How Newton Can Help Manage And Change Strategy In FP&A

Brian Kalish

Part 16 in the Dynamic Planning Series

I think it has to do with being formally trained as an engineer (or maybe I’m just a geek), but when I see the words “manage” or “change,” I immediately jump back in time to my undergrad physics classes and ponder Newton’s first and third laws of motion.

Newton’s first law of motion (also known as the law of inertia) states, “an object at rest stays at rest, and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force.” Newton’s third law is, “for every action, there is an equal and opposite reaction.”

It is important to keep Newton in mind when you have to manage or change strategy in FP&A, because there will be some force that causes a change to be required, and there will be reactions to the change you implement.

Planning for change

One of best tools one can use to maximize the likelihood of implementing change to a strategy successfully is to plan, plan, and plan some more. Developing a change management strategy for FP&A provides purpose and direction.

Every FP&A change-management strategy must include an understanding of the unique characteristics of the change, a supporting structure to implement the strategy, and analysis of the risks and potential resistance to the change.

When implementing a change to FP&A strategy, it is important to keep in mind “ADKAR” (awareness, desire, knowledge, ability, and reinforcement). Can the organization answer the following questions in the affirmative:

  • Is there the Awareness of the need for change?
  • Is there the Desire to participate in and support the change?
  • Is there the Knowledge about how to change?
  • Is there the Ability to implement the required skills and behaviors?
  • Is there Reinforcement to sustain the change?

The process of change can be broken down into three parts:

  • Preparing for change
  • Managing the change
  • Reinforcing the change

Preparing for change incorporates defining the FP&A change-management strategy, preparing the change management team, and developing the sponsorship model. Managing the change involves developing the plans and taking action to implement them. Reinforcing the change means collecting and analyzing feedback, diagnosing the gaps and managing any resistance, and implementing corrective actions and celebrating success.

Start at the top

In my experience, there are a number of actions an organization should take to maximize the likelihood of success when there is a need to change FP&A strategy and then manage that change.

An organization needs to lead with its culture. The organization needs to address and overcome any cultural resistance and leverage cultural support for change. As Lou Gerstner, former CEO of IBM famously stated, “culture is everything.” To be successful, the organization needs to start at the top, where almost all successful change originates. The advance work must be done to ensure that everyone agrees about the case for the FP&A change and the particulars for implementing it.

Every layer of the organization needs to be involved in the change and take ownership. Often, it is the midlevel and front-line people who can make or break the effort.

Engage employees

The organization needs to make the rational and emotional need for change at the same time. To truly engage employees, in addition to presenting the business rationale, management needs to connect with staff in a way that generates genuine commitment to the change.

The organization should leverage both formal and informal solutions. Formal solutions include structure and compensation, while an informal solution is more reflected in the culture of the organization.

Organizations must also focus on assessing and adapting to what is and isn’t working throughout the entire change process, just like the argument we have made about adopting dynamic rather than static planning. The world is moving too fast, and the velocity and magnitude of change are too great not to be constantly monitoring the situation and making adjustments in real time.

To learn more about how dynamic planning lets you update your financial forecast to react to events, click the button in the banner on the top right to download the research paper from Aberdeen Group.

We will be addressing these issues and more at the many FP&A roundtables and conferences we will be hosting in 2018. We hope to see you at the SAP-Centric Financials conference in Plano, Texas (Dallas area) March 19-21, and at SAPPHIRE NOW in Orlando June 5–7.

2018 will be a busy year with FP&A Roundtables in Chicago, Boston, San Diego, Atlanta, San Francisco, Dallas/Fort Worth, Las Vegas, Jeddah, Hong Kong, London, Denver, Charlotte, Raleigh, New York City, Singapore, Bahrain, Kuwait, Frankfurt, Dubai, Kuala Lumpur, Prague, and many other locations around the world to support the global FP&A community.

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Brian Kalish

About Brian Kalish

Brian Kalish is founder and principal at Kalish Consulting. As a public speaker and writer addressing many of the most topical issues facing treasury and FP&A professionals today, he is passionately committed to building and connecting the global FP&A community. He hosts FP&A Roundtable meetings in North America, Europe, Asia, and South America. Brian is former executive director of the global FP&A Practice at AFP. He has over 20 years experience in finance, FP&A, treasury, and investor relations. Before joining AFP, he held a number of treasury and finance positions with the FHLB, Washington Mutual/JP Morgan, NRUCFC, Fifth Third Bank, and Fannie Mae. Brian attended Georgia Tech in Atlanta, GA for his undergraduate studies and the Pamplin College of Business at Virginia Tech for his graduate work. In 2014, Brian was awarded the Global Certified Corporate FP&A Professional designation.