Factories are great places for imaginative nicknames…I used to work with someone who was known as “The Abominable No-Man”.
That probably tells you all you need to know about his positive attitude to life and his communications skills.
And to be fair, that’s a nickname many businesses could probably pinch for their Finance Director or CFO as that’s the reputation that tends to precede us. People think we’re just there to crush their pet projects, moan about people overspending their budgets and rat them out to their boss when they miss their KPIs.
When I started out in the accounting profession, that was pretty much the brief for the Finance Department. But I was really lucky early in my career to work for the finest Finance Directors I’ve ever come across.
He was amazingly successful and, for a relatively young guy, was the Group Finance Director for one of the UK’s largest quoted companies. He’d got there by doing things very differently and he was a great mentor to me.
One of the things I learned from him was that it wasn’t the Finance Director’s job to say “no” to things. It was the job of a Finance Director or CFO to think through “if this is good for the business, how do we make this happen, even though we didn’t plan for it or set aside a budget for it?”
James – my old boss – had a great way of conceiving his budgets and strategic plans which is pretty much summed up by Stanford University Professor Paul Saffo’s “strong opinions, weakly held” mantra.
James was sceptical about anyone’s ability to write a strategic plan or a budget six months before the start of a financial year which would, with any great accuracy, predict the likely year-end out-turn 18 months later.
Which isn’t to say James didn’t do a strategic plan. He did.
What set him apart, especially at the time, was his willingness to change that strategic plan in light of new information, new evidence or new opportunities. He had to hit a margin target and a “cash at bank” target, but as long as he did that, neither the Group Chief Executive nor the City analysts cared much how he did it.
At the time he wrote the plan and set the budgets, James had a strong opinion that he had devised the best plan he could with the information available to him at the time. But if something better came along, those strong views were weakly held, and he devised a better plan instead without being overly precious about the plan he’d prepared a few months earlier.
This was James’s “X Factor” – the skill that, more than any other, set him apart. His nimble approach to running the finances of a large quoted company would set finance teams in many much smaller businesses into meltdown, even today when buzzwords like pivoting and re-imagining have seeped into the business vocabulary.
Even though it’s nearly 20 years since I last worked for James, I still use the approach he modelled for me every day as a Finance Director and CFO. And yet, it’s still a rare approach for a Finance Director to take.
I still see plans which are kept inflexible, unchanging and inviolable long after they’ve lost touch with reality. And, I’ve got to say, for businesses like that, usually the bankruptcy courts aren’t all that far away. Those businesses don’t seek help until it’s too late because they think that “staying strong” and “holding people’s feet to the fire” for their original plan shows the sort of strong leadership people are supposed to admire.
Maybe next time, by all means start out with complete and utter conviction to the plan you’ve just prepared. After all, you’ve done your research, you’ve done an options appraisal or two, carried out some sensitivity analysis and reviewed the risks. At that moment in time, it’s the best plan you know how to write.
But if something changes in your business, or the sector you operate in, make sure those strong opinions are loosely held.
It’s not a sign of weakness to change your plan in the light of new evidence…but it is a sign of monumental stupidity not to change the plan when it’s clear the plan you wrote a few months ago is never going to come close to the new reality facing your business.
Although he never used the term, and may well not even have been aware of it, the greatest Finance Director I’ve ever seen taught me 20 years ago that you ran your business plan and your budgets with “strong opinions, loosely held”.
And, for your business, that’s a darn sight better than being nicknamed “The Abominable No-Man”.