Few people enjoy making major change. Whether you’re switching up your personal life or your business, change can be disruptive, exhausting, and expensive.
And yet we all recognize that change is inevitable, necessary, and usually worthwhile. Why then do many business leaders fight it so vigorously?
About six years ago, I met with the executives of a major multinational corporation headquartered in Singapore. Business was growing dramatically, and the company’s leaders were interested in preparing for the future.
My team discussed the need for business transformation. We explained how shared services, common processes, and integrated technology solutions could help the enterprise improve efficiencies and make the journey from its 2010 reality to the digital economy. The executives loved our ideas, and everyone around the table enthusiastically agreed with this path forward.
But nothing happened. Company leaders took no action. Growth was still strong, after all, and management was deeply focused on day-to-day internal issues. In the final analysis, the CEO really didn’t see the need for transformation.
Time to take charge
But then the world changed around them. By last year, profits were down. The Internet had sapped business from the company’s traditional sales channels. The future was no longer bright. We met with the executive team again.
The new CEO, appointed after a board shakeup, regretted that his predecessor had not taken our advice. Now the company was forced to change, with limited time and options available.
When I think of this company’s 2010 leadership team, I’m reminded of the Lao Tzu warning: “If you do not change direction, you may end up where you are heading.” Those executives didn’t truly recognize the need to prepare for the future. Their business was moving on a certain trajectory, and no one was brave enough to advocate for a different course.
Job one for CFOs
In 2016, the stakes are higher and the pace of business is even faster. Blazing a path is never easy, and it can be scary out on the “bleeding edge.”
But experienced CFOs must be ready and willing to drive change. Being a follower or a late adopter won’t cut it in this market. The fact is that CFOs alone possess the vision and influence to help their companies become early adopters of new technologies, business models, and services that support business transformation.
So why did this company’s CFO neglect to stand up at the time, take the lead, and drive the necessary change in his company? Why did this CFO wait until the company was forced by the market to make a change? These are good questions.
The answers may lie in the fact that, in 2010, the company was not threatened. In fact, it was growing adequately, and the leadership team had a sense of complacency. It could also be that the CFO was not doing one of the most important parts of his job: helping to steer his company to profitable growth. And finally, as I have seen many times, the CFO placed too much emphasis on the cost of change – in this case, the required technology and implementation – as opposed to recognizing and driving the future value.
In the months that followed our second meeting, we worked with the company’s leadership team to develop a single integrated system, along with advanced process efficiencies and shared services, which is helping the company get back on track. These executives now understand that they must be willing to embrace transformation and continually drive progress forward.
Change is not always easy. My advice for CFOs is not to wait until change is forced upon you; that is always the most difficult time. Instead, make changes as you look to the future, even though taking these steps might be uncomfortable and the returns not immediately obvious. Good CFOs know when this time has come and how to react!
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