startup by Eric Ries resonated with the same theme from a more practical angle of having an iterative approach both as a general Build-Measure-Learn cycle as well as thinking through the value of our deliveries from user perspective based on the following four questions:
Do customers (internal or external) recognize the problem we're trying to solve?
If there were a solution, would they use it?
Would they use it from us?
Can we build that solution?
In an era where business environments constantly evolve, FP&A must also evolve its “product offerings”. Of course, first, taking ownership of the deliveries and then keeping in mind that at the end of the day also finance should think about in the lines of “not just doing things right, but doing the right things”.
Section 2: Amplifying Value through Product Ownership
Traditional FP&A processes, often felt to be 'in place,' are usually followed based on project management thinking. However, the absence of clear ownership and mandate leads to stagnation. FP&A shouldn’t only focus on fine-tuning timing and coordination (the short term); it should also take the time and effort to discuss and consider what would drive maximum value for the business, to think what is important for the strategic direction. The long term will become the short term sooner than one often expects.
Product ownership in FP&A involves understanding the evolving needs of the business, leveraging technological developments, and nurturing the necessary skills over time. By this, one takes ownership of the vision and a real roadmap, not just what we will do in the current planning cycle. This approach takes inspiration from product lifecycle management with continuous iteration and feedback to enhance value delivery.
Section 3: Achieving Speed and Accuracy via Iterative Processes
An argument often made in IT development—speed versus accuracy—is prevalent also in FP&A discussions. Instead of accuracy perhaps even certainty comes to mind. However, like IT, this is a false dichotomy.
FP&A can and should adopt small, iterative changes that enable accuracy validation (and correction). Trying to make sure that all assumptions are correct, because nobody will have time to run multiple iterations of a model is not a recipe for having relevant insights in a ever-changing landscape.
Changes in mindset, tool usage, and skills are necessary for this shift. An iterative, hypothesis-based approach is needed to ensure transparency, accuracy, speed, and alignment with business needs in the FP&A function.
Section 4: A Customer-Centric Approach for Enhanced Stakeholder Alignment
Traditional FP&A processes sometimes falter in aligning with internal stakeholders' needs. Viewing internal stakeholders as customers can help FP&A adopt a customer-centric approach. Instead of solely focusing on efficiency, it's crucial to consider what valuable, actionable insights FP&A can provide to its customers.
Embracing a mindset that prioritizes developing what is relevant for customers, instead of maintaining existing solutions, will require a shift in mindset and skillset. Even if one understands that only 10% of the entire process today provides real value, it may take an outsized effort to untangle and decommission the legacy solution, which ultimately can be taken on only with a product ownership mindset.
Furthermore, such a change cannot be carried out by a single analyst—it needs to be endorsed throughout the finance organization with a clear strategy.
Section 5: Becoming an FP&A Product Owner: The Path Forward
One of the clearest descriptions of Product Owner skillset I have lately seen is by Elad Gil in his book, 'High Growth Handbook':
Product taste
Ability to prioritize
Ability to execute
Strategic sensibilities
Top 10% communication skills
Metrics and data-driven approach
Transitioning to a product mindset will require FP&A professionals to rethink their role from scratch. One will need to develop a clear vision for their 'product' today, tomorrow, and in the future out and above of “providing accurate numbers”.
The role of an FP&A product owner will be that of an evangelist, an intrapreneur. By taking on this role, FP&A professionals can expand their skills to align with modern ways of working and remain abreast of new trends, and not leave the exciting new trends only to the business or IT side of the organization.
Conclusion
When we reimagine our FP&A deliveries as products and embrace a product ownership mindset, we unlock the potential for providing long term value for our business partners. Being a product owner will bring FP&A closer to the ever-changing needs of the business, fostering a deeper understanding of their needs rather than just focusing on what appears interesting for us.
The Lean Startup Model of Build-Measure-Learn cycle enables thinking about our deliveries as iterative MVPs that will enable to take a customer-centric view, including whether what we believe is valuable truly brings added value to the decision-makers.
From our own perspective, this transformation into FP&A product owners enables us to enrich our skills, embrace modern ways of working, and stay on top of technological trends. Change invariably presents challenges, but transitioning to a product owner mindset offers a unique opportunity: to evolve the role we enjoy and elevate its value for the benefit of profitable growth.