Ep. 38: Steve McNally - Business Transformations

Steve's Articles:

1. https://sfmagazine.com/post-entry/november-2018-business-transformation-no-pain-no-gain/
2. 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...