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Why Many Organizations Fail to Address Change and Why CFOs Should View Disruption as an Opportunity

Why Many Organizations Fail to Address Change and Why CFOs Should View Disruption as an Opportunity 3

Why Many Organizations Fail to Address Change and Why CFOs Should View Disruption as an Opportunity 4By Jenn Ryu, CFO, RGP

The ability to adapt to change is more important than ever, as we’ve seen during the macro events of the last few years. These events are global in nature, forcing companies of all sizes across virtually every sector to rapidly adapt. Yet, change is rarely easy, and many organizations fail to change until their bottom line is at risk. A recent RGP survey of C-suite leaders and employees from Fortune 500 companies found that 43% say their organizations only implement change when there is something negatively impacting revenue, hindering their ability to deliver services or disrupting operations.

So how can CFOs and finance leaders shift their organization’s perspective to view disruption as a profound opportunity for innovation and growth, rather than an obstacle to overcome? The organizations that successfully navigate disruption are the ones that capitalize on opportunities rather than view them as threats. Through our long-form research on how businesses thrive amid disruption, we found that the most successful organizations share five core characteristics:

Adopt a model for human agility

Agility is characterized by the democratization of power, broadly distributed knowledge, nimble financial mindsets and a culture of flexibility — and rely on a foundation of continuous listening. The more an organization adopts these characteristics of agility and infuses them into their People, Processes and Technology, the more benefits they realize and the more value they create. Companies with a deep-rooted culture of innovation, fueled by an agile workforce managed with empathy, are more likely to experience benefits from macro events and encounter fewer obstacles. These benefits can include more adaptive workforce strategies, enhanced organizational transparency, stronger collaboration capabilities, improved employee experience and increased operational efficiencies.

Build the organizational change muscle

Every time an organization lives through a major change event it develops communal knowledge and experience. These change events help an organization form a sort of “muscle memory.” A cycle of successful change reinforces innovation and a willingness to embrace change, while a cycle of failed change reinforces fear of change and resistance. We found through our research that companies that are typically successful with change initiatives experience more associated benefits than those that do not.

Proactively manage macro events

Some organizations choose to respond to macro change events rapidly, favoring speed over deliberation as they determine the right solution. Others take on more research and strategy development. Both approaches can be successful depending on the company’s specific context and their specific team of people. However, leaders must be able to intuitively fill information gaps and avoid the risk of “analysis paralysis” to make important decisions swiftly. Like organizations that have had success with change initiatives, those that proactively anticipate disruption are more likely to experience the benefits associated with change.

Adopt a dynamic, responsive financial management mindset

Funding an innovation-oriented organization requires a higher level of dexterity. In order for leadership to make decisions with fewer financial constraints, an organization’s finances must be designed and carefully managed to be nimble. This is where People, Process and Technology need to work in concert:

  • People – Organizations need to design the right incentives for individuals that align with the organization’s financial objectives. This shapes the right mindset and drives the right behavior that can support nimble decisions without the burdensome governance.
  • Process – This is where an agile planning and accounting process comes into play. Organizations must strive for timely, accurate and meaningful metrics to manage their business.
  • Technology – Organizations need to use technology as an enabler to allow the processes to be more efficient and to allow the democratization of information. This is a must in order to be nimble, and requires self-service information that is available anywhere, anytime.

Capitalizing on change

When adverse change events do occur, it’s important to have the financial resilience to place strategic bets and capitalize on emerging opportunities. Organizations with a healthy resting financial state are better equipped to manage and mitigate risk, especially when it aligns with risk analysis based on real-time funding and spend. Without this ability to take financial risks during macro events, businesses may respond to perceived threats by retreating into survival mode. On the other hand, change events might offer ideal opportunities for financially stable companies to make strategic acquisitions, as we saw with the soaring volume of global M&A activity in 2021.

The need to adapt to a changing environment has always been key to both human and business survival. However, the velocity of change we face today is unprecedented, particularly with artificial intelligence, virtual and augmented reality, hyper automation and other advances breaking barriers in almost every industry. The ability to see change as an opportunity for growth and innovation rather than a burden or threat will be an essential skill during the Fourth Industrial Revolution.

To keep up with this accelerated pace of change – and not just survive but thrive – organizations need to infuse human agility into the corporate and cultural DNA.

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