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2018 | Book

Finance Unleashed

Leveraging the CFO for Innovation

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About this book

Fast moving, to the point, and rooted in first-hand executive experiences, this book is for people of vision and action, and for creating the conditions required for growth, innovation, and increased competitive advantage.

Finance Unleashed is based on a series of interactive interviews with a diverse group of global influencers and executives, all of which will challenge readers to think laterally and find inspiration in the new role of finance. Cases and interviewees represent organizations such as UPS and DHL, and the London School of Economics, and approaches such as Lean Six Sigma, innovation, customer-centricity, the financial supply chain, and behavioral procurement. The authors’ goal is to serve as a catalyst for leaders who are positioned to make meaningful changes today.

The book includes a practical model to help executive teams redesign and refocus finance to drive business leadership - with an emphasis on the CFO. The model has three primary components: 1) Customer-Centricity - Listen and Map; 2) Process - Structure and Technology; and 3) Innovation - Create and Measure. These are presented as phases that each executive team will need to consider based on the goals and maturity level of their organization.

For the CFO and ambitious finance executives, Finance Unleashed presents a path forward towards success and career advancement. For the CEO and the board, it presents an expanded vision for what financial organizations are capable of.

Table of Contents

Frontmatter

Part 1

Frontmatter
1. Three Critical Changes to the Role of CFO
Abstract
The role of Chief Financial Officer (CFO) has historically been an internally focused one. Even when their sphere of influence and interaction did stretch beyond the four walls of the corporation, finance’s top priority remained supporting the needs and objectives of their own organization. In some cases, this led to finance being pushed to meet and exceed performance targets at the expense of suppliers and distributors: the very partners they were dependent upon for innovation and competitive advantage.
Magnus Lind, Kelly Barner
2. Finance Taking a Customer-Centric View
Abstract
The ultimate goal of any company is to sustainably increase the level of stakeholder value they create. As a result, the primary stakeholders are their customers, since they are the key source of financial value and long-term commercial survival.
Magnus Lind, Kelly Barner
3. Take a Process Flow Perspective
Abstract
According to Toyota, it takes 18 hours to manufacture a customized car. And yet, even in 2016, it still could take 48 hours to process a cross-border payment. Considering that each payment consists of no more than debit and credit transactions, the 30-hour difference between these physical and financial chains demonstrates just how much we can gain by investing resources into improving the flow – and the transparency – of the financial supply chain.
Magnus Lind, Kelly Barner
4. Allow the Whole Supply Chain to Innovate
Abstract
Small and medium-sized businesses (SMBs) need financial assistance from other organizations in the market. This is not a result of the way they manage their operations as much as it is a function of the leverage disparity between them and their much larger customers. SMBs would need less of other organization’s money if they were allowed to have increased access to their own. Instead, they are forced to ‘invest’ in their customers through extended payment terms, even when those same customers have a significantly stronger cash position than they do.
Magnus Lind, Kelly Barner
5. The CFO as the Driver of New Business
Abstract
The role of the CFO is changing, and CEOs have a part to play in deciding just how much change will be ushered in through the head of their finance function. If the CFO is to drive new business and innovation, appointing the right CFO is one of the most strategic decisions a CEO can make.
Magnus Lind, Kelly Barner

