The FP&A Trends Webinar: Digitised FP&A Business Partnering: The Formula for Success
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The FP&A Trends Webinar: Digitised FP&A Business Partnering: The Formula for Success
Click here to view details and register
By Ivan Mitringa, Worldwide CFO Displays, Software & Client Peripherals, Singapore FP&A Board Ambassador
Let’s imagine your Business Partner has given you a task to perform a deep dive into their portfolio's profitability, or you have been assigned a project to evaluate growth opportunities for your business.
You have vigorously jumped on the task, spent hours and hours analysing numbers, reading articles, going through history, talking to other people around you, and consolidated it into a report… The only thing you got from your Business Partners was something like “I don’t understand what you are saying” or “What’s the key takeaway?”. I know it’s disheartening and disappointing as you start thinking, “How come they did not understand it? I have spent endless hours analysing, preparing, and giving my recommendations. What was there not to understand?”. We all experienced something similar at some point in our careers, as most probably very few people were born with natural storytelling and data/business analytics skills simultaneously.
Why is it one of the critical traits of a successful Finance Business Partner?
We can all agree that we don’t remember too much from childhood, but we do remember fairy tales. Why? Because they were told as a story, and you remembered the key components: “Good defeated evil”; “Prince has defeated the dragon and married a Princess, and they lived happily ever after.” You probably have already got the gist of it. Storytelling has an easily understandable start/entry, mid-part (which can encompass issues, business case and performance), and memorable ending (e.g., key takeaway, suggestions, conclusions, call to action). One wise person said:
“No one ever made a decision because of a number. They need a story.”
What does this mean in the context of being a finance professional? Being a data analyst, having all the technical skills only gets you up to a certain level, as there will always be a request to “interpret” the numbers into “Business Partner’s language” so that even leaders with non-financial backgrounds can understand it. I feel that one sub-set of this skill is essential for any finance person, especially those who work in Financial Planning and Analysis (FP&A). And that is to put numbers into CONTEXT = BIG PICTURE = WIDER STORY.
Here is a simple example. Let’s imagine you own a performance of Product A, which has generated specific revenue for the current quarter. Your task is to compare it to a set annual plan for that quarter, which was done six months ago.
The usual pattern or behaviour that we tend to see from the business analyst is as follows:
“Product A has achieved 102% of the plan. We have done very well and exceeded our plan, which is an awesome result! Let’s move on to another Key Performance Indicator (KPI), which is already checked as “GREAT”.
But where is the CONTEXT?
There are a few things we need to ask ourselves prior to answering this question:
Based on the example above, we should be at least considering the following to wrap a story in the appropriate context:
How can it be compared to the official plan:
Internal-relative performance presupposes comparing this 102% to your business performance in other periods. We can also compare it to the existing internal competition.
Traditionally, it is a comparison between “your” market and competition. The insights on the external relative performance can be published by official agencies such as IDC, Gartner, GFK, Context, and others. However, there are multiple other sources for different industries. If you grow your business premium to the market, you certainly grow your market share. But if you grow your business with a gap in the market, you may lose share to your competition.
Another comparison could be made to your competitors' financial statements, which can be obtained via the investor relations websites of respective companies, provided they trade publicly. You can compare the financial statements and other disclosures across multiple companies and draw a complete picture of the performance of your business.
Let’s consider an example of how your story should look when you are going to describe the performance, as indicated in Figure 1. The sample provided in Figure 2 is not exhaustive and only indicative.
However, there are a few key observations I would like to point out to complete the overall picture of Product A performance:
Overall, we beat our annual plan, but the market dynamics improved, and we were unprepared to react to those changes fast enough. As a result, we lost our №1 position to the competition. We need to review our processes, such as faster reaction to the pricing changes of our competition, improve our distributors' sell-out, align with our supply chain for more agile inventory management, and many more. That’s it! You have a story with a meaningful impact and actionable takeaways.
The HBR Research1 shows that storytelling can help us captivate people’s attention and inspire them to act. It is one of the essential human traits. The harder the situation, the more essential an action is. The French philosopher Blaise Pascal once apologised for writing a long letter, explaining that he didn’t have time to write a short one. The ability to tell a concise story to your Business Partner will make you stand out among your peers and showcase that you can take on a more advanced role in the future!
1 – FREI, Frances X., MORRISS, Anne. "Storytelling That Drives Bold Change: How to Craft a Narrative That Matters." Harvard Business Review. November–December 2023, from the Magazine. https://hbr.org/2023/11/storytelling-that-drives-bold-change
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