INNOVATION - HAVE YOU CONSIDERED THE COST OF STANDING STILL?

Charles F. Kettering was an inventor, engineer, businessman, and held 186 patents. He co-founded the General Motors (GM) subsidiary Dayton Engineering Laboratories Co. (Delco), and was head of research at GM from 1920 to 1947. He is quoted as saying: 

“You will never stub your toe standing still. The faster you go, the more chance there is of stubbing your toe, but the more chance you have of getting somewhere.” 

Why do organisations wait to be pushed to change? Why don't organisations, as a matter of course, aim to be the best practice? It seems incongruous with being a formidable competitor. Who really wants to be left in the wake of others? There is no better place to be than on the front foot, running ahead of the pack. Yes, it takes money, it takes ingenuity and effort, but it also costs enormously to be left standing still. 

 

The cost of standing still is incalculable, however will take the form of: 

1)    Business as usual costs generally rising over time.

2)    Service levels failing to keep up with the needs of the business.

3)    Finance becoming a target for arbitrary cost reduction which will impact service levels.

4)    Finance becoming less relevant to the business – a costly, unresponsive, less than useful overhead.

5)    Systems becoming unsupportable. This will lead to either system failures or the need to invest a lot of money. This investment may come at a time when the business can ill-afford the outlays and the management distraction.

6)    Finance staff will come under ever increasing pressure – people will walk. 

 

Change in the Finance space centres around the amount of time and resources consumed in recording, reconciling and reporting versus that tied-up turning these reports into value-add advice to the business. To increase value-add, the advice needs to become the primary activity, whilst transaction processing and getting the numbers together needs to be secondary and, at the same time, needs to be reliable, faster and cheaper. 

 

How do you change (ie. reduce and optimize) the cost of the Finance function? 

1)    Standardise - do things one way.

2)    Simplify - remove duplication, do things in one place and leverage economies of scale. Also, really look critically at the objects you capture and their relationships - the more objects there are, the greater the immediate and downstream cost.

3)    Automate repetitive transactional activities.

4)    Invest in training and supporting your team.

5)    Maintain a continuous improvement culture which will see you re-visit 1) to 4) on an ongoing basis.

 

Of course, nothing dramatic happens without the right systems support. If success is achieved primarily through manpower hungry spreadsheets, replace them with a system that deals with complexity. Drive down or eliminate no/low value add activities, and focus more on high value adding activities like planning and analysis. 

Yes, by moving to change things you will get somewhere, and yes, you might stub your toe, possibly many times. Stand still, however, and you will certainly be hit by that proverbial truck.

 

Related Blogs:

HOW DO YOU CLIMB A MOUNTAIN THAT LOOKS TOO TALL TO CONQUER?

DOES ‘ONE SIZE’ REALLY EVER ‘FIT ALL’?

WHAT DO YOU DO IF YOU HAVE BEEN RUNNING WITHOUT AN ASSET REGISTER FOR 100 YEARS?

DOES IT MAKE SENSE TO USE CODES THAT ACTUALLY MAKE SENSE?

HOW DO YOU MAKE SURE THAT WHEN YOU SELL A BUSINESS, IT ACTUALLY IS A BUSINESS?

  • 2016-01-13 09:56:20
  • Mark Spicer
  • Effectiveness and Efficiency, Innovation, Continuous Improvement, Leadership