Costs: coping with ambiguity

Summary: [You might care to view the post “Costs: beyond preventive power” before this.] The job in the complex new global reality may well have become ambiguous, limitless and stressful. Balancing between various challenges isn’t easy.

Ultimately the company’s total performance is important. So knowing what and how of business processes isn’t with intent to interfere with them.

Short and long terms

This means understanding the contributions of various functions, business units, business managers, suppliers and so on. Their individual strengths and weaknesses have to be identified, and current performance explained.

The objective is to improve the collective performance. For instance, in the short-term, influencing efforts to create accountability, and stimulate better performance in specific units or departments.

Or they could also facilitate developing a long-term strategy for the company’s future survival, through the changing of processes or systems.

A well-functioning unit

With the hard facts at their fingertips, finance people are able to argue the point in current and day-to-day business needs, as well as facilitate the activity of the management think-tank in enterprise-wide or future initiatives.

This needs nurturing an atmosphere of mutual respect and trust. Active listening helps, besides a personal relationship built with each of the company’s department and business unit heads.

It also means recruiting and managing a highly skilled backup staff to analyze and collate data collected from the length and breadth of the system to produce meaningful information.

So Finance must be a well-functioning unit getting accurate data feeds in all situations, organizational forms or IT processes. Their credibility depends on it.

Limitless ambiguity

Some Heads of finance of earlier times appeared to be glued to an armchair out on the back porch, not to be disturbed!

Not any more. Their job in the complex new global reality of mergers, acquisitions, and regulatory scrutiny of conduct and compliance, may well have become ambiguous and limitless.

Keeping balance

Experienced CFOs have some advice on coping with on-the-job stress –

• Spend time to gain trust and credibility
• Prioritize consistently
• Listen before you act

Keeping a balance between the various challenges is not at all easy. On the job stress is mounting – a turnover of about 13 percent for Fortune 500 companies showed in 2006.

Adapt and perform

We begin to empathize with the human element! For people immersed in the numbers and unused to being pleasant and friendly, perhaps the best way to cope is to first find a mentor - and learn the art of communicating freely.

It’s a lonely job, they say. But if the company is to adapt and perform in the face of challenges, so must its key people.

Comments/opinions anyone??

Costs: beyond preventive power

Summary: The role of finance evolves beyond conserving resources. Now they have critical responsibilities for company performances.


Crashing Asian stock markets, rising oil prices and inflation, and a slowing of global economy, put costs foremost in people’s minds.

Conserving resources?

Organizationally, more than ever before Finance is the most important department.

I’d the impression that they considered their sole task to be conserving resources - wielding preventive power to hack down people’s budgetary requests and their creativity!

Perhaps finance people also need to better understand their role because no, their job isn’t only cutting costs, it seems.

The role evolves

As the world becomes increasingly complex the finance role is meant to evolve. Their task is less conserving resources and more ensuring that the system can perform, and long survive environmental challenges.

The job covers a wide range of activities from enterprise-wide initiatives to day-to-day business issues that need time, involvement and careful management.

Enhancing gains

Finance needs to fully understand each complicated process of the company’s business outlook, its competitive advantages, the returns on invested capital - money, as well as intellectual capital and commitment.

The first consideration is how much the company might gain from each of them. Second, how contributions of key process drivers may be enhanced, e.g., through sources of growth, better operations or changes in the business model.

Master information

Clearly, they can’t afford to be poor data processors or poor communicators.

Finance has to collect the data, master information that is available, value audit and help create a viable company strategy. That means they need to be far more visible than just the name on the door that people tiptoe past!

Various departmental heads, professional service providers, investors and customers, are stakeholders sharing markets or product lines – and all need financial services. But within the system and outside of it, differing needs, values, and perspectives exist.

Where company is going

They might recommend the cuts, downsizing or restructuring organizational form. But at the same time, they have to ensure the company’s not left poorer as a result. Their reassurances still investor panic.

The CFO have to keep close track of what’s happening in the company and where it’s headed. They’re the ones to break the news - especially when it’s bad!

Shareholders responsibility

Their focus, derived from the value audit, also speaks for the shareholders, to whom they are directly accountable.

Shareholders, this ‘sleeping giant’ of earlier times, have evolved too. Companies now have to contend with their savvy activism and growing expectations.

Leading consensus

Finance is like the company conscious, active in the decisional process facilitating group consensus to give shape to the company’s agenda.

They bring the objectivity to the table, counsel what can or can’t be done and at what expense – that is, lead the leaders, to achieve organizational goals.

The finance role has clearly moved beyond cutting costs at whim, toting the numbers, and closing the quarter on time. Now they have critical responsibilities for company performances.

Cont’d 2…coping with ambiguity

Memory: networking association

Summary: [You might view the earlier post “Memory: recalling significance” before this.] Memory is crucial for survival. Neural ‘networks’ help us make sense of our surroundings, and choose actions we think are appropriate.


