This article was updated on June 18, 2018.
As a senior executive, you probably tend to focus on profits, costs and ROI. As a finance leader, however, you're in a prime position to lead your business in a shift to value focus.
How to Shift to Value Focus
Historically, CFOs have been known to take a cost focus, looking to minimize expenses within a focused market. Cutting unnecessary costs or renegotiating expensive contracts can profoundly impact your bottom line, and if you're in a business with shareholders, can also help produce an acceptable result in time for the next quarterly meeting.
Important as these shorter-term results are, a shift from cost to value focus allows you to have a long-term vision for the health and well-being of your organization. Your shift to a value focus requires effective strategies targeted at business growth. As a finance leader, you can incorporate your shift to value focus at your next strategic planning session or budgeting meeting by identifying how you can achieve long-term growth.
Here are three ways to start a shift to value focus.
1. Connect With Your Employees
Your employees' knowledge of successful business processes is invaluable. To take advantage of this intelligence, you should encourage a culture of open communication between your chief executives, managers and employees. Once you demonstrate that you truly value employee input by emphasizing that anyone can contribute ideas, employees at every level will be emboldened to contribute without fear of embarrassment. You should also make it a point to take the time to share your long-term vision with employees, so they fully understand your overall strategy and can then frame their ideas accordingly.
2. Identify Your Customers
Your customers and clients are vital to the long-term health of your organization. As a leader, you influence the attention your business gives to its client or customer base — and its competition. As Chuck Cohn, founder and CEO of Varsity Tutors, advises in Forbes, good questions to ask when identifying your customers or clients include: Who is most likely to buy your product or service? How old are they? What's their buying power and location? What about them makes them interested in your specific product or service?
To gather information and data on your clients, you can conduct surveys, or hire a market research firm if you think it's worth the investment. From the results, you can glean a better understanding of which demographic groups are generally buying what you sell.
Tools like Google Adwords and Google Trends can help you pinpoint profitable niches. Adwords can demonstrate the competitiveness of your niche; trends can show the performance of your market overall, a benchmark through which you can measure your growth. To understand the strategies of your primary competitors, a notification tool such as Google Alerts can help keep tabs on both developments in your industry and moves by your competitors.
3. Clarify Internal Functions
No matter how well a business is run, every organization can suffer from mission creep — the uncontrolled expansion of teams. This leads to muddled roles and duplicate efforts. For example, if you have teams performing the same function across departments, work with management to combine them into one. Streamlining can sharpen accountability and performance metrics — additional keys to an effective shift to value.
The best organizations put a premium on the value of their business and take pains to ensure their brand is represented and used to its fullest potential. Whether that takes the form of utilizing employee ideas or making an effort to better understand their clients, organizations can use that enhanced value to charge more for products and services and/or improve employee engagement and productivity, bettering the top and bottom lines in a lasting and impactful way.
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