Why You Need A Culture Of Analytics (Part 1)

Anders Liu-Lindberg

Part 1 in a 3-part series. Read Part 2 and Part 3.

For ages, the finance function has been occupied with roles of compliance: closing the books, complying with rules and regulations, and controlling company performance to incentivize the company to deliver on its targets and strategy. The focus has been on looking at historical information and, at best, comparing it with a budget prepared once a year that quickly got outdated.

In recent years, this has been changing as uncertainty has increased and the amount of data available to companies has grown to unimaginable amounts. There’s been a clear call for someone to make sense of it all. Yet, while many, including finance, have been trying hard, few have managed to do so. This has to change, and we see finance taking a lead role in building a culture of data-driven decisions using advanced analytics. Let me explain why.

Without insights, you have nothing 

First, it’s important to understand that while you can analyze as much as you want on the vast amounts of data available to you, it’s worth nothing without deriving insights from it. “Insight” is what you don’t currently know but will influence the decisions once you know it. Further, insights must be clearly understandable and discussable with business stakeholders. Lack of insight has traditionally been the Achilles heel of finance.

Until now, we have repeatedly analyzed using large spreadsheets and business intelligence tools but been unable to provide true insights. We simply recorded what happened. That was obvious to the business stakeholders themselves, and while they liked our waterfall charts and first-level explanations, they needed no more from us. An email would do for any future interactions. To break this deadlock, finance needs a strategy and, in our opinion, it’s simple.

  1. Explaining WHAT happened allows you to send the email.
  2. Explaining WHERE it happened makes people open your email.
  3. Explaining WHY it happened gets you a seat at the table.
  4. Making predictions about WHAT MIGHT happen if changes are made gets your opinion heard.
  5. Making recommendations as to HOW to make it happen influences your stakeholders’ decision-making.

While it sounds simple, it has proven hard for finance, in general, to crack the code on how to do this effectively. We’ve been so used to just sending emails (and reports generated on stakeholders’ request) without knowing what they show or following through on their effect.

The sad fact is that many of the activities in the finance function today could be stopped tomorrow and no one would feel the difference. Things must be done differently, and it starts with developing insights as to where and why something happened. Without those insights, we should drastically reduce the size of finance.

Building insights means building an inquisitive culture

In later articles, we’ll explain how to build insights, but first we need to understand what has prevented us from doing it and what we must do differently to make insight-building second nature. We must go from being unconsciously incompetent to unconsciously competent, and it’s going to be somewhat of a journey.

Based on the strategy above, we can try to institutionalize the process of analytics, which will lead to building a different culture in the finance function. We’ll address that in Part 2 of this series.

Learn how new intelligent finance technologies are breathing new life into finance operations.

Anders Liu-Lindberg

About Anders Liu-Lindberg

Anders Liu-Lindberg is the head of the Global Finance Program Management Office at Maersk and has more than 10 years of experience working with finance at Maersk, both in Denmark and abroad. Anders is also the co-founder of the Business Partnering Institute and owner of the largest group dedicated to finance business partnering on LinkedIn, with close to 5,000 members. His main goal at Maersk is to create a world-class finance function not least when it comes to business partnering. He is the co-author of the book “Skab Værdi Som Finansiel Forretningspartner” and a long-time finance blogger with 20,000+ followers.