All living beings are concerned with survival one way or another. In rapidly changing environment, the ability to detect novel events, respond to them and remember them is crucial.

Neural networks

Researchers explain that within our memory, changes occur in neural processing at the cellular and synaptic levels of the nerves.

The nerve endings grow and connect to form networks between centres in the brain that can be quickly activated. They guide us to our action choices.

Complex interactions

The links on the network may be formed quite unconsciously.

Interactions among people becomes complex and unpredictable because their mental maps include representations of internal somatic states, knowledge about the self, perceptions of others, attitudes, motivations, learning and so on.

All of these aspects contribute to influence social functioning by association.

Emotional outcomes

The networks link closely to our emotional outcomes. These may be positive like happiness or interest, or negative like fear or threat. When that particular section of the network is activated, our associated feelings are also aroused.

We thus relate in different ways to specific things, like individuals, groups, subjects, topics or other concepts. Or even react to certain distinctive features about them like strong or weak, nurturing or insensitive.

Concepts and theories

The networks also activate our attitudes, and concepts of self and social groups. We build our own unique theories about the world from them, with which we explain our thoughts and determine our actions.

These develop from earlier experiences, exposure to new information, and priming whereby we make meaningful associations - meaningful to us, that is.

The networks can be activated by external or internal stimulation. Obviously then, no two people hold identical views on all issues.

Our subsequent experiences strengthen or weaken our concepts. Sometimes this happens directly by the external stimuli, and sometimes indirectly by association to other concepts that are already active.

Schemas - tactics for ‘survival’

The ‘networks’ provide us with the social knowledge crucial for quick working references, so we make sense of our present surroundings.

We build schemas from learning and experiences that we store in our memory bank. This is information we recollect for clues on how to react in new or similar situations.

For example, in Asian families and societies, people are taught from childhood to respect and obey those elder in age or social hierarchy. Those from this socio-cultural tradition would respond first up to elders or authority even in the workplace in similar fashion.

Our past memories energize our present thinking. Our eventual actions tend to depend largely on networks and schemas then activated. Thus our memory powers our survival instincts in any condition, situation and context.

Comments/Opinions Anyone??

Memory: recalling significance

Summary: Our memory is selective. We remember words and events that have meaning for us.


We vividly remember some events and have almost no recall of some others.

Search for meaning

Our memory is selective in keeping or deleting information.

Perhaps a hundred years ago, psychologist Hermann Ebbinghaus found with his experimental lists of words that the order of meaningless stimuli – called nonsense syllables – is forgotten most easily.

For example: Pni, ipr, tse, cmt, xyt, lrf, udn, mrx.

The order of a list of words we are familiar with is better remembered.

For example: Cloud, lake, branch, box, walk, stone, glass, door.

But the best recall of the order of words is when there is a definite relationship between the listed words.

For example: The exotic bird perched delicately on the fine gossamer thread.

In the same way, events that relate to something significant to us are remembered in great detail, even years later.

The recall

In experiments to test people’s memory, researchers introduced symbols, alphabet-type and object-type, before each word flashed on a screen.

One symbol asked the participants to decide whether the word represented a living or non-living object. The other symbol asked whether or not the first and last letters of the word were in alphabetical order. Then came the surprise memory test. Participants were shown a series of words and asked if they had seen them before.

The researchers found that people remembered the words following object symbols better than they did the others. Why? The object symbols lent meaning to the words.

Primers

In the experiment, the symbols were ‘primers’ that stimulated participants to remember words, or forget them.

Priming triggers associations in our memory. It influences our thinking and acting in distinctive ways.

Thinking tasks

Researchers also recorded activity within the brain’s frontal cortex (where we think consciously) during the time between presenting the symbol and presenting the word.

This region, the seat of intelligence, has three broad tasks:

• Social cognitive processes such as perceptions and inferences.
• Monitoring actions like the execution and control of responses.
• Monitoring outcomes like punishments and rewards.

They found that the stronger the neural activity, the more accurate the recall.

Action response

In the test, the thinking centres were able to ‘read’ the object symbols meaningfully, and thence correctly identify the words following them.

Words with letters in alphabetical order just didn’t make sense, and because they lacked meaning, they couldn’t be recalled.

Not the words per se, but their significance float in our memory and can be retrieved as and when we need them.

Cont’d 2…networking association

Survival: adapting for the future

Summary: [You might view the earlier post “Survival: executing performance” before this.] The bias of past experiences may negatively impact adaptability. Flexibility of form or social architecture is needed.


A reciprocal relationship with the environment the company finds itself in helps the process of its adapting.

The bias of experience

Our experience makes our thinking biased. We store in memory various schemas of what to do and how to do it from learning over years.

