This much I know is true: The technologies are here right now to turn every large company into a real-time business. By this, I mean a company whose employees can easily access current data about its operational and financial performance and take immediate, corrective action if necessary.
Make Information Sharing a Cultural Mandate
One obstacle that prevents this from becoming a reality? My observation is that the typical way most executives and their staff work with one another – especially across the “siloes” of marketing, sales, service, finance, R&D, production and distribution – practically guarantees a company won’t act like a real-time business, even if it has the technology. Why? Because functional, product line, and divisional employees in most big, global firms are not measured or rewarded for giving each other the information necessary to run a business in real time.
For example, sales organizations may be reluctant to share intelligence “from the field” about customers to a marketing or finance department that just initiated budget cuts. Or share information about the unhappy customer who just chose a competitor startup company to fill an important need. In other words, information in one corner of the organization that could be strategic to another corner doesn’t travel – at all or quickly enough.
CFOs Need the Ability to Respond in Real Time
This scenario is becoming increasingly more problematic for chief financial officers. It’s a serious concern because CFOs are operating in an environment in which their companies’ fortunes can rise or fall much faster than in previous decades. Product defects can be known around the world as quickly as it takes to write a comment on Facebook. New companies can use social media to generate a large following for a new service without ever advertising in traditional media. Internal company practices – both good and bad – can go viral online and fuel or undercut sales in days.
The Foundation of Real-Time Business
Companies need technology to monitor these external and internal events and quickly figure out how to respond. But all the technology in the world is meaningless if a company’s people aren’t measured, motivated, trained and inspired to work as a team – one that reacts competently and speedily to seize fleeting opportunities and ward off threats.
We refer to such internal collaboration as “performance partnerships,” and it is a phenomenon that we are studying in our new survey of chief financial officers. But what do we mean by this? Simply put, they are collaborations by executives across sales, marketing, customer service, finance and other functions – bringing new ways of working together cross-functionally as a cohesive unit. This mindset is elemental to moving a company to operate as a real-time digital business.
Three Key Factors for Strong Performance Partnerships
Performance partnerships across functional areas are the foundation of real-time business. Three factors we’ve found to be important for effective performance partnerships is:
- Creating the right incentives and measures
- Establishing key performance indicators (KPIs) that several business functions must meet (For example, a “profitable customer” is a metric that sales and marketing have key roles in achieving. This type of clearly defined KPI helps prevent marketing from delivering leads that are likely to be unprofitable ones.)
- Providing the training to reskill people
Don’t Miss Out
More on this topic and others in the upcoming 2020 CFO Study. Visit Finance Leadership for Future-Ready Enterprises to learn more about how finance executives are helping their firms create real-time businesses. And if you enjoyed this article, get more insights about CFO topics of interest here: “The Digital Reinvention of the Finance Department,” by Dave Jordan.