Data can be like a new toy to a CEO or any executive for that matter. Technology whips up a fresh recipe for assimilating, correlating, interfacing, integrating, and even expressing information almost every day. It is therefore too tempting for an executive team or officer to unleash all its eye-catching and appetizing capabilities with little discrimination. It can turn data inside out, outside in, upside down, or stand it straight up.
It takes the human element, however, to turn data loose. Therein lies its danger, especially to CFOs who are asked to provide relevant insights from given data. Michael Burwell, CFO at Willis Towers Watson, says accuracy and clarity in a data analysis request is essential to putting any data to useful work and to making sound operational decisions. Otherwise, you are just watching a toy perform amazing yet largely moot accomplishments.
Instead of grabbing a box of popcorn and enjoying the show while your company spins in place, Burwell insists on fellow chief officers to think of what kinds of insights particular data capabilities might provide.
Ask Essential Questions
To ensure a data request is clear and understandable, a CFO should ask the executive or team requesting the analytics a few questions. What does the chief executive or the particular department need? Why do they need it? How will it be applied? Finally, how does it further operations and the overall mission? Burwell says these are essential questions when coming across a new way to deliver and dissect data.
When these questions are answered accurately, a CFO does not waste time producing and analyzing data that ends up being shelved because his or her associates did not articulate what they wanted from the onset.
Burwell, who has served in both a CFO and CEO capacity during his three decades in financial services, says it is always a good idea for a CFO to ask, “How will this information help us?” when a CEO or other team member asks a CFO to analyze data.
Knowing that the analysis will guide an operational decision will lead a CFO to focusing on just the right data, rather than offering multiple sets of data in hopes that one set helps the team to arrive at a decision.
Know the “How” and the “When”
It is also incumbent for an executive team to identify those aspects of operations where the particular analytics can enhance the value of product and give a company or organization the competitive edge, according to an article in the Wall Street Journal.
Some of this data and its analysis is completed in real time, so, communication becomes paramount. Customer pricing, supply chains, and asset tracking are only a few examples of real-time operations that require exactitude when the CFO is asked to deliver business analytics, according to Burwell.
Directives Can Change in a Minute
Of course, even the most precise communication is subject to circumstances in which the analytics needed may change. Because of the delivery speed of technology these days, that which a team accurately assessed as a need at the beginning of the day may morph into an entirely different need by the end of the day.
For this reason, according to Burwell, it is important for the CFO to enlist some partners from the team to check in periodically on the CFO’s direction with his or her analytics. If partners learn that something has significantly changed in dynamics regarding sales, inventory, and supply or asset assessments, they can immediately inform the CFO to keep him or her on the right track.
According to Miles Ewing, principal at Deloitte Consulting, the need for new and instant decisions on business units, marketing tactics, or sales volumes can occur on the hour or even on the minute due to real time influences. A CFO is not typically the first one who learns about these instant reflexes. Therefore, partners poised ready to alert a CFO during an analytic can prove crucial to keeping that CFO’s analysis relevant and critical to an executive decision.
Communication Proficiency Goes Both Ways
CFO’s should also remember that what is good for the goose is good for the gander. In other words, as much pressure is on the CFO to communicate with precision as it is on other team members.
George Pissides, who has served in senior finance and commercial roles at Tesco, Boots, and Caterpillar in the United Kingdom, says the CFO’s team must compose on paper a conclusion to its findings and a recommended action, based on the insights that the analytics offer.
He says in an article for CFC Innovations’ online news sheet that this can be a daunting task for finance teams because verbally misrepresenting the prescribed action can ratchet up the pressure on the team.
Therefore, Pissides suggests that CFOs apply the tried-and-true elevator test to their conclusion(s) before presenting it to the remaining executive team. Write them out by stating the dilemma, the insight conclusion, and line of action, he says.
Then see if you can convey all of it within the time it takes to ride the elevator up to your office suite.
Pissides provides the following as an example:
“I conclude that the reason for the shortfall in sales (the dilemma) is because store staff are struggling to get the stock out onto the shelves as the increase in customer numbers means they do not have enough time to restock (the insight conclusion). I propose a pilot project to increase staff in the stores with the biggest declines in sales. If this is successful, I propose a wider review of resourcing in our stores (the indicated actions).”
In his article, Pissides also suggests running conclusions by the partner or partners recruited to keep the data analysis process on track. See if it is understandable and free of ambiguity to said partners, especially in terms of the line of action.
Present a Clean Report
As always, the rule when it comes to CFO communications, Pissides notes, “Clean your data to ensure it is accurate, complete, and in the right format.” He adds, “There is nothing worse than unclean data undermining the credibility of your insights.”
By proceeding with your analytics mission based on these solid communications tenets, your conclusions will best equip the leadership team to arrive at the best operational decision.