We assume that what’s worked in the past, will always work. Our thought structure becomes set. We dislike novelty in the processes we follow, and tend to resist change.

Unconscious biases, and our perceptual errors affect the quality of our decision-making. The overoptimistic reasons that change efforts aren’t urgent.

There’s a sense of complaisance. Resources then route to short-term processes, leaving future to take care of itself.

Soured ‘cream’

Companies generally organize into hierarchies. ‘Cream’ is at the top - the successful people who bring stability to the system and contribute largely to the company’s performances. All’s well, for a while.

With significant environmental change, however, they’re in shock. Past achievements don’t serve current purpose, because requirements have altered.

Researchers call this the hero-rogue syndrome: a CEO hailed for success in one environment, falls off a cliff in a new reality.

Systemic gridlock

Complex problem solving involves interdependencies that grow as the company’s size increases. Problems are fragmented to various departments. Successful coordination between them ensures reassembling the pieces in correct sequences.

The degrees of freedom drop. Conflicts and constraints appear during implementing. The system becomes gridlocked since positive change in one part impact negatively elsewhere. In highly interdependent set-ups, change appears impossible.

Simplify structure

How then can the system adapt? One way is through change in structure and processes. That is, redesigning the organizational form to:

• Reduce hierarchy
• Increase autonomy
• Encourage diversity.
  

Flatter organizations for example, are more agile and able to problem solve far more quickly.

But flatness, autonomy and diversity lose the control, coordination and consistency needed for complex problem solving.

Build flexibility

Obviously, an arbitrary change from one organizational form to another is not always feasible since organizations evolve in response to the problems they solve – simple or complex.

How can the system then adapt and perform? Research suggests another way. By instilling:

1. Cooperating norms – encourage trust, reciprocity and shared purpose.
2. Performing norms – create strong expectations for individual performance, rewarding initiatives, honesty and transparency.
3. Innovating norms - support experimentation and diversity, showing that facts matter and the best idea can come from anywhere, not necessarily from the top.

The social architecture

Adaptability may be developed addressing the organizational norms and culture building the flexibility to change, into the social architecture and the mindset.

This is a crucial requirement especially in an organization hoping to establish a presence in global diversity today.

Flexibility enables the system to adapt as it executes. As a result, there is significant value for longevity while sustaining the company’s performance.

Comments/opinions anyone??

Survival: executing performance

Summary: Most companies tend to focus on the short-term only. But those that perform well don’t last very long; if they survive time, performance is mediocre.

Most companies, like most people, tend to shift focus from long-term to short-term as they age.

Life expectancy

They prefer to concentrate on executing activities directly related to revenue flow that brings the sense of achievement.

However, while the life expectancy of people seems to be on the rise, that of business isn’t quite so.

For example, of the original Forbes 100 companies, in 1917, only thirteen have survived independently to the present day.

Trade off?

Researchers conclude that short-term performers execute very well – until the environment changes. Their competitive advantage declines, which few of them can re-create. Hence as a corporate entity they soon die.

Companies that survive time are adaptable. They withstand the ups and downs of economic, political, market and technological change. However, with a few rare exceptions, they return relatively mediocre or poor performances.

Business demands

Any business faces 2 basic demands:

• Executing current activities to survive today’s challenges
• Adapting those activities to survive tomorrow’s.
  

Both these demands compete for the same resources – money, people, time and performance.

Reactive controls

Theorists say available resources actually define and limit explorations. In fact, lack of resources constrains the company’s exploiting new opportunities. Tomorrow’s possibilities are also checked by the company’s need to execute today.

Familiar surroundings help performance. People can ‘read’ the conditions, anticipate minor changes, coordinate skills sets and consistently fulfil requirements.

But then they tend to become reactive, and prefer to control environments, events and people, so high performance (and revenue) may be sustained. And eventually they may attempt to prevent change.

Expect the unexpected

But continuity isn’t guaranteed in reality. The phenomenon of change is constant and uncontrollable; it will happen whether one wants it, or not.

There’s exposure to new places, new people, new processes and new realities. As a result, past behaviours must change. We need to prepare for the future, and to factor in the unexpected now.

Reciprocal relationships

To create the best product in the business today, tomorrow or whenever, the ability to be in synergy with change is crucial. We need to develop the willingness to learn to change with change to adapt to it.

In the process, anticipating change, getting used to increasingly unfamiliar surroundings, and incorporating innovations is important.

Reactivity fails in the long run because the system’s longevity depends crucially on this ability to adapt. The environment ultimately plays a significant role in any performance.

Cont’d 2… adapting for the future

Influence: interrupt the flow

Summary: [You might view the earlier post “Influence: the global tilt” before this.] Asian reactions to diversity are strongly tied up with history and traditions. The flow pattern needs to be interrupted.


