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Global Finance 360

PREPARING FOR THE LEAN FINANCE JOURNEY


FOUR STEPS EVERY TRANSFORMATION PLAN SHOULD HAVE
Author: Stephen G. Lynch Every successful transformation initiative has its roots firmly grounded in a well conceived and executed plan. As part of a lean finance initiative, finance leaders must make an objective evaluation of their organization and its capacity to manage change if they are to successfully launch and complete a transformation initiative. Here are four ways finance leaders can guide their transformation efforts:

Leaders of successful change programs understand that true transformation occurs in leaps, not increments, and that 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 the organization so that finance is a true business partner in the drive for value creation.

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 organizations realize that continuous improvement is necessary to remain competitive. Transformational finance leaders have a holistic perspective on the role of their organization and how it enables the fulfillment of corporate strategy. There is a strong understanding of both the quantitative and qualitative measures defining finance performance and how their organizations current performance compares to best-in-class organizations. This information 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 of urgency, a burning platform that drives the need for change in finance. People involved in the transformation effort need to understand why its important to experience short-term pain to achieve long-term gain. They need to understand how the transformation program will 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. Every transformation effort at its core consists of three basic stakeholder groups: change 1 strategists, change implementers and change recipients. It takes a coordinated effort from a number of individuals sharing a common vision and desire to create a better future to drive a transformation effort. The journey to lean finance requires leadership that can drive and 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 key 2 attributes that members of the coalition should posses: Position Power The key leaders of the identified stakeholder groups should be part of the coalition. Its dangerous to leave out key individuals who can fuel resistance against the transformation program. Expertise The coalition should have the expertise needed to create comprehensive and holistic change, both in the finance organization and across the broader corporation. Credibility The members should be seen by the organization at large as highly credible individuals. These people should have a track record of aligning their behaviors with their words, and have a track record of achieving meaningful transformation. Leadership Different from managers, leaders are adept at shaping the vision and getting people to buy into that vision. They can be trusted to guide the organization through the transformation program. Leaders convey a credibility and track-record for accomplishing meaningful change.
Copyright 2011 | Stephen G. Lynch | All Rights Reserved

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 in public accounting. Mr. Lynch is an active content contributor on the topics of Finance Transformation and globalization 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

Assess the Maturity of the Existing Finance Organization


Transformational leaders understand that there are both hard and soft levers that drive finance transformation efforts. Hard factors include processes, organizational structure and technology infrastructure. Soft factors include the values, beliefs and cultural norms that guide behavior in the organization. Effective leaders evaluate and diagnosis the current maturity 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 existing performance. A central focus of this stage of transformation will involve the collection of baseline performance data and comparing the current performance to those of leading companies in the form of benchmark data. By assessing current performance, transformational leaders can better understand their organization and identify the areas that can yield the greatest gains in the transformation program. Assess Organizational Readiness for Transformation In addition to understanding and documenting current performance, the transformational leaders must take an objective look at their capacity for change. Factors to consider include: 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 finance leaders can properly structure and scope the transformation program to drive change and reduce the risk of transformation.

Plan for Organizational Resistance


Every transformation effort has resistance. As soon as an initiative is communicated to the organization, resistance will form and that resistance will be both active and passive. Active resistance is easy to identify and can be deal with quickly. Passive resistance is much more difficult to identify and correct. Leaders of a lean finance initiative need to understand, identify and remove the resistance that threatens the transformation effort. This can be as simple as publically reinforcing the vision and intent to transform the organization. In extreme cases it can mean removing of a key executive that has not personally and publically embraced the new vision of the finance organization.

Conclusion
Leaders of successful transformation programs understand that true transformation occurs in leaps, not increments, and that the transformation effort is holistic, encompassing the hard and soft levers of organizational change. There is a guiding coalition and comprehensive plan to guide the transformation effort with a deliberate eye towards identifying and mitigating risk. Transformational finance 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 the organization so that finance is a true business partner in the drive for value creation.
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Kanter, Rosabeth Moss, The Challenge of Organizational Change, New York, Macmillian Free Press, 1992, pg. 370 Kotter, John, P. Leading Change, Boston, Harvard Business School Press, 1996, pg. 57 Copyright 2011 | Stephen G. Lynch | All Rights Reserved

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