“If you want to go fast, go alone. If you want to go far, go together.” – African Proverb
If you are about to embark on a digitalization journey, do not forget to take your employees with you. This short article explains how FP&A can help organizations avoid the three-to-five-year gap between the technology adoption level and the mindset of employees.
Technology is not the only success factor
Many companies look at digital transformation through technology lens – we focus on:
- mapping all possible data sources and dependencies between them,
- building a conceptual data model,
- and establishing a robust data warehouse.
They set up a modern tool for real-time reporting and in-depth data analysis only to find out in a couple of weeks, that nothing has changed in their decision-making process. As a business analyst in corporations and later on as an external consultant I have repeatedly witnessed top or middle management ignoring data insights in their decision making. Even when those insights were made readily available to them. Intuition, opinions, isolated observations, lack of critical thinking cloud our vision.
Even though understanding technology is important, no shiny real-time reporting tool can help us until we change the way we make decisions. The biggest obstacles on the way to data-driven organization are not technological but psychological. Cultivating an insights-driven culture is the most difficult and time-consuming step.
How FP&A can change the collective mindset of the organization to embrace data?
- Begin to shape the culture way before technology is in place. Done right, technology will give your employees the data they seek, not ignore.
- Go beyond Business Intelligence (BI) tool training – focus on the skills relevant for data-driven decision making:
- Data analysis. Help your FP&A team go further than investigating business issues. Give them a skillset necessary for understanding business drivers, evaluating options and determining solutions to business problems.
- Data visualization and Data storytelling. Train your business analysts to present information so that the eyes can perceive it quickly and the brains can extract the most important insights from it.
- Critical thinking. Let your team gain the habit of constantly challenging their own knowledge, judgement and quality of the information available.
- Decision making. Introduce your team to the decision-making steps and frameworks for a conscious and formalized approach.
- Decision-making is a process, so manage it as a process: with design, execution and monitoring quality at every stage. Establish formal processes for making important decisions in your organization and personally follow them down to the letter.
Consider incorporating managerial techniques, that dramatically improve decision-making quality and encourage reliance on data:
- Premortem. A technique in which a decision-making team imagines that a project or organization has failed as a result of their decision, and then works backward to determine what potentially could lead to the failure of the project or organization. Premortem legitimizes doubt and points out areas where more data should be obtained and analyzed.
- Decorrelation of error. A decision-making technique in which all the participants are asked to write a very brief summary of their position, before an issue is discussed. Thus, the sequence in which we receive information doesn’t affect our judgement. This procedure makes good use of the diversity of knowledge and data available in the room.
- Incorporate external data in your everyday decisions. Do not rely solely on what your internal systems tell you. Stop asking your team about gap to the budget. Use competitor data, market and industry data as a source of relevant context and objective benchmarks.
- Be a change agent in your organization. The FP&A team has always been the closest to data sources and most skilled in extracting relevant insights and meaning from it. Help the rest of the business acquire these skills as they are no longer a competitive advantage, but basis for survival.
As an FP&A leader in your organization be a gentle guide and rigid challenger. Question decisions made with you or just in your presence. Encourage reliance on financial data, not exchange of opinions. Otherwise, your team will end up as in the famous quote from James Barksdale “If we have data, let’s look at data. If all we have are opinions, let’s go with mine.”
The article was first published in FP&A Trends Portal
