Improve Your Decision-Making And Strategy Through A Deep Understanding Of Finance And Operations

As a functional leader, it’s crucial for you to have a deep understanding of the financial and operational picture. It can help you avoid unnecessary expenses, strategically prioritize projects, and maintain your company's values.

Engaging with this work and taking the time to cultivate a deep understanding of finance and operations allows you to identify potential risks and opportunities and understand what drives expenses and profits so you can make informed decisions about what to invest in, in what order, and how to allocate resources with an eye toward long-term profitability.

Years ago, when I worked for Talbots, our Head of Stores strongly believed that everyone should know and understand the numbers regardless of their position. Only then, he believed, could leaders make sound business decisions. Recently, I was reminded of just how right he was.

Not Knowing The Numbers Can Cost You

In early January, while some of the team were out on winter break, I went into the company bank account to pay some vendors. I got pulled away, and when I logged back in, the account was much lower. At first, I wasn’t sure what happened. We’d already paid December expenses, and nothing much had happened during the last two weeks of the month, so what were these expenses for?

As I scrolled through, it turned out we were being charged five very hefty fees for tools we’d moved away from two years ago - woah! This was a chunk of change we didn’t need to be spending. In 2022, we brought finance back in-house, but when I added bookkeeping to one of our internal team members, I hadn’t asked them to look out for anything like this. The job was being done but without the necessary oversight or strategy.

After we canceled and were refunded our money, I spent a couple of weeks considering the issue. I wondered how deep the problem went and how I could have someone who isn’t involved in all of the tools, subscriptions, and vendor agreements get up to speed and make strategic decisions when it wasn’t really their job. The answer? I couldn’t. It was time for me to get on the dance floor and familiarize myself with all of our expenses, get off our legacy systems, and get a true picture of our annual finances.

It didn't feel like an incredibly proud moment. I grew up in a family business, so I know the importance of understanding the entire financial picture. However, I’d been so busy with coaching, facilitating, and writing (plus last year’s rebranding and social media launch) that my energy had been elsewhere. 

I’d been involved from the other side of the equation, given that I approve proposals before they are sent, so I had a good picture there. But now it was time to move away from just-in-time payment of invoices and expenses and add some rigor and discipline, and of course, get a clearer picture of what it took to run the business.

Then, a week or two later, I met with our IT coordinator to review a list of things I needed to approve. It turns out, four out of five issues had already been resolved, but it took us two hours to figure that out. It seems the lines of communication were a bit broken as each person on the team had been working in a silo.

Uh oh, we now had another issue where we didn’t have a clear process, and people had been moving so fast (particularly at year-end before we closed for the break) that our fabulous IT leader had been left out of the loop. 

This information was shared with me in a gentle way, but I heard it loud and clear.

I now have an obvious remit for the year: to assess, step back, and move into operational mode to ensure our communication processes, expenses, and change management are well-managed.

Let Finance And Operations Guide Your Decision-Making And Strategy

Rosie Poultney, former Head of Advanced Technologies for Peapod Digital Labs echoes this idea, “There’s been a sea change in the industry towards “data as a product” which isn’t just about raising its intrinsic value. It’s also that projects should be prioritized based on their contribution to financial success and ability to be put into operations. That should’ve always been the case, but adding Product Managers has made it more formal. It adds rigor that already exists for software development.”

Seeing this from an organizational viewpoint may shift where we invest in people and have them spend their time.

Several years ago, I was coaching a CEO and founder who wanted his team to do an equity review.  He was a data guy, so after gathering all the information, he set aside a full day to go through and analyze job titles and pay across groups. He wanted to truly dive into the numbers and ensure there was equity across functions and groups and that things were on par regardless of race, gender, marital status, ethnicity, religion, and orientation.

He knew the changes that came out of the equity review had the potential to do good and aligned with his values and the DEI promises of the organization. He was excited to make changes. However, he needed to understand the ultimate cost and repercussions of these changes - how they might need to modify policies or change titles, etc.

As he dove into the details, he uncovered that, given some title and role changes, some people might no longer be getting overtime, so although they were getting a raise, their take-home pay might be lower. By taking the time to dive into the numbers, he was able to make changes that truly promoted equity within his company.

7 Steps To Motivate Yourself About This Work

Being more of an idea gal, this new focus is not really lighting me up, so I’ll need to find a way to get excited about the work ahead. If you’re also tackling finance and operations this year and, like me, you’re not particularly excited about it, try the following to keep yourself motivated.

#1 Find Purpose

When we understand how our work fits into the bigger picture and feels meaningful, it’s easier to stay motivated.

Or if you can see how doing this will contribute to your personal growth. You could even try writing it on a Post-it and keeping it somewhere visible while you’re working. Visualizing the outcome helps to make the steps to get there feel worthwhile. You can also see this as an opportunity to learn new skills, which can make it more interesting and add a layer of purpose.

