Looking back through the archives of this blog is a sobering experience: nothing really changes. Today’s cliché about "operating in a world of uncertainties" is hard to escape (and like most clichés is true). But then this post from three years ago reminds us that living with massive uncertainty isn’t new. Covid-19 has just been layered on top of long-running instabilities that make up what we called in 2017 a world of VUCA (volatility, uncertainty, complexity and ambiguity).
Talking to experienced finance execs also makes you realise how little is really new in any sphere, at any time. Having seen stuff crop up before – opportunities, challenges, personalities, external events – is what makes ‘experience’ valuable, after all. And while it’s great to have youth and energy in a finance function, even at the top of it, seasoned voices can often be invaluable in ensuring we don’t over-correct or panic. Been there, done that.
We’re seeing a good example of that not working in government right now. Let’s be clear on two things. First, Boris Johnson and his acolytes are having to deal with unprecedented challenges that manifest at speed, and intersect in frightening, unpredictable ways. His position is unenviable. And second, not every shift in policy to meet these challenges is a ‘U-turn’. "When the facts change, I change my mind - what do you do, sir?" as John Maynard Keynes famously (didn't) say.
Adapting to new circumstances, or changing tack, is sometimes essential. Most of you will have worked in a team, division or business that’s faced chaotic times – situations that demand quick thinking and decisions that are either painful or have to be made on incomplete information.
But there’s a difference between being agile in how you operate – and making panicked swerves, bad choices or, yes, U-turns.
Right now, we seem to have a government making a double error. On the one hand, they want to be seen as dogged, dogmatic even – holding their nerve, keeping the ship on course, forging through with will unbended.
We’ve seen that in their language on Covid-19, but it’s most obvious in the ongoing Brexit bravado. “Get Brexit done!” is not just a mantra, it’s dogma. Global pandemic? Northern Ireland peace deal? Complete lack of customs infrastructure? No matter! Onwards!
In a way it’s admirable – “The Will Of The People Must Be Done” (regardless of what the will of the people really is four years later…). But in business, this would be seen as folly. It’s the antithesis of agile. It’s a project which has seen its rationale and operational parameters change, but where the project manager still thinks delivering on time is all that matters to the shareholders.
The other side of the coin is Covid – the flip-flop on exams; the bombast about Great British track-and-trace technology, which then evaporates; the boasts on testing, where low numbers are spun by the Leader of the Commons as a remarkable British achievement as if we couldn’t see how other countries are doing so much better.
Again, think about how a company works when things are shaky and unpredictable. A CEO who breezily talks up the brilliance of the business to employees – who can see first-hand how bad things are going – doesn’t boost morale. They destroy it. A CFO making bold claims for earnings in a shareholder meeting despite falling demand or a new competitor emerging isn’t an ‘optimist’ – they’re a fraudster.
So what’s the solution? Three things immediately jump to mind from my years interviewing finance directors.
First, under-promise and overdeliver. This is just elementary. You don’t go to the board or your team and say “this year’s EBITDA forecast is called Operation Moonshot, we’re going to make £100m a week”. It’s ridiculous. You outline achievable targets and support your reasoning with evidence of deliverables. Targets can be stretching – but they must be realistic, for the sake of staff as well as shareholders. I’ve lost count of the number of CEOs, board chairs, fund managers and investors who’ve said, “I don’t want a flashy finance director, I want someone I trust.”
Second, leave yourself room to be agile by losing the dogma. There’s two styles of project management: waterfall (everything planned out in advance, with deadlines and deliverables); and there’s agile (meet up frequently to decide what to do next to progress objectives). If you know the environment is changing, and particularly if the project scope itself is a moving target, you don’t come charging out of the gate with fixed targets and brash statements. You explain to the team (or your constituents): “Be on your toes – we’re going to need to adapt at short notice and keep our options open. No promises, except we'll do our best; and no sacred cows...”
Third, get the basics right. Again, even the most entrepreneurial FDs I’ve met qualify their creativity with a simple statement: “balance the books, manage cash and stay solvent – these are the buy-in. Get those wrong and no amount of off-the-wall brilliance will save you.” This government, sadly, has messed up basics for pandemic management – most notably communications and testing. You lose credibility when Operation Moonshot seems faintly ridiculous; but you lose trust when no-one can get a test at all.
(By the way: what is the Covid Alert Level these days? Google it: there’s virtually no mention of this 'critical' tool, launched on 10th May, after June, bar a few local papers. It was supposed to be the national touchstone for Covid readiness. The succession of lousy “simple slogans” to beat Covid-19 is embarrassing.)
Interestingly, the one person in government who’s ‘had a good war’ is probably Chancellor Rishi Sunak – and he’s done so by sticking to those rules. He’s not made rash promises (furlough, for example, was time-limited from the off); he’s adapted to circumstance (‘eat out to help out’ once the hospitality sector began to collapse); and he’s nailed the basics (keeping the money flowing in the economy).
A coincidence that he’s the nation’s finance director? And you know what they say about the top job. When business is booming, you want a marketer CEO to drive growth. When survival is on the line, you want a finance CEO to keep things tight. Just what kind of CEO we currently have is anyone’s guess. But given that he’s ignored those three rules, we might ask how long he should keep the job.