Ep. 38: Steve McNally - Business Transformations

Steve's Articles:
https://sfmagazine.com/post-entry/november-2018-business-transformation-no-pain-no-gain/https://sfmagazine.com/post-entry/october-2018-catalyst-for-change/

FULL EPISODE TRANSCRIPT
Adam: (00:00)


Hey everyone, this is Count Me In, IMA's podcast about all things
affecting the accounting and finance world. I'm your host, Adam
Larson and I'd like to welcome you back to another episode filled
with valuable insight from an industry leader. Steve McNally is a
CFO, board director and thought leader who joined Mitch to talk
about business transformations. While business transformations
may not be new to accounting and finance, Steve provides
practical steps, best practices for setting up implementing and
completely successful transformations for your organization. Keep
listening as we're going to head over to their conversation
now. 


 


Mitch: (00:40)


How do you define business transformation? 


 


Steve: (00:50)


Typically based on my experience, transformations are big,
complex, expensive, time consuming and at least theoretically you
hope so to have a significant positive impact because simply I
believe transformations are all about trying to change the way
you do business with on a global enterprise wide scale well on
one is more limited 


 


Mitch: (01:14)


And what is the current nature of business transformations.


 


Steve: (01:19)


In terms of current nature? My first remark is transformations
have been around for a long time. Maybe the word itself is used a
whole lot more, but transformations had been around for quite a
while. One of the most typical examples of transformations would
be ERP and or software implementations. For example, SAP. I know
that's one of the big ones I did in my career. That's it. Other
kinds of transformations include keeping up with regulations,
whether you know, a couple of years back, Sarbanes-Oxley more
recently from a finance accounting perspective, the revenue
recognition standards, the lease standards, other gap changes
under other regulations and these kind of regulation changes
really force in some cases a company wide change in how they do
business. Other typical transformations would include, for
example, in house versus outsourced services type decisions, uh,
within finance and accounting. For example, decisions around, you
know, typical plant finance and accounting responsibilities.
Should they be done in house or is it more efficient, more
effective to outsource and offshore them and in some cases, is it
more efficient and effective to bring them back in house. Another
kind of transformation occurs when there's been a major change in
key leadership. Whether your CEO, your CFO, other personnel
changes, like head of a division anytime there's a significant
personnel change, it's going to change not just that person and
that team, but it'll have ripple effects throughout the
organization. Also, there could be outright end to end process
changes within a company organization. For example, a services
company that does engineering work for others might be rethinking
this project process flow, trying to optimize that activity. And
that really will affect all the different individuals in the
company. All the different functions and partners within that
company. Another type of transformation would be M and a mergers
and acquisitions, whether you're on the acquisition end or you're
the company being acquired, but when there's a merger of these
two different companies and cultures, it's going to be a
significant transformation. And lastly, one thing that drives
transformations is keeping up with growth. If you're a small
startup and things are going really, really well, you're going to
have to keep up with that from a personnel perspective and
manufacturing perspective, a process and policy and procedure
perspective, a financing perspective. So all these are different
things that could drive a typical transformation or need for
transformation. 


 


Mitch: (04:05)


So in your opinion, from the different reasons that businesses
have gone through business transformations, can you explain some
of the best practices that you've seen for setting up and
initiating the overall transformation? 


 


Steve: (04:18)


Sure. I think there's really three, three key best practices or
three things that feed into that. First of all, you really need a
compelling business needs. So what is the problem you're trying
to solve? What are the underlying root causes? Are you trying to
overcome the tough competitive environment and you delay
investments for a number of years and now you need to catch up or
the new regulatory requirements. So what is that compelling
business need to initiate this transformation? And of course the
transformation requires significant investment in time and the
resource people and money. So you want to be sure it's the right
thing to do. The second thing is your case for change. So you as
the leader, you may have the vision, you may know that you need
to make a change within your company, within your organization.
However, you're not going to get there alone. You need a core
team that's going to work with you and you know, day to day make
this transformation happen. And then you need other champions who
are going to be out there, the key stakeholders to buy in and to
support the initiative that you're focused on. But you need to
create this case for change to make sure that you win the hearts
and minds of all these individuals who are going to make the
industry initiative. They'll make the transformation a success.
And then the third thing, the third best practice I would say is
project plan. So in general, a project plan really helps you
articulate what you're trying to do. Gain alignment at all levels
within the organization and alignment on project scope, on
milestones and timelines on the budgets. So overall, make sure
that you have clear line of sight of what you're trying to devote
to deliver and how you're going to deliver it. That's it. A solid
plan. It's all a project plan to be highly motivational. It can
help you celebrate the milestones as you're going along and it
can also help you quickly identify if you're going off track.
That's what a good solid project plan will do for you. But you
also do need to be flexible. So a project plan, in my opinion,
the project plan that you've managed centrally. Depending on how
big, how complex your initiative is, the core project plan should
be, the highlights should be the big picture of what you're
trying to accomplish. And then there's various sub teams and
those sub teams should really manage their own details. And the
other way that a project plan should be flexible, especially if
you're dealing with a project that could last, I don't know, 1212
months or more, even two or three years. In that case, you're not
going to detail out the plan from start to finish. But rather I
would suggest you should detail out the plan for the first, is it
three, six, nine months, but have milestones along the way and go
no go points along the way. And as you approach a note, well at
that point then you detail out the next phase in the next phase.
So a project plan can be really helpful and insightful, but you
also need to be flexible with it. 


 


Mitch: (07:42)


Now I know a project plan typically incorporates a lot...