Chris Daniel, Mapping Advisor at Leading Edge Forum, outlines a mechanism that can help CFOs regain their correct position in the balance of power.
The CFO, without question, is always deemed to be one of the most important people in an organisation, sometimes even more powerful than the CEO, because they control the money. They act as financial stewards, ensuring that company resources are used in the best possible way. They decide which departments thrive, which projects are within the company’s budget and which are too expensive.
The CFO has the power to block projects, but if the project is in line with stakeholder expectations, should only do so with very good reasons. To prioritize projects accurately, CFOs need a deeper understanding of the business domain, relying on others to provide them with the right data, and working together to make the right judgements. Because part of the CFO role is to bridge numbers and value, the CFO that loses sight of value gives up control and can create a serious power imbalance, that may damage the relationship with the rest of the company.
Start with the basics
Classic project evaluation rules favour calculation of a Net Present Value (NPV) of any given project, to estimate how that project will contribute to the value of a company, expressed in today’s money. From a mathematical perspective, it is a fairly simple task that most people can easily do, and popular spreadsheets have built-in formulas supporting these calculations. The difficulty is not the arithmetic, but the ability to predict and evaluate the impact of a project, and express it as a financial measurement.
Imagine a situation where you are about to start competing with banks by delivering a particular service 30 percent cheaper. NPV, and indeed most analyses, would fail to acknowledge that the banks can – and would – fight back, and that the lifespan of your service would be limited.
It is the CFO’s responsibility to ensure that a project starts only after adequate analysis of delivered value. Inevitably, some of the key variables will not be known in advance, and therefore it is necessary to assume their value. It is vital to make those assumptions explicit for the sake of further project verification (to answer such questions as is it still on track? and has the environment changed?). The knowledge resulting from this analysis should be widely distributed among the project team, so each team member is equipped to raise a hand if something unexpected happens.
A short, correctly structured, meeting is enough to clarify what is known, what needs to be researched and what is unknown. It may turn out that the market has yet to be created (i.e., uncertainty is high), in which case there is no way of estimating the NPV, and the company has to accept this project as an experiment and be ready to lose all the investment.
Get uncertainty under control
No project can be totally predictable. When a completely new solution appears, it has no customers and nobody knows how to use it. It is highly uncertain. Well established solutions have well defined markets, but those markets prevent significant changes – consumers do not want to change unless absolutely necessary.
This creates a spectrum of anticipation – within a project, there are parts that are highly predictable, with assumptions that can be easily validated, and there are parts that are highly uncertain, with unremovable assumptions that can only be anticipated to be wrong.
There are four major categories, which reflect four stages along the component Evolution spectrum – from uncertain Genesis, through Custom-Built and Product/Rental, to end up in the Commodity/Utility space.
Each of these has different characteristics and associated risks, and should be handled in different ways, also from the financial standpoint. Enumerating the components, understanding their nature and expected behaviour not only allows for improving project handling, but also constitutes a shared understanding building exercise.
Situational awareness is critical
The previous section introduced a method of assessing project risks and potential rewards (through uncertainty-market maturity correlation). With that knowledge, it is possible to prioritize projects and cancel them early if they do not meet expectations. Visualizing the project through a range of tools such as value chain diagrams or Wardley Maps can help even more in breaking large projects into small, manageable parts and identifying the uncertainty associated with them. This process creates high situational awareness – you learn in the process what will be done, what is the cost structure and what are the key risks. That situational awareness helps different teams to take decisions, plan or test marketing campaigns, research relevant legal cases or even cancel the project if it does not build enough value.
The process of identifying key project stakeholders, making them identify components and their characteristics and exposing their assumptions, can and should be embedded into corporate culture.
The CFO, through a spend control mechanism, can ensure that key uncertainties and assumptions will be exposed before projects above a certain threshold are approved.
The CFO should exercise this power – it is in the company’s best interest, and in the best interest of the CFO, because it is a unique opportunity to understand the value of projects, not just their financial aspects.
