The Advisory Role of Controlling Beyond 202030.10.2020
Being on the edge of a fundamentally transformational period, controlling professionals all look ahead obsessed with the thoughts of what is happening now, what do we need to do to prepare for that, which will come next. Knowing the past is key in absorbing our present environment in order to prepare for the next normal – the life after this special 2020 year. An abundance of information has been already accumulated coupled with a ton of fi nancial wisdom and priceless business experience. It simply needs to be taken advantage of!
Being on the edge of a fundamentally transformational period, controlling professionals all look ahead obsessed with the thoughts of what is happening now, what do we need to do to prepare for that, which will come next. Knowing the past is key in absorbing our present environment in order to prepare for the next normal – the life after this special 2020 year. An abundance of information has been already accumulated coupled with a ton of financial wisdom and priceless business experience. It simply needs to be taken advantage of!
It was in the early 80s, when personal computing power started entering our world to reshape the perspectives of the financial world. About 10 years later mankind was provided with the world wide web driving a massive wave of connectivity power pushing further the frontiers of communicating speed as well as data interchange. The world of statistics started to flourish. Data models were being developed and tested at a much faster pace. Corporate economics departments could substitute the paper and pencil with a much more powerful tool that enabled them to illustrate data in a graphical form and compute economic returns. With the arrival of the famous iMac another 10 years later and the convenient PowerPoint packages, the world of economics was given a much more colorful environment. The corporate economic models preassured by the thriving world of financial analysis in the early 21st century gave birth to the real controlling agenda we know today. Controlling was no longer about control. Top management became more interested in understanding the dynamics of the corporate results. The data was present, it could be easily computed, put together and presented in neat colorful materials to all the board members. The requirement of understanding what is behind the bottom-line, enabled by strongly developing financial analysis, established the world of modern controlling. A world, where answers to questions overtook the basic economic perspectives of gathering together all the debits and credits as well as the statistical strength of vertical or horizontal trend analysis. Certainly that did not make it to the top!
Fierce corporate competition following the dotcom burst and further more the subprime mortgage crisis in 2008 gave a headwind to the consulting job placing a key focus on expanding economic value and ensuring sustainable profitable growth within the business circles across multiple companies and sectors. Right at that moment stepping beyond 2010 controlling departments got their greatest challenge demanded by business and the environment at stake. The better of us were able to understand & interprete well the P&L results, communicate the figures in an engaging way with a variety of colorful and well-prepared materials all the way up to the boardroom and certainly answer the most fundamental questions. Business started to expect more and more of this consulting type of controlling, where their ideas of how business is performing could be challenged and multiple brainstorming sessions on creating higher economic value could be supported, if not even facilitated by the already well-established controlling departments. Controlling role was presented with the unprecedented opportunity to become the true business partner during the last decade behind us. Controlling was no longer about having the data, nor the most beautiful charts.
Much more often than anytime before in the history of corporate world, business and controlling met to discuss pending issues, elaborate on potential business opportunities and evaluate the profitability of ongoing activities as well as current spending fulfillment. The doors of the confidential world of business were finally opened to the controlling department becoming a business partner to the management. Despite that astonishing achievement for all controlling professionals, only a couple of years later the controlling business partner job met another strong challenge on its way. That is the understanding of business as such and all the complex interactions behind the key drivers that lead to success or a dead-end street. Sitting together within the same room often created tension with business management fully aware of their assets, priorities, customer bases and targets. On the other side controlling business partners being the masters of all the numbers and financial evaluations kept on producing extensive materials with plenty of back-up slides in order to get their messages across better. The need for speaking the same language became more than dire – controlling partners and business needed to understand each other. The burning platform for controlling professionals to become co-pilots and sit into the airplane together with business management was already here. Controlling started to reach a level where the length of the materials filled with colorful trends, the vast plethora of figures accompanied with strong headlines did not score goals anymore.
Along those lines, controlling entered the 2020 with its greatest ambition of all time – that to understand business, be ready to financially analyse its key drivers and deliver the most valuable feedback to management. In a nutshell, controlling professionals got ready to enter the plane and sit next to the pilot. The increasing dynamics of business together with the frequently changing external environment started to deprive management of available time, which by itself substantially increased their need to receive valuable, timely and relevant feedback. Thus business got more and more occupied with strategical manuovering tasks and setting the stage for delivering higher value, while controlling professionals spent a lot more efforts in merging the business concept with the financial modeling at hand. Time became a scarce resource, while value established itself as the utmost goal of joint efforts. The era of co-piloting started, strongly realizing the power of valuable dialogues and effective communication, where business and financial controllers understand each other and move in the same direction. Here we are and that is without further discussion the fundamental backbone, upon which further initiatives are to be build.
Without doubt controlling professionals will need to step into the world of profound triple-line value generation. It will no longer be majorly about the bottom-line of business, nor about the customer satisfaction questionnaire results. Culture will certainly be an enabler and quality will be the only secret key opening well-protected doors. Firstly, it will all start with the controlling professionals themselves, their self-fulfillment and continuous development. No external influence can lead to a more effective change, than each of us is internally capable. Being business-smart, responsible, agile, curious and collaborative will be the major competencies required. Secondly, cost awareness and sustainable efficiency will no longer be just external key performance indicators applicable for the rest of company but part of the daily life in all controlling teams. Doing the same things in the same manner, while expecting different and better results will simply not work. Controlling professionals will need to challenge the status quo more often than it has been done during the last three decades. Last but not least the business storytelling for quality and timely decision-making will need to spread widely into the controlling agenda if not even daily operations. Getting the right message at the right time to the right people will become priceless. Yes that will require more of developing the proper confidence, chosing the right moment, managing effectively time as a scarce resource and above all building solid trust across all business lines. Indeed, there should be no discussion if controlling professionals will need to understand the essence of standardization, automation, RPA technologies, and all the flavors of digitalizion in the financial world including artificial intelligence. It will be an absolute requirement since without this fundamental IT background, it will be quite a hassle achieving the triple-line value target in front of us – advising with the proper sense of urgency. Controlling professionals will need to climb that ladder effectively from 2020 onward in order to stop being busy and be there for the rest of the organization. Continuous availability and sharp focus will become the salt and pepper of the controlling job in the upcoming future. They will not cook the meal for us, though they will make a sizeable difference once all above-mentioned ingredients are blended together. Good luck and watch out for the forest, not the tree!
Plamen I. Michev , MBA
Plamen Michev is a Downstream Finance manager in Slovnaft,a.s., a member of MOL Group - a leading oil & gas company in CEE. Plamen graduated the Clarion University of Pennsylvania with an MBA degree in management following his BA in finance & accounting.
Plamen launched his career as financial analyst in the Bratislava shared services center of IBM with a five-year professional relationship developing himself to senior financial controller. Following a two-year period in Zapadoslovenska energetika,a.s, a member of E.ON, Plamen landed as Chief Finance Manager in the green-field plant of Bekaert in Slovakia. That five-year partnership with the world market and technology leader in steel wire transformation and coatings stimulated Plamen to gain substantial production and manufacturing excellence experience.