As lockdown eases and business life begins to return to some kind of normality, the challenge for mid-market finance directors is to reflect on the new ways of working, introduced to help overcome the virus and cope with lockdown, and build on them to work differently in the future to enhance finance operations, manage costs and accelerate success.
Before COVID-19, when we talked to finance directors in mid-market companies about the pace of change and innovation in recent years, we often heard the same kind of comments. Many would admit to being nervous about taking the leap into using new technologies or operating models that some of their colleagues in larger organisations were more relaxed about. Usually this is because larger organisations have more substantial technology support teams and because the cost of investment in and maintenance of new systems is substantial and sometimes unpredictable. However, where chief financial officers (CFOs) have made the change, the benefits can be significant. One example of this is the migration of finance data to the cloud. It is common to find CFOs who admit that five years ago they felt uncomfortable with such a move, but today those who made that change can’t imagine doing things any other way.
The current crisis has forced finance teams to work differently and take innovative steps as part of their response to the pandemic. Some of these changes may have been forced by necessity but they can highlight opportunities to accelerate out of this period of upheaval. As mid-market businesses prepare for the challenge of an economy that is recovering and rebuilding, what can be learned from the recent experiences and how can these lessons deliver sustained improvement?
1) A greater willingness to do things differently
There is no question that the past few months have forced radical changes across most businesses. Previously office-bound teams have been forced to operate remotely, with distributed teams meeting virtually. In many cases, these changes have brought improvements that could and should be sustained longer term if properly embraced by leadership. For some, the challenges of home working have highlighted weaknesses in technology and processes which needed attention and investment in order to protect the business. The unforeseen nature of the recent crisis means that many businesses have had to either engineer temporary solutions or, at worst, put a sticking plaster on these problems in the short term. In each case, it has brought a recognition that change has to come in a more sustainable and resilient form in the future. The pace of change is not going to abate and new, exciting technologies from better data analysis and interrogation tools, to enhanced reporting platforms and smarter outsourcing models will improve the ways the finance function reports to the board to inform strategy.
2) Adding hard data to gut feel
In the past, private mid-market businesses have had to rely heavily on the gut feel and instincts of experienced leaders. These leaders know their business so well that they can almost feel change in the organisation and their market before they see it in the numbers. This instinctive feel for what’s happening can be a huge asset and is often what makes such businesses more agile and entrepreneurial than their larger competitors. But recent events have demanded more than good instincts. The past few months have, more than ever before, required better quality data and evidence. We are in uncharted territory and Government support through initiatives such as the furlough scheme and Coronavirus Business Interruption Loan Scheme (CBIL) has required accurate, historic data to be quickly assembled. The economy faces a period of massive uncertainty in the years ahead and in order to secure the right investment, finance or partnerships, CFOs will have to be able to provide high quality, well analysed data in order to stay competitive.
3) Maximising your investment in people
For many businesses, people remain the biggest area of spending, so it’s pretty obvious that getting the maximum return from this investment can be a genuine game changer. In private mid-market businesses in particular, people often have to wear multiple hats, helping to support across areas that aren’t their forte. This is especially likely during periods of immense pressure or crisis. As the economy gradually re-opens, businesses should consider what they have learned from the lockdown period in terms of their operating model and start to consider how to improve their ways of working. This kind of review should prioritise finding ways to keep talent focused on the tasks that will deliver the maximum positive impact to the business and identifying better technology, processes or outsourcing partners to enable this. This may mean finding innovative ways to change the way you operate and to keep the right people focused on the right things but it will deliver sustainable benefits to your business, making it more resilient and adaptable to future shocks or crises – and to future opportunities.