#2 Set Goals

Break it up into smaller tasks so it’s less overwhelming, and stay organized with deadlines and dedicated time in your calendar. This step lets you map out the steps needed and ensure you adequately allocate appropriate time and resources. And, of course, for some of us, nothing beats the satisfaction and sense of accomplishment when you get to cross something off your list as you make progress.

#3 Seek Support

Find someone who will hold you accountable for the goals and deadlines you’ve set and check in with them when you hit obstacles, need encouragement, or reach milestones. Having an accountability partner to cheer you on when you make progress increases that motivation and encourages you to maintain momentum. Also, choosing someone who knows your patterns, strengths, and weaknesses will allow them to coach you well.

#4 Stay Healthy

It can be tempting to dive in and try to “power through” to get it over with quickly so you can move on to a project that you’re more interested in. However, understanding finance and operations isn’t a one-and-done project so pace yourself. Bite off a little bit at a time so you don’t get overwhelmed or give up. Take breaks. Listen to your physical needs and protect your mental health.

#5 Use The Pomodoro Technique

The Pomodoro technique says to work for 25 min and take a 5-minute break. You can try these focused bursts and short breaks inside the blocks of time you set aside for finance and operations. Telling yourself you only need to do something for a short period of time can make it less daunting.

#6 Reward Yourself

Remember to reward yourself after you complete tasks or once you work for a set amount of time. If you give yourself a treat you particularly like and only do so when you work on a particular project or task, you can motivate yourself even further! And with a little positive reinforcement, you might even start to find joy in the activity.

#7 Change Your Environment

Declutter, work somewhere new, or make it comfortable and inviting. Plan ahead so that you have everything you need to work. Choose a location free from distractions, where you can focus on your tasks without interruptions. Consider adding music, a podcast, or some ambient coffee shop background noise, provided it helps your concentration. Incorporate natural sunlight, a great view, or artwork to create a more visually stimulating workspace. And if you are someone who works better with others, consider a coworking space or time, even if it’s virtual!

7 Approaches To Involve Your Team In This Work

If you're a leader who wants to motivate your team to develop a deeper understanding of the financial and operational picture, we’ve got a few things for you to try as well.

#1 Connect To The Bigger Picture

Elevate your team's understanding of the significance behind their tasks by establishing a clear connection between operational and financial objectives and the overarching strategic vision of the company. By weaving a narrative that links the day-to-day grind to the broader mission, you instill a sense of purpose and commitment within your team.

#2 Delegate Effectively

Identify the unique strengths of your team members—those who excel in data-driven decision-making, possess a knack for big-picture thinking, or demonstrate prowess in strategic planning. Consider whether these folks already exist on your team or whether you need to bring in someone to fill a gap. Strategically allocate tasks to individuals based on their strengths, and don’t forget to foster an environment of collaboration and knowledge sharing. It’s also important to find a member of your team who can educate others and can make the complex understandable. This approach optimizes individual performance and cultivates a unified team dynamic.

#3 Seek Feedback And Do Check-Ins

Regularly seek feedback to refine your approach and be receptive to adapting your strategies. Implement consistent check-ins to keep goals at the forefront of everyone's minds. Utilize these check-ins to track progress and celebrate milestones, individual achievements, and collective successes, fostering a positive and motivated team culture.

#4 Use Tech And Automation

Explore innovative avenues to streamline operational processes. Consider leveraging technology to automate routine tasks, liberating valuable time for your team to engage in more strategic endeavors or creative problem-solving. Embracing technological advancements not only enhances efficiency but also positions your team at the forefront of industry trends.

#5 Encourage A Learning And Growth Mindset

Encourage a mindset of continuous learning and personal development within your team. Frame tasks as opportunities for skill enhancement and tie them to each team member's individual growth goals. For instance, if there's a desire to enhance analytical skills, approach data-driven operational tasks as hands-on learning experiences, aligning professional development with project objectives.

#6 Focus On Team Building

View projects as more than just tasks to complete—see them as opportunities to fortify team bonds, foster collaboration, and enhance communication. Create an environment where team members actively engage with one another, sharing insights and knowledge. Strengthening these relationships not only improves teamwork but also lays the foundation for enduring collaboration beyond the current project and leads to better results. 

#7 Be Mindful Of Stress Management

Mitigate stress by maintaining organizational clarity and setting realistic timelines and goals. Ensure that priorities are well-defined and communicated, offering ample support and training for team members to excel without succumbing to burnout. By fostering a culture that values well-being and balance, you enhance the team's resilience and effectiveness in achieving objectives.

Get Your Leaders Invested...

Focusing on grounding your functional leaders in both finance and operations is a crucial strategic step. This approach was emphasized during a discussion with my colleague, Kathleen Patton (General Counsel at Divert), who highlighted the importance of this integration. She pointed out that "operations are where strategy comes to life, and finance ensures alignment with the financial plan." 

By understanding both finance and operations, functional leaders are equipped to make strategic decisions that minimize unnecessary expenses, prioritize essential projects, and uphold the company's values while advancing its mission and vision for the future.