Understanding gives the CFO power
Power stems from control over rare assets, regardless of what those assets are – finances, authority, knowledge. Not knowing or not understanding what is happening in your immediate environment is a big risk. It is not enough to be a financial expert, or any expert whatsoever, unless that expertise is put to work for the benefit of your organization. Indeed, the willingness to learn and to extract knowledge outside of our primary domain and outside of our comfort zone is one of the key aspects that makes us powerful enough to live up to our responsibilities.
You can learn about product categories and mapping techniques to support you as a CFO, by downloading the Leading Edge Forum practice paper “Restoring The Proper Balance of Power”.
WHY 2020 IS THE RIGHT TIME FOR FS MODERNISATION
Chris McLaughlin is chief product and marketing officer at Nuxeo
Few would argue against the notion that the UK financial services (FS) industry is facing many challenges as both a new year and new decade begin. Uncertainty over Brexit, the potential threat from new competitors and Big Tech brands, and rising customer expectations are just some of the challenges facing the sector.
But for every challenge, there is also opportunity. Digital banking paves the way for greater service continuity, making it easier for banks to capture and analyse data (with consumers’ permission), reduced repetition of information collection, and delivering more of what customers want in terms of products and services.
By innovating with richer and more convenient online and mobile banking experiences, and by using technology to deliver smarter and more streamlined backend operations, traditional FS providers can roll out and execute services more cost-efficiently too.
But many FS firms have been restricted in their ability to innovate and realise such opportunities, due to the outdated and inefficient systems and applications to be found in many organisations. However, with many FS workers believing that the challenges the industry face could see their company lose customers in 2020, the time is ripe for FS firms to embrace modernisation.
The 2020 agenda according to UK FS workers
Nuxeo recently surveyed 501 UK FS workers that focused on the challenges, concerns, and opportunities facing the industry. The main 2020 FS industry challenges were Brexit uncertainty; cybersecurity threats and information or data breaches; physical branches closing down; the burden of increasing regulation; competition from Big Tech firms potentially moving into FS; and competition from new challenger banks.
Perhaps of most concern to the industry is the fact that 59% of FS workers in the study felt that these challenges left their organisation vulnerable to losing customers over the next 12 months. But there are signs that FS firms are adapting to the new market reality and embracing technologies such as artificial intelligence (AI) that can help them modernise and address such challenges.
Almost two-thirds of respondents claimed their organisations are committed to innovation, and more than half (58 per cent) believe that firms which use AI in creative ways make for more attractive employers. 68% of respondents say their organisation is already using AI for content search or is in discussion to do so, and 67% say the same for automating backend processes, suggesting that FS firms are alive to the value that can be achieved.
Transforming customer service delivery is also a key focus for AI ambitions, with more than one-third (34 per cent) of respondents saying their organisation is already trying out AI in this context. Chatbots, often used to improve the customer experience, are being used by one-quarter. Meanwhile, 41 per cent are already using AI-based capabilities for some form of data analysis, suggesting that FS providers are attuned to the need to target their activities more strategically.
Smarter management of data, content and information
One of the major threats to productivity is the inability for FS firms to connect and organise all the data they have at their disposal and there is a real need for smarter management of data, content and information. Compared to newer industry market entrants, established banks and FS providers have far richer data going back decades or longer. If institutions could tap into this considerable resource, it could be used to distil invaluable intelligence and insights into consumer trends, product performance, and relative account profitability.
Although organisations have all the underlying information stored within their legacy systems, it is typically very difficult for teams to access, combine and cross-analyse this data. This is because, too often, systems are unconnected, use incompatible data formats and feature considerable data duplication between applications.
In the Nuxeo research, FS providers confirm that, on average, they store information and content across nine different systems. And these systems tend to operate in silos: almost three-quarters of respondents say their organisation’s systems are not fully connected with each other.
System users who need to access information as a regular part of their jobs can be spending up to an hour a day (52 minutes) searching for what they need because it is not readily discoverable. Given that this equates to four hours 20 minutes each week per employee spent looking for information, the total time wasted across an organisation over a year is quite significant.
Embarking on a managed journey of modernisation
13 per cent of respondents in Nuxeo’s study believe their organisation’s inability to adopt AI quickly enough is one of the main challenges facing UK FS in 2020, so it’s something that will need to be addressed sooner rather than later.
