“Now everyone gets it: Cash flow is vital!”

In times of business transformation, I often find that organizations feel stretched to excel in many directions and it is hard to pull everyone together to thrive under different challenges. This is especially true for CFOs. While we can all agree that they are experts at driving the business, sometimes they can feel like only few of their colleagues understand why KPIs are important and how crucial cash flow is to the the company’s growth.

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Helen Zhang is a senior consultant working for Celemi in Shanghai. She is working with the business transformation challenges that Fortune 500 companies are facing in the APAC region. She has over 12 years’ experience in providing insights and solutions on how to develop leaders, skill building, increase capabilities and implement change using engaging Celemi business simulations.

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“Cash is everyone’s concern”

In 2016, one of my clients was a global fashion retail giant that made the shift from wholesale to retail business model. The CFO and internal finance team found that they could not afford to drive the change alone, as different departments were unsure of their own role in the new process and the company needed to avoid internal clashes affecting the bottom line.  The finance team wanted to demonstrate to all employees how “cash is everyone’s concern” and show how each of them can substantially impact the business in their daily job. To achieve this, the CFO brought on board the Learning & Development Manager to identify the specific developmental needs of the organization and how to best frame an effective intervention. The L&D Manager therefore partnered with the Celemi APAC team to design and implement a learning journey based on our Apples & Oranges™ simulation with the specific goal for the staff to understand which individual actions influence costs and margins and clarify the meaning of key KPIs.

This approach allowed the employees not only to gain fundamental knowledge on how to influence cash and why it’s needed to achieve profitable growth, but also to learn how their personal contribution helps the company to increase the margins. An interesting dynamic I observed was that even the Design and R&D teams, usually unfamiliar with financial terms and processes, discovered that a small change in their day-to-day tasks can visibly support the organizational efforts.

Additionally, following up with the L&D Manager I found out that the two departments often clashing over opposing requests, like Logistics and Commercial, finally had a chance to recognize each other’s positions and come to a mutual understanding:  seeing the big picture above their own needs and priorities enabled them to work better together towards a greater common goal.

Throughout the learning journey process, it was striking to see how building a common understanding of finance throughout the workforce can improve the company’s readiness for external challenges as well as facilitate better internal communication and active cooperation between departments.

A couple of years into the initiative, the CFO noticed that the decision making in key departments was increasingly more effective because colleagues have more precise and real-time information on performance, cash positions and profitability drivers. At the same time, sharing new ideas related to profitability has become a two-way conversation between the employees and the company, bringing the financial strategy to a level easily understood by the whole organization.

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In 2018, Celemi Global is launching a knowledge sharing project with industry experts on the ongoing trends, starting with profitable growth, the holy grail of every organization.

When competition is getting fiercer and emerging-market companies go global, what obstacles do you face in your company on the path to profitable growth?

2018-05-16T09:51:45+00:00 April 10th, 2018|Case, Cash (Flow), Insights|