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We’ve got some great topics. Here’s what’s on tap:
Quickly creating an effective transformation roadmap
Challenging Operations on R&D spend
Coaching your team on how to discuss difficult results
Now, let’s get into it.
Workhorse from the US asked:
From your experience, what’s the best way to build an effective finance transformation roadmap fairly quickly, without getting stuck in weeks or months of data gathering? This is for a specialized manufacturing/fabrication business.
I’m thinking of framing it around key end-to-end workflows like quote to cash, procure to pay, payroll/labor to job cost, project budget to actuals, and close to reporting. Followed by identifying ownership gaps, process issues, system/reporting needs, and quick wins.
The goal is not just to identify improvements, but to get buy-in from a long-tenured team that may be cautious about change, while also helping leadership think about what finance/accounting needs to look like at the next stage of scale.
Would you use this workflow-based approach, or is there a better framework to quickly get to a practical roadmap? How would you lead this type of meetings?
Thanks Workhorse, this is an interesting question.
I’ve got somewhat radical views here… at least compared to the common corporate narrative.
The conventional wisdom goes something like this: Kick off with a current state assessment, which means weeks of interviews, process mapping workshops, and documentation reviews. Then a gap analysis comparing current state to some notional future state that nobody has fully defined yet. Then a vision and strategy document. Then a roadmap with phases, workstreams, and RAG statuses. Then a business case with a pretend ROI calculation. Then a governance structure, a steering committee, a project management office. Then change management planning. Then stakeholder engagement above, below, and sideways. Then a business requirements document that takes three months. You know the drill…
It is not wholly wrong. There is just one problem. It is so complicated and stodgy that nothing important ever actually happens.
Finance transformation has been around since God was a boy. Ask yourself how many genuinely successful case studies you can point to. Not young tech companies with a blank slate, and nothing to transform from. Actual real, mature, legacy-heavy, gummed-up organizations that successfully modernized. Most of them are transforming, but at a pace no faster than technology is evolving in front of them. So they aren’t really cathcing up.
Also ask yourself who gave us this methodology… Consultants. Big Four, Gartner, Tech implementers, Management consultants, etc. All groups who sell hours not success. And who are famously good at producing beautiful roadmaps and considerably less famous for getting things done.
What you actually need is momentum. Something that breaks the status quo fast, before the organization talks itself back into inertia. The last thing you need for that is more workshops.
Here is what I would do instead.
Get the people in your leadership team who are genuinely prepared to embrace change into a room. If that list is short, start with whoever is on it. If it is just you, that is fine too. Then run an exercise I call ‘0-1-10’.
Step 0: Define where you are now, honestly. What are the biggest pain points? Where does the function break down?
Step 10: Define where you want to be in three years. 5 to 10 statements. Be specific, not aspirational. Not "AI-native" or "insight-driven." Something like: "Quarterly reforecasts delivered within ten days of quarter end, loved and embraced by the exec team in a structured quarterly business review." For where you are, that might be ambitious, or not. But get it right for you.
Step 1: Identify one clear, meaningful step in the direction of Step 10. Pick the thing that will deliver the most tangible benefit to the team. Something with a real output that people can feel quickly , not just the first phase of a much larger initiative that will take eighteen months before anyone sees anything.
Then … just make Step 1 the most important thing in the world. Resource it properly. Energize it. Get it done. Then identify the next step and repeat.
What you will find is that once the boulder starts rolling, some people get addicted to the momentum and want more of it. Others will not. The agnostics you will bring along if you are convincing enough.
But the active, noisy cynics are toxic to transformation and need to be removed, and ideally with great fanfare. A guillotine in the car park is maybe a bit too strong, but you cannot afford to let them be a drag on transformation energy.
One thing worth saying on systems. If you are stuck on the starting line because the ERP feels like the obvious problem, do not begin there. ERP rollouts are long, expensive, and organizationally exhausting. Pick off small wins first. Improve processes around the systems you already have. Get the business comfortable with the language of improvement and the discipline of change. You will need that organizational muscle to land an ERP successfully anyway, so you might as well build it first.
If you don’t know where to start, a good place to look would be your monthly close. What is the most painful / slow part? Focus there first.
The best way to get buy-in from a long-tenured, change-cautious team is not to tell them why change is good. It is to show them something working better than it did before. Do that consistently, and you should feel the mood change.
I also wrote a full playbook series on finance transformation here.
TLDR: Don’t overthink it, you need momentum, so pick something achievable and meaningful, and just focus on that. Then pick the next thing. Rinse and repeat.
Ronnie from France asked:
I am a VP finance in Saas PE-backed company. How do you actually do R&D controlling? How do you challenge Operations during budget season about the projects they will be working on?
Hey Ronnie,
R&D controlling is interesting because it’s quite uncomfortable for finance people. You are - by definition - pouring capital into a pot with unknown outcomes and uncertain size.
The usual finance instinct, to measure, quantify, and justify everything, does not translate cleanly here. You have to make peace with that upfront. And if you are in a PE-backed business, you need to make sure they have the appetite for it… PE sponsors don’t like spend they can’t measure (more on that another day).
Good R&D controlling sits somewhere between a capex process and a VC investing methodology. Here is how I think about it.
First, agree on your R&D envelope. How big is the pot, and is it fixed or dynamic? A fixed dollar amount for a defined period? A percentage of revenue? Something tied to a strategic threshold? This needs to come from your strategic unit economics and business model design. Once you set the guardrails you can get into the bigger question of how to allocate it.
