Recent years have witnessed seismic shocks like COVID-19, Russia’s Ukraine invasion, and continued global inflation. Promoting business growth in our changing world means it is now essential to reframe any threat to your company into an opportunity
Hugely consequential events of this kind are coming with increasing frequency, fuelled by political instability and economic uncertainty, international power struggles and trade wars.
Companies, therefore, need to be able to adapt. This is why it is essential to reframe a threat to your company and turn it into an opportunity.
Reframe a threat to your company
While a crisis brings plenty of challenges it also represents an opportunity for transformation and growth. Travel companies felt the strain of COVID-19 particularly acutely – with the world going into lockdown just before Easter when they’re typically at their lowest cash levels, these businesses suffered greatly.
Here Marco Torrente, Global CFO of WebBeds, examines how his company adapted to the changing world provided by COVID-19.
“We acted to ensure my company not only averted a disaster but emerged from the pandemic in a powerful position: we were better placed in the 2023 fiscal year than in the year leading into COVID.
While the first steps were about survival, protecting and raising cash and capital to survive during the low revenue period, the main focus was finance transformation.
We had to merge four mid-sized departments into a streamlined one. The aim was to reduce costs and inefficiencies and upgrade the team to a different level, focusing more on value-added activities rather than simply transactional.
This was done by using a new ERP (the software we use to run the company’s day-to-day business activities), as well as introducing AI and machine learning, closer alignment of the finance department with other departments and a change in company culture.”
This is an example of how to reframe a threat to your company into a brand-new opportunity.
AI is not a threat but an evolution
While some see AI as a threat, it can be utilised as a form of evolution when applied correctly.
Repetitive activities can be replaced with AI and robotics.
Repetitive activities can be replaced with AI and robotics. All consolidation between supplier and customer can become automatic.
A quicker and higher quality customer experience can be created through chat boxes, real-time answering and immediate reconciliation.
Payments can become automatic as well. Machine learning can improve decision-making, such as cash flow or automated revenue forecasts. This means staff can spend more time analysing data rather than creating them.
Automation is a means to an end
Automation may not be the end goal, but it is a means to an end. Less time spent processing can be more time spent freeing up brain capacity and, as a result, adding value.
However, what AI cannot do is make decisions for humans. It can be used as a baseline, but humans must react
For example, finance and commercial departments should support each other and work towards the same goals. For a public company, this creates value for the shareholder in delivering the expected revenue and profit.
The finance department must become a trusted business partner to the commercial team at all levels. Everyone needs to be working towards the same goals, from financial planning and analysis (FP&A) to accounts payable (AP) and accounts receivable (AR). When everyone speaks the same language and moves in the same direction, the company is ready to succeed and reach the next level.
Aligning the right culture across the company is crucial
For these reasons, aligning the right culture across the company can be crucial during this journey.
Finance transformation can be challenging. Initially, it requires a high level of resources and time to define the project, and there is minimum return in the short term. The culture needs to switch to a medium to long-term view. Patience and planning are crucial to see results in several years.
Leadership should set out the importance and benefits of innovation, for example, efficiencies and new revenue streams. Companies should create more opportunities for employee learning and development of skills through training, as well as encouraging risk-taking and learning from failure. Recognition is also vital in ensuring the team is on board and able to succeed.
A culture of innovation whilst reframing a threat is essential
A culture of innovation is essential if a company is to have the flexibility and agility to succeed in a fast-changing and often tumultuous market. Those that embrace it are the ones that will follow.
That’s where a crisis can be an opportunity: a catalyst for building a more robust, superior company. Ultimately it is essential to reframe a threat to your company.
The secret is to do these things step-by-step – first, you need to understand the organisation’s culture and the people you are dealing with, and then you can adapt the structure.
This piece was written and provided by Marco Torrente who is the Global CFO of WebBeds.
