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Building a Future Ready Organization Starting g gToday
Steve Player Steve Player
October 21, 2014
About the Speaker
• Steve Player serves as the North America Program Director for
Steve PlayerDirector, BBRT North AmericaManaging Director, The Player Group
• Steve Player serves as the North America Program Director for the Beyond Budgeting Round Table (BBRT) and works with BBRT member companies to implement continuous planning processes.
• He has over 30 years experience with improving performance management and implementing strategic planning processes. He is also the Managing Director of Beyond EPS Advisors, a Business consulting firm, and founder of ABM SMART.
• He is the co-author of Future Ready: How to Master Business Forecasting and Beyond Performance Management as well as five other books. Steve also interviews CFOs from leading organizations on innovative finance and planning processes. These are published on the CFOThoughtLeaders.com web site.
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Is your organization Future Ready?
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Session Agenda
• What role does your Finance organization play?
• Why do you have to “stop doing dumb stuff” Why do you have to stop doing dumb stuff before you really begin?• What should you stop now?
• What is holding you back?
• Six key lean activities to create an agile enterprise
• Getting started
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Changing your business to manage in a volatile world
or
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Clean sheet? Cumulative Cost Structure Profile?
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What ship do pwe need?
- What projects and initiatives are needed to transform?
How do we continue performing- How do we continue performing while we change?
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What’s the objective?
“Get there as quickly as possible” q y p
If the wind blows hard, If the wind doesn’t blow at all,
Sail fast
Break out the oars
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Session Agenda
• What role does your Finance organization play?
• Why do you have to “stop doing dumb stuff” Why do you have to stop doing dumb stuff before you really begin?• What should you stop now?
• What is holding you back?
• Six key lean activities to create an agile enterprise
• Getting started
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1. Monthly closing
2 Standard cost accounting2. Standard cost accounting
3. Monthly financial variances
4. Forecasts just to year end
5. Confusing targets and forecasts
6. Tying bonuses to reaching budget targets
7. Reporting solely by columns of numbers
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E
Mistake #4–Forecasting to the wall
Actual FcstActual Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst
Actual Actual Fcst Fcst Fcst Fcst Fcst Fcst FcstActual Actual Actual
End
of
Ye
Actual Actual Fcst Fcst FcstActual Actual Actual Actual Actual Actual Actual ar
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Year x Year x+1
Migrate from annual budgets to 5-quarter rolling forecasts
1st Review
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2nd Review
3rd Review
4th Review
ActualsAnnual Plan
x+1Forecast
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A2 – Incentives are tied to reaching negotiated budget targets
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Session Agenda
• What role does your Finance organization play?
• Why do you have to “stop doing dumb stuff” Why do you have to stop doing dumb stuff before you really begin?• What should you stop now?
• What is holding you back?
• Six key lean activities to create an agile enterprise
• Getting started
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BBRT Principle #9 - Planning
Make planning a continuous and inclusive process, not a top‐down annual event
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TargetsAligned
AnnualPlan
Enablers:
Timely Allocation of Resources
American Express:Transform to Continuous Planning
Integrated Decision Support
Processes
MonthlyResultsReview
MonthlyRisk/Opportunity
FlexibilityAssessment
BusinessStrategy Validation
LongRangePlan
Enablers:
• Finance/BusinessCollaboration
• Robust Tools/Technology
• Information
• External Visibility
• Application of
Resources
Focus on Future
Performance of Company
ShareholderValue
Optimization
OngoingInvestmentOptimizationDecisioning
QuarterlyForecasts
Six Sigma Principles Visibility to
improve/ adjust
strategy formulation
and executionCase Example A: Continuous Planning at American Express
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American Express
S i Pl G lf W (J 2003) Ri k d O t it A t
Frequent scenario planning allows finance to forecast the potential impact of a range of uncontrollable events to the annual plan…
…and to create management “playbooks” to mitigate risks and take advantage of emerging opportunities
Scenario Plan: Gulf War (Jan 2003)
$MM
Business Unit:__________
Pretax
Income $ Q2 Q3 Q4 l
Risks
•Lower Business Travel
•Weakness in Equity Mkts
•Competitor New Prod Launch
•Additional Technology Development
Opportunities:
•Early end to SARS epidemic
Risk an d Opportunity Assessment
Planning TransformationEPS Impacts of Gulf War EPS Impacts of Mg Actions
•Further economic recovery
•Improved credit quality
•Additional marketing opportunities
Scenario Planning – American Express
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Park Nicollet Health Services
“ Planning and control are still important, but the focus of planning becomes one of mid-term and long-range forecasting and control is accomplished by focusing on continual improvement.”p y g p
- David Cooke, CFO, Park Nicollet -
FOCUSFrom
L ki B k
To• Getting Better
L ki Ah d
• Numbers
• Looking Back • Looking Ahead
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Park Nicollet Health Systems
Lean Planning
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Session Agenda
• What role does your Finance organization play?
• Why do you have to “stop doing dumb stuff” Why do you have to stop doing dumb stuff before you really begin?• What should you stop now?
• What is holding you back?
• Six key lean activities to create an agile enterprise
• Getting started
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1. Join a community of practice to learn from others
2. Determine which approach is most appropriate –Evolutionary or Revolutionary
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3. Start by assessing your “as is” processes
4. Compare current processes to best practice principles
5 Develop a prioritize development road map5. Develop a prioritize development road map
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Transform finance into a “danger control center”
Think like the mayor of a city about to be hit by a major storm
Presentation by Mary Driscoll & Steve Player
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To Learn More
• Read Future Ready: How to Master Business Forecasting (Wiley 2010)
• Join the Beyond Budgeting Round Table www bbrtna orgwww.bbrtna.org
• Attend the BBRT Fall member meeting in San Antonio on Nov. 17-18, 2014
– E-mail [email protected] for details
For additional follow-up:
S PlSteve Player214.239.0155
www.bbrtna.orgwww.theplayergroup.com
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Steve Player214.239.0155steve@theplayergroup.comwww.bbrtna.orgwww.theplayergroup.com