Part II

Frontmatter
6. Visions for the Financial Supply Chain
Abstract
Our capacity for real, meaningful change is limited in part by our imagination and in part by the true desire to change. Although it is easy to point fingers, technology generally serves as more of a conduit than a barrier. In fact, revolutionary technology usually exists long before individuals and organizations are willing to take advantage of it. As a result of human hesitancy, the more that can be centralized – whether technology or controls – the easier and faster it becomes to carry out the change that is at hand.
Tim de Knegt
7. The Innovator CFO
Abstract
All organizations and executives will agree that innovation is important in sustaining competitive advantage, and yet, when it comes to making that innovation a reality, remarkably few succeed. If meaningful – and potentially disruptive – change is to become a reality, innovation must be distinctly assigned and given support at the highest levels of the company. Of course, even purposeful investment in innovation does not ensure success. Companies that are serious about systematic innovation must be willing to accept, and in some cases even celebrate, the periodic failures that will inevitably play a part in motivating change. Here Murat paints his picture of how the CFO role is changing in his view and the importance of innovation in finance.
Murat Erden
8. Nudging the Financial Supply Chain
Abstract
The rationale behind the adoption of any given framework can easily be assumed to be based on logic and reason. For execution, however, we must be prepared to understand and accommodate more emotionally driven behavioral effects. While the financial supply chain may be a conduit for currency and cash, it is still subject to the whims and imperfections of the human beings in charge. For that reason, investments in the relationships between supply partners of varying sizes and structures are as critical to customer value and profitability as any other organizational effort.
David Loseby
9. Leadership Is Not Enough
Abstract
Companies are conditioned to prize leadership and influence in their employees – particularly when it comes to executive-level responsibility and promotion. Yet even the best leaders often do not generate the kinds of operational results that the company wants to see. Based on his research with thousands of talented professionals, Dr. Adrian Atkinson has identified a rare type of person that he calls a ‘Wealth Creator’. Roughly 2 percent of the population of senior managers and executives are Wealth Creators. Contrary to what you might expect, Wealth Creators are often not natural leaders or even in leadership roles and may have trouble getting along with managers and colleagues. Put them in the right position, however, and give them the right support and they can significantly change a company's direction for the better. In his contribution, Adrian sheds light on who Wealth Creators are and what wealth creation means.
Adrian Atkinson
10. Let Them Eat Cake
Abstract
Every function in the organization must tie their focus, objectives, and performance metrics to customer satisfaction. Unfortunately, many companies take a myopic internal focus that leads them to focus more on their internal activities and processes than on how their efforts create customer value. As Peter Huber explains, not adopting a customer-centric view is naïve, foolish, and dangerous. He refers to himself as the ‘customers’ best friend’, even after a career in production and supply chain management (and not in sales). He also talks about ‘customer-centricity’. Here he tells us what he means by the term.
Peter Huber
11. Building Competitive Advantage by Connecting the Physical and Financial Chains: A Study of UPS and DHL
Abstract
UPS and Deutsche Post’s DHL are renowned as two of the world’s largest couriers/small parcel carriers. To some of their customers, however, this is no longer the most valuable service they provide. Over the past few years, both companies have developed financial supply chain products. Each product leverages different parts of working capital management.
Magnus Lind, Kelly Barner
12. Back to the Future
Abstract
Sir Charles (Charlie) Bean puts the financial supply chain into a historical perspective by presenting parallels and similarities from his background as a central bank governor and economist. Globalization is nothing new; the need to fund and financially risk manage global supply chains has been around for hundreds of years. With his deep knowledge of trade and policy making, however, he points at trends and previous solutions that can provide the historical answers to our current questions.
Charles Bean
13. The Whole Chain or Separate Links?
Abstract
One of the greatest risks to the performance of a company is their inability to move beyond functional silos. This is seen in the tendency to ‘throw’ transactions over the wall from one function to another as well as in the individually set – and often contradictory – objectives that the functions are simultaneously working toward. Ironically, the same challenge often exists within the supply chain as a whole. Whether it is companies or banks, entities would benefit from trying to understand the inner workings of the entire chain from end to end rather than approaching each link individually. Gary is an advocate of cooperating financially over the supply chain and this effort starts with the linking of stakeholders internally.
Gary Slawther
14. Leadership Is Leveraging the Full Output of Your People
Abstract
Connecting performance with objectives through the use of metrics requires perfect alignment if it is to work across all functions. Sometimes, however, organizations don’t fully leverage the talent and knowledge sitting within their own walls. Whether the need is improving finance’s performance or better rotating talent within the organization, the answer is more communications, increased expectations, and circular accountability.
John P. (Jack) Miles
15. Financial and Operational Measurements
Abstract
We reached out to Luis Manuel Hernandez, PhD, to learn how he uses supply chain methodologies such as Lean Manufacturing and Six Sigma to improve the finance function. His Lean Six Sigma approach is critical to our thesis since it focuses the entire organization on the value they create for end-customers and it also leads to clear and decisive priorities. All of the actions we take that are benefiting our customers are value-added. In this case, and as measured through quality standards, Lean and Six Sigma help us stay on course and avoid getting distracted by company politics or bureaucracy, neither of which have direct value to customers. Here Luis explains his Lean Six Sigma model for finance.
Luis Manuel Hernandez

Part III

Frontmatter
16. The Context
Abstract
The primary purpose of the banks is to fund the government directly as well as indirectly via real estate and private households. This has been an underlying theme in all financial regulations (especially by current regulatory regimes) passed since the 1980’s. The intent of these regulations is not to decrease the level of debt in the economy or to fund the corporate sector, but to ensure that the government always has access to the cheapest cash, either because the banks (including the central banks) buy their bonds and debt papers or through financing households so they can continue to consume and pay taxes.
Magnus Lind, Kelly Barner
17. Seizing the Opportunity
Abstract
One of the challenges facing the CFO is the need to make his or her office more streamlined and homogenous and to align the departments that comprise it. Everyone must share a common goal. How else can we eradicate silos, obtain process flow thinking, and make the CFO’s office drive towards a common objective? Is there a more compelling and strategic objective than building profitable customer value over time?
Magnus Lind, Kelly Barner
18. Finance Unleashed: A Practical Model
Abstract
In this chapter, we provide you with a practical model for implementing customer-centricity, supply chain process thinking, and innovation agility. It is a model for getting you from here to there and to assist executive teams and boards (with an emphasis on the CFO) with the redesign and refocus of finance. The model has three primary components or phases:
1.
Customer-centric – Listen & Map
 
2.
Process – Structure & Technology
 
3.
Innovation – Create & Measure
 
Magnus Lind, Kelly Barner
Backmatter
Metadata
Title
Finance Unleashed
Authors
Magnus Lind
Kelly Barner
Copyright Year
2018
Electronic ISBN
978-3-319-66370-8
Print ISBN
978-3-319-66369-2
DOI
https://doi.org/10.1007/978-3-319-66370-8