Other demographic groups in the global organization tend to relate less to one another, than to the ‘dominant’ group. This stems from their socio-cultural learning.

Legacies

For example, in much of Asia, colonial legacies remain. Asians generally know more about research, business, politics, styles and showbiz in USA, UK and Canada than say, Indians know about the Chinese - and vice versa.

They’ve been taught over centuries of exploitation to follow the West. Situational cues are meant to emphasize that their intellect, their business practices, their economy, and, despite several centuries of usage, even their communication skills in the ‘universal’ language of English is yet only developing.

Divergent views

Asian diversity is formidable. For instance, in India alone there are 23 official languages and dialects in thousands! A vast mix of races, cultures, religions, nationalities and socio-political structures across the continent ensures that homogeneity can’t happen.

But divergent views are perceived as conflict producing. Asian nations have learned to believe that differences are a threat. Integrating perspectives is rarely contemplated. So each is aggressively competitive instead.

History and traditions

Reactions to the continent’s diversity are strongly tied up with history and traditions. They communicate polarized, nationalistic positions. They may even seek mediations in mutual interactions.

Thence the mutual mistrust, and the pro-’white’ bias, persists.

Asians in Asia become aware of the regional positives last - after the West approves. One seldom adopts the developmental principles and practices of neighbours, for fear of being perceived ‘inferior’! So relationships between representative groups anywhere in the continent remain minimal.

Sharing strength

Traditional mindsets constrain positive thinking within groups. There’s much traditional strength in the continent’s diversity often forgotten or neglected.

Like, collectivism, cooperation, non-violence, assertiveness, scholastic abilities, and creativity that have lasted civilizations. These brought change, elsewhere in the world as well.

Unafraid of competition

A story from rural India may illustrate the point in collective improvement:

A farmer wins awards year after year because of the excellent quality of his crop. When asked the secret of his success he says it is sharing his expertise with all his neighbours. Isn’t he afraid of competition? No, he says, it ensures that cross-pollination doesn’t occur with inferior stock.

Asians need to discard age-old assumptions and unafraid of competition, redesign strategies for new outcomes of mutual collaboration and cooperation.

Review assumptions

In relating positively with others of the region, they interrupt the global flow pattern and create a more balanced influence.

They also break the archaic dependence on erstwhile colonizers to develop a self-reliant, independent thinking Asia that comes through in representative groups.

Then perhaps, the research finding would make sense across the globe, that even in diversity, organizational influence comes from personality characteristics, and the fit between person and organizational culture.

Comments/Opinions Anyone??

Influence: the global tilt

Summary: In diversity, influence may still be carried by race and social culture.


Research suggests that the ability to influence comes from personality characteristics, and the fit between person and organizational culture.

Person-culture fit?

Like extraverts have more influence in team-orientated organizations; conscientious introverts are more influential in organizations dealing in technical tasks.

The researchers say this influence carries, through demographic details such as gender, ethnicity and socioeconomic status. But in diversity, does it really?

The flow pattern

Those constituting ‘diversity’ in global organizations might argue that in the tilted world, diversity never fits the organizational culture! Individual personality characteristics can’t compete with group identity.

So far, the flow of global influence is carried by race and social culture. What is aired or published or practiced comes predominantly from Western intelligentsia. ‘Who’ rather than ‘what’ counts in being heard, seen or quoted, and often other thought is minimized, shelved or dismissed.

Booming Asia?

Revenue is the focus, also for the data flow. Regarding Asia, for example. When we’re informed, “Asia is booming!” it’s a Western perspective, and mayn’t quite be what Asians think!

The point is there’s generally little or no interest in Asia’s intellectualism, business practices or traditional cultures. These others don’t sell in the ‘developed’ world, and hence are unnoticed or ignored.

Underscore divides

But cheap in labour and rich in raw materials, Asia, the new economic frontier, is most fashionable for Western business.

Also Asian poverty, population explosion, ethnic/communal strife, etc, may find some coverage. These may be of interest since they underscore ‘them’ and ‘us’ divides – and open the continent to ‘big brother’ influence and sales.

Power and dominance

The reality is that in global politics and business, power still originates in the West. Their habits of world dominance grown over the past several centuries, continues.

The glass ceiling still operates in Western-orientated organizations. They don’t much trust the rest of the world. Even in companies seeking a global presence, the same flow pattern generally determines who is to be at the top, or visible.

The subtle bias

The tendency is to identify with the perceived dominance also by those who don’t belong to it! Attitude tests report findings that, irrespective of their actual race, 80 percent of all people who have taken the test are pro-‘white’.

This subtle bias permeates interactions in diversity. It causes the conscious or unconscious reactions to various demographic categories – the ‘dominant’ group with the others, and the rest amongst themselves - that may not be articulated or show up in individual testing.

Cont’d 2…interrupt the flow