But a managed modernisation journey, incorporating wider use of AI, which can help address many of the issues that are so concerning to those that work in FS, is already underway for many. Such modernisation can deliver quick wins, without incurring new risk or detracting from other critical work that needs to be done in 2020 and should be embraced wholeheartedly as the FS industry embarks on the new decade.
WHY MAKING MONEY ON YOUR MOBILE IS EASIER THAN YOU MIGHT THINK
Aaron Brooks, Co-Founder of Vamp
For Millennials and Generation Z, becoming a social media influencer is an increasingly desired career. According to a recent study, 86% of millennials want to use their social platforms to post sponsored content. It comes as no surprise. Getting paid to produce content about the products you love, why wouldn’t you?
It’s more than just a pipe dream too. While marketing used to revolve around big brands, employing big agencies to create ads, technological advancements have created a user generated content boom. Thanks to smartphones, most of us now have a 12 megapixel camera in our pockets. Brands have capitalised on this, launching campaigns that harvest user generated content, asking their customers to share their brand experiences through pictures, videos and reviews.
Social networks have normalised the sharing of content, which has helped propel this movement further. ASOS’ UGC hashtag #AsSeenOnMe has over a million entries on Instagram. Then of course there’s Apple’s incredible ‘Shot on an iPhone’ billboards, which use their user’s images to promote their phones.
Influencer marketing takes this a step further. These social creators produce high-end content and have engaged followings – both a valuable commodities for brands. 93% of marketers now using influencer marketing. So if you’re looking to make your mark as a content creator, there are plenty of opportunities. Don’t be put off if your Instagram following isn’t in the high thousands either. Micro influencers, with their small but highly engaged audiences, have become popular among marketers and this trend will continue to grow in 2020.
Of course, brands want high-quality content to represent their brand, but if you’re keen to kick start your creator career and start making money, a smart phone and a creative eye is a good place to start. If you want to take it further, then follow these three tips for success.
Hone your personal brand
Rather than trying to be fashion, art, foodie and travel all in one neat package, find a niche and create a consistent message. The same goes for photography styles. If you want to be the flatlay expert, I’d recommend sticking to that at least 80% of the time.
Finding your niche and making it your hallmark will let people know what they can expect from you. It’ll make you more likely to maintain follower loyalty and help you to stand out from the crowd. Make sure it’s of genuine interest to you. You’ll need enough enthusiasm to post consistently in order to build your authority in that area.
Cultivate an engaged following
While a high follower count was once the most prized possession of the influencer community, times have changed. These days if you want the attention of big name brands, not only do you need a beautiful feed, but a highly engaged following. That means people who follow you, spend time with your content and engage with it.
Actively engaging with your existing audience and contributing to the larger Instagram community will help you build relationships on Instagram. This means replying with genuine
comments and pro-actively engaging by offering your own comments on other accounts.
While it might be tempting to take shortcuts by buying fake engagement or followers, it will only sabotage your efforts. Software has become increasingly effective at spotting fakes so chances are, you’ll be found out and blacklisted.
Maximise influencer marketing platforms
Once you’ve honed your personal brand and cultivated an engaged following, you can begin making money on your mobile. Rather than waiting for these opportunities to find you, you can take a proactive approach and join an influencer marketing platform.
These technology services connect brands with content creators. Depending on the platform, it may have a database of thousands of pre-vetted influencers who have opted-in to receive content collaboration briefs from brands. You’ll get opportunities delivered direct to your mobile and will be able to choose whether you opt in or not. This gives you the freedom and flexibility to work with brands that truly resonate with you and balance the work around other commitments.
With brands constantly searching for people who boast content creation skills, there are plenty of career opportunities in the influencer space. For those looking to make money in this space, all you will need is a smart phone, passion and creativity to begin carving a career as an influencer.
BANKS UNDER ATTACK: HOW FINANCIAL INSTITUTIONS CAN PROTECT DIGITAL GROWTH
By Victor Acin, Threat Intelligence Analyst, Blueliv Financial services firms are increasingly being told to embrace disruption in order...