Then build a stage gate process. Think of it like placing bets. Small bets early to learn, progressively larger bets as you develop conviction on the best ideas. For example, a simple five stage model might look something like this:
Gate 1: Initial concept, small exploratory budget, qualitative assessment only
Gate 2: Proof of concept, slightly larger budget, early learning criteria
Gate 3: Prototype or MVP, quantitative criteria start to matter
Gate 4: Scaled development, full business case required
Gate 5: Launch readiness, ROI accountability kicks in
The idea is that as things fall at each hurdle you are dividing a growing capital pot by a smaller number of higher conviction ideas. Like holding a magnifying glass up to the sun.
Because the payback on those few projects that make it all the way through to launch need to return against the whole R&D pot, not just the successful projects (this is where it’s like VC investing).
On how to divide the budget across gates: You will naturally have ideas that fail at every stage, so the pot for the earlier gates need to be wide enough to give good ideas room to breathe. But small enough that the team has to make real choices. Finance should help set the criteria. But I would let the operators make the calls of which projects meet those criteria. If there are fifty ideas competing for ten Gate 1 slots, that is an engineering and product judgment, more so than a finance one.
On ROI in the early gates: Do not do it. It is too restrictive and largely fictional at that stage. The objective in the early gates is to collect data you can learn from, not to measure prospectively. Applying quantitative ROI too early just incentivizes people to game the numbers rather than run good experiments. Save the rigorous financial criteria for Gates 4 and 5, when you are committing serious capital and the outcomes are knowable enough to model honestly.
Beyond those principles, individual project controlling looks a lot like good capex management. I went deep on that here.
One final point: if you are a SaaS business, I assume R&D spend looks more like allocating internal labor to projects, so you will need a good controls for capturing R&D costs and making sure they don’t get used as dumping grounds for operational inefficiency (and vice versa).
TLDR: R&D controlling is like a capex process sat inside a VC-type mindset methodology. Use a stage gate process to make sure you weight the most capital possible towards high quality validated ideas.
FP&A Guy from the US asked:
I am a Director of Finance for a manufacturing operating division of a public company. I need to present to our Division leadership team (40+ people across all functions) on "Discussing Difficult Results".
I feel like you have had a lot of good Playbooks that touch on this topic, but I'm struggling to choose one as a pre-read for the group.
Can you please help with your thoughts or any other resources / words you would enlighten me with before my upcoming presentation next month?
FP&A Guy - you are right, I have written a lot around this topic, but never tackled it head on.
It’s not the easiest thing to write a Playbook for because so much depends on the circumstances. The obvious question is ‘how difficult is difficult’.
If you are talking about existential cash flow difficulties, that needs a more urgent, cash-led narrative with a clear short-term action plan front and center.
If it is more of a "we missed budget and bonus, let's do better next year" situation, that is a different tone entirely.
Likewise, how much of the difficulty is in tricky external conditions in the context of a team doing their very best, vs. a unit that is just underperforming. Again, the message is TOTALLY different here.
Whatever the severity, the principles I always come back to are heart, head, and hands:
Heart. Meet people where they are emotionally before you try to move them anywhere else. This sounds soft, but it does not have to be. Sometimes they need an arm around them. Sometimes they need a kick in the ass. But start with addressing their headspace, hopes, fears, and frustrations.
Head. With the emotional temperature addressed, you can appeal to the rational. Here is what our current trajectory means. Here is why we are underperforming. Here is what needs to change and why. This is the logic that justifies the ask you are about to make.
Hands. Only once you have done the first two can you go deep on what you need people to actually do differently. Give people their specific role in the solution. Help them feel less helpless.
A few other things to think about:
Create a burning platform. Inertia is the enemy in these situations, and people will not change without a compelling reason to do so right now … not eventually. But there is a fine line between motivating people and frightening them. Get this wrong (in either direction) and your best people will be looking for the exit door right when you need them most
Be honest about the unknowns. False certainty will destroy your credibility. Good operators will respect "here is what we know, here is what we are still figuring out" far more than a polished narrative that does not match what they are seeing on the ground.
Strong storytelling. People will come to these kinds of sessions with their own versions of the truth. You need to make sure they leave the room with one single clear version of the narrative. You can judge your effectiveness in these situations based on how well you achieve this.
TLDR: Read the room and calibrate the tone to the situation. You need to create urgency without panic and make sure everyone leaves the room with the same story and a clear idea of what they need to do
A few of the biggest stories that every CFO is paying close attention to. This is the section you might not want to see your name in.
Looks like some CFOs are cashing out while the getting is good and before the pressure builds for AI led transformation.
The departing CFO spent nearly two decades at the company, including a long stint as its chief accounting officer. He built the function that missed this… nowhere to hide I guess
Peloton hired a CFO who's done the dirty work of turning around a struggling consumer brand. I published a four part deep dive into the Peloton business a couple of years back. It’s a fascinating story. Still waiting for the comeback…
ICYMI, here are some of my favorite finance/business social media posts from this week.
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Let me know what you thought of today’s Mailbag. Just hit reply… I read every message.
Last weekend’s Playbook gets tactical as we wrap up the series on Working Capital.
In last week’s Boardroom Brief we ask if quarterly reporting is on the way out, and what that would mean.
Disclaimer: I am not your accountant, tax advisor, lawyer, CFO, director, or friend. Well, maybe I’m your friend, but I am not any of those other things. Everything I publish represents my opinions only, not advice. Running the finances for a company is serious business, and you should take the proper advice you need
