Agile has become an important initiative for many organizations as they struggle to cope with the ever-accelerating pace of change in the external environment whilst also being under the threat of new entrants unencumbered by legacy organization and technology issues.
This article aims to explore whether “agile” is relevant for the finance function.
Why is it important?
Finance has traditionally been seen as a cost centre that is preoccupied primarily with its stewardship and compliance obligations.
At the same time, the request from business to finance has been evolving and the demand is increasingly on the function to go further up the added value curve. The modern finance function needs:
- to provide financial management service elements that can better help the organization realise its strategic objectives.
- to work more effective (contribute to better business outcomes) and efficient and therefore reach a step-change in productivity.
- to become more engaging to continue to attract talent.
All this puts pressure on the finance function to fundamentally address HOW it operates. Therefore, it is worth asking whether an agile approach can play a relevant role in this transformation.
What are the key considerations?
Some of the key elements that characterize agileness and an agile organization are as follows:
- Strategic alignment and commitment
- Empowered teams
- Faster cycles, feedback loops and learning
- Flexible and dynamic people allocation that sustains motivation and commitment
- Technologically fit for purpose and leader
From a finance function perspective let us look at which ones could be relevant and why.
Strategic alignment and commitment
Although not entirely new, everyone benefits from being part of a clear purpose and a vision that is shared across the organization. As a support function, it is very easy to imagine people in finance roles who come in to “do the job” without a deeper understanding of what the role means to the big organization picture. I believe this is relevant for finance and especially for the more business-facing and expertise type roles such as Treasury, Tax, M&A.
Structurally, finance has done a decent job of “mapping” to the business. In creating separation between sub-functions such as Accounting and Reporting, FP&A, Business Finance, Tax, Treasury, Investor Relations, Internal Control etc. The real question is whether a more flexible approach to creating a pool of expertise within business finance can help map onto a more agile business better. So that such expertise can be easier deployed to where it is needed rather than being “stuck” to a particular unit. What is as relevant is the role of leadership to provide greater role clarity and stability in the form of communities of practice to offset the relative destabilization that can come with a more flexible deployment model.
Faster cycles, feedback and learning
At heart here are ideas of performance orientation, standardized ways of working, experimentation, transparency of information and ongoing learning. Given that finance and FP&A, in particular, tends to have process leadership of the performance management cycle, the need to approach these in a more suitably agile manner in keeping with the changes in the business environment is only to be expected and thus relevant.
Dynamic people allocation
This is about what Agile implies in terms of leadership style. A move to flexible resource allocation implies delegation and trust. Which means that the old styles of command and control and micromanagement will not cut it. Rather Leadership should reflect servant leadership. Meaning having the requisite skills to steer the functional resources in a very different way and, importantly, to act as super coaches and set the environment where entrepreneurship, risk-taking, experimentation can flourish and where a growth mindset rather than a fixed mindset is encouraged when it comes to career development.
Fit for purpose Technology
This probably goes without saying but with information remaining the core product of the function, the ability to work with the Business and IT to design the right systems architecture and to deploy specific tools for specific purposes in a very different way to traditional IT projects becomes highly relevant.
Are there any challenges?
For me, the biggest challenges will remain two-fold. The change in leadership style required to support a more agile finance function and addressing the legacy systems infrastructure.
I hope in this article have illustrated that whilst Agile is seen mainly in the context of software and product/services development, it can have clear relevance to how the finance function can provide a better business service in a more flexible and, potentially, more cost-efficient manner.
The article was first published in Unit 4 Prevero Blog