When it comes to organizing and leading any business, it can be easy to point to its strengths in times of growth, but often difficult to pinpoint weaknesses in less prosperous periods. The same can often be said when building an effective finance & accounting department, or indeed any individual unit of a company. Finance chiefs must maintain a fresh perspective to keep themselves from getting caught in the weeds of bureaucracy, and that requires using the best tools at their disposal, both within the company and via outsourced partners.
Where growing companies trip up
When a company is just starting out, it often looks to bigger competitors or industry success stories for inspiration and growth direction. But once they grow larger, firms often find themselves paradoxically smothered by their size.
David McCann writes in CFO.com that this phenomenon may have become more noticeable in the post-recession climate of sluggish growth and skepticism across the board. Essentially, small companies still want to get big, while big firms wish they could get a little smaller.
This leaves finance leaders and teams in an awkward position. A survey of CFOs from CEB found that the vast majority of companies are being stifled by the same internal restraints:
- Burdensome bureaucratic processes.
- "Short-termism," or rushing to meet arbitrary quarterly or annual goals.
- Fear of failure, encouraging stagnation over innovation.
- Basic lack of time or resources to commit to projects.
The common thread between all of these, in the estimation of CEB researchers, is an "anchoring" mindset. In its usual maritime context, of course, an anchor is used to stabilize a ship, whether it is docked or in rough waters. But anchors are hardly advantageous when it comes time to advance forward.
Furthermore, a type of cognitive bias known as "anchoring" or focalism expands on this idea. Focalism describes the tendency for decision-makers in any capacity to act only on very limited sets of data. This bias rears its head in the corporate world time and time again, and can be seen even in the most basic operating principles. In the anchors noted in the CEB study, we learn that CFOs often find themselves and their teams too focused on the old way of doing things.
Cognitive biases like focalism or anchoring are notoriously hard to decode and counteract. One way modern firms are tackling the age-old problem is through new data analytics technology and a focus on strategic partnership. Through outsourced finance, companies are finding it easy to provide that extra jolt that's often needed to spur growth, but without causing a catastrophic shakeup. That's part of the reason why more businesses are turning to outsourced F&A partners to solve innovation challenges, rather than simply reducing costs.
Sometimes, all it takes is an extra pair of eyes to get things going in the right direction. But there are now more options available for firms to accomplish those goals without paying massive consulting fees. Consero is one of a new breed of services that gives companies the people and processes needed to save money, drive efficiency and ultimately spur growth.
Learn more about how Consero can help unanchor a business and see it succeed far into the future.