THE ROLE OF NEW TECHNOLOGY IN DEVELOPMENT OF MYANMAR’S BANKING INDUSTRY
U Htoo Htet Tay Za, Managing Director, AGD Bank Myanmar’s economy is one of the fastest growing in Asia...
WHY 2020 IS THE RIGHT TIME FOR FS MODERNISATION
Chris McLaughlin is chief product and marketing officer at Nuxeo Few would argue against the notion that the UK...
WHAT DOES 2020 LOOK LIKE FOR P2P LENDING?
By Roberts Lasovskis, Investment Platform Lead, TWINO It’s a new year; time for resolutions and forward planning, positivity and...
WHY MAKING MONEY ON YOUR MOBILE IS EASIER THAN YOU MIGHT THINK
Aaron Brooks, Co-Founder of Vamp For Millennials and Generation Z, becoming a social media influencer is an increasingly desired...
DIFFERENTIATION – THE KEY TO THRIVING IN A SATURATED MARKET
Graham Glass, CEO of Cypher Learning What has enabled Cypher to continue to grow in an increasingly saturated market?...
WILL BLOCKCHAIN REVOLUTIONIZE FINANCE?
By Ken Timsit, ConsenSys Over the last 10 years, researchers, software developers, start-ups, and large companies have been conducting...
FIVE FINANCIAL SERVICES TRENDS FOR 2020: BIGTECHS SWOOP IN, BANKS GO ON THE OFFENSIVE AND CRYPTOCURRENCY STALLS
Rahul Singh, president of financial services at HCL Technologies We’ve just finished a very exciting decade in financial services, with new...
COMBATING INSURANCE FRAUD WITH MACHINE LEARNING
By Georgios Kapetanvasileiou, Analytical Consultant at SAS Most insurance companies depend on human expertise and business rules-based software to...
DELIVERING SUCCESSFUL IT SYSTEMS THROUGH THE POWER OF PARTNERSHIPS
By Mike Smith, Executive Director, Virgin Media Business (Direct) Is there anything more frustrating than finding out your bank account...
BATTLEFACE RECEIVES INVESTMENT FROM FINTECH VENTURES FUND
battleface Inc., a rapidly growing tech-enabled insurance startup focused on providing travel insurance products for unconventional travellers worldwide, announced today...
VANQUIS BANK PARTNERS WITH HOOYUTO DIGITALISE KYC PROCESSES
HooYu KYC digital journey deployed during the customer lifecycle on a risk-based approach Leading customer onboarding and KYC technology...
WHY NEOBANKS ARE ON THE RISE IN THE UK
New research by SmallBusinessPrices.co.uk analyses how neobanks are on the rise and why they’re so popular amongst consumers compared to...
RECOLLECTING 2019 CRYPTOCURRENCY TRENDS & LOOKING FORWARD TO 2020
Marie Tatibouet is the CMO at Gate.io It has been a bold and progressive year for the digital asset...
WILL HONG KONG REMAIN THE JURISDICTION OF CHOICE FOR OFFSHORE BANKING?
Hong Kong has traditionally been seen as a tax haven and the financial hub of Asia, if not the world....
HOW CHARITIES CAN MEET TOMORROW’S DIGITAL CHALLENGES?
By Steve Georgiou, Business Consultant at Xpedition Charities are under constant scrutiny for how they handle their finances. Budgets...
RECALL YOUR REPUTATION: HOW TO HANDLE PRODUCT RECALLS
By Alex Balcombe, Partner at Harris Balcombe John Lewis, Tesco, and Hotpoint have all been in the news in...
THE WORLD’S MOST ENTREPRENEURIAL COUNTRIES PERFECT TO START A BUSINESS IN
Latona’s has analysed The Global Entrepreneur Monitor data to reveal the world’s most entrepreneurial nation. Analysing each country by a...
MENDIX SUPPLIES RABOBANK WITH LOW-CODE PLATFORM TO BUILD NEW CORE ONLINE BANKING APPLICATION
New online portal leverages low-code’s speed and flexibility Mendix, a Siemens business and the global leader in low-code and...
RETIREMENT ANNUITIES AND THEIR ADVANTAGES EXPLAINED
By Gerard Visser, Financial Planning Consultant at Alexander Forbes There are a number of ways to save and a...