How FP&A can become your two-way player in today’s COVID-19 world
Many debates have been had, likely over a pint of beer, as to the athletes who have been able to excel on both offense and defense. Known as the “two-way” player, they are the very talented individuals who have mastered the skills, experience and EQ to play equally well “on both sides of the ball”. Take a moment to think about who might rank on your top 5 list. I know, it’s not an easy question to answer. Offensive players - no problem. Messi, Ronaldo, Magic Johnson, Lebron James or Jerry Rice. Defensive players - easy. Bobby Moore, Franz Beckenbauer, John Havlicek, Kevin McHale or Deion Sanders. And, your list is likely to differ from mine. I’ll come back to this question as who is the best “two-way” athlete later on.
Putting the concept of the “two-way” player against the backdrop of COVID-19 and its impact on global markets, many businesses are trying to play a bit of both but often default to either offense or defense. Let’s start on the defensive side of the ball. As a business leader, if I start to see softening in the market, I may elect to drop my prices, retreat from certain markets or employ retrenchment strategies like reducing costs and selling assets. On the flip side, companies can elect to play offense. They can reallocate unproductive spend to higher-return investments such as R&D, acquire synergistic businesses (including a competitor), adopt flexible real estate models or move into a new market where they may have a “first-mover” advantage.
In my role as CFO at a global software company, I have the opportunity to explore and evaluate a multitude of short, medium and long term strategies for Unit4. And in today’s world, that went from being a part of my role to a full-time focus due to the fact we’re living in a world of “unknown unknowns” where we are confronted with the unexpected that can have severe consequences and where no precedent exists. It’s hard if not unrealistic to apply lessons learned from the 1918 global pandemic to today’s corporate challenges because of how, where, and the velocity with which business operates.
Within a finance organization, having a team of “two way” players coupled with those tools to help model, plan and operationalize decisions is a critical element in helping a company employ both offensive and defensive strategies when facing the “unknown unknowns” or as we’re calling it today, COVID-19.
At Unit4, we’ve elected to go with the “two-way” player strategy. As part of our business continuity planning, functions ranging from sales, professional services, customer support, marketing and HR are all active participants, flexing their mental muscle to see how best to play “both sides of the ball”. Examples include developing “crisis packages” for customers, investments in employee training (upskilling), sales territory optimization and procurement saving exercises, to name a few. Our finance team members are playing an integral role in helping their business partners explore offensive and defensive options to drive the best results in the short, medium and long term.
I’ll close with this thought. In this age of “unknown unknowns”, we can model out dozens of forecast scenarios in the hope that one of those will be the right one. While some degree of scenario planning is important, it can’t become an obsession. Instead, building and executing offensive and defensive-based strategies, based on sound business principles, will help organizations weather the storm. Of equal importance, remaining flexible, staying close to customers and thinking realistically about issues including cash flow, credit, order backlogs and inventory levels should be part of your planning process.
Now back to the question of the best “two-way” player athlete. I’d have to say that Michael Jordan is at the top of my list.
To hear more on my thoughts of the role of FP&A and the critical role it plays in times of crisis, please listen to this on-demand webinar from our friends at FP&A Trends titled “Modern FP&A at the time of ‘Black Swans’”.
Related resources:
Modern FP&A at the time of "Black Swans" webinar recording
Modern FP&A at the time of "Black Swans" webinar slides
Steering the ship during times of extreme uncertainty – an FP&A perspective
