Ever been part of an organization led by a professional accountant? Well, one must experience it to make a self-commitment; never being part of such an experience again!
It’s a no brainer that accountants are good at numbers; they’re number crunchers after all, but that’s a non-starter too. Because it is something that certainly won’t end well. Ending at numbers; the financial impacts being the bottom line is one thing that might be understandable, but beginning also at numbers is non-sensical ending typically in disasters.
Everything has a cost, right? Every decision, initiative, strategy has a cost attached to it, so venturing without knowing these is foolish, isn’t it? It indeed is foolish because we never put a lid on ideation because of anything, let alone the numbers. Robbing entities of ideation is intellectual bankruptcy that would ensure the entity doesn’t grow, the problem isn’t solved, excellence remains elusive, and the team is unable to accomplish goals.
So, if the thought process cannot be capped, why make it one dimensional? Thinking costs should follow once an idea has been reviewed adequately to be viable for the purpose for which it has been brought to the table. An unviable idea already doesn’t need costs review.
In fact, the review of numbers should nothing be more than a mere side note; an item that needs to be checked out on the due diligence checklist. It should not even be the end, just means to an end. Options / Ideas should be evaluated against the purpose these have been churned out for, being best fit for their business rationale, not the financial sense they make or don’t make.
If risk is the effect of uncertainty on objectives and an upside risk could become an opportunity, basing decisions on costs is a downside, since we would be ignoring the potential of threats giving rise to opportunities. Finances could always be delegated to the Chief Financial Officers (CFOs) for management. Let them decide how to fund a solution or an investment venture which has been evaluated as the best fit.
Business development has traditionally, never been a CFO’s domain. Only in the recent past, the drive to cede more ground to CFOs for advising businesses has gained momentum. Whilst I am all for evolution and empowering, its best this concession remains limited to advisory just like the Chief Audit Executives (CAEs), who simply advise about pros and cons of an option around its risk profile.
And the buck shouldn’t even stop here. Even an expense optimization exercise shouldn’t begin and end at numbers. The objective is to optimize the value of operations, deriving optimum value from the dollar invested. Cost efficiencies are better achieved by several other approaches than giving a target %age for reduction. Cutting slack and redundancy in operations is one such approach.
Thus, even expense optimization shouldn’t be handled by accountants singularly. As otherwise being driven by an optimal / target operating profit, the economy of operations would be prioritized on the expense of efficiency and effectiveness.
In a recent experience, I found myself flabbergasted when in an executives meeting, everyone emphasized on a two-pronged approach to achieve business continuity from that point onwards, optimizing the operations and rightsizing. On my turn I had to insist that the two were related with rightsizing being a consequence of a review of operations for optimization.
It didn’t end there. I was asked to elaborate my viewpoint so had to explain what a Business Process Reengineering (BPR) is and what it aims to achieve. However, it was an exercise in futility since the rightsizing was already decided to be budget driven based on future operating model. The revision in operations was then ‘rationally’ conceived to be a consequence of rightsizing.
It won’t come as a surprise then that the rightsizing execution will be person specific rather than being position specific, finalized with subjective preferences of the people to let go and to keep. Operational optimization was too ‘fancy’ a term to be grasped for execution, so it has already vanished into thin air. That’s a classic accountant’s approach to achieve economy of operations.
Expense optimization works best when viable alternates are given, mostly tech driven. But don’t expect these to come from accountants, because a regular accountant lacks the broader process and system understanding needed to recommend alternates. And to think of them to yield a positive impact on decisions like restructuring is akin to living in a fool’s paradise.
That brings us to another very important aspect lacking in what a CFO has to offer, business acumen. The CFO perspective and world view is all numbers focused and driven. This approach is certainly good for making a point in meetings and earning self-satisfying laurels on being updated about the cost of everything, but it ends there too. It has no substance in finalizing a business strategy / decision.
Business decisions require thought leadership, ideation, real-time market centric strategies and study of the impacts thereon to continually assess the dynamics and respond accordingly. These are traits of a business development executive, not an accountant or a finance professional.
And by business decisions, I am not even talking about growth for growth comes after business sustenance has been taken care of! For the numbers myopia that accountants have even business sustenance is a challenge. Sustenance itself requires being a step ahead of competition not just from the market but also from the dormancy that stems from being presently the biggest, largest or having a secure revenue stream or a fixed margin.
But an accountant’s skill comes in handy when it’s about their personal finances. If that’s the long and short of everything a management is invested in, better give an accountant the driving seat, not just any seat in the C-Suite!
And if business decisions are to be approached by looking at the budget, we won’t need minds, we need MS Excel’s goal seek function since we will be working backwards not forward!