In part one of the two-part series, we shared how to incorporate process improvement and innovation, Lean Manufacturing, and Learning Loops into a strategic Controller’s toolbox. In this post, we will cover additional tactics that a Controller can use to transition to a high performing organization – Six Sigma, Fishbone Diagrams, and Design Thinking.
Why add Six Sigma to the Controller’s toolbox? W. Edwards Deming said, “Understanding variation is the key to success in quality and business.”
Six Sigma provides Controllers the necessary insight into how to use statistical methods to understand and control process variation. With some creative adaption, a Controller can adopt a few simple tools from Six Sigma’s statistical approach to generate deeper levels of understanding of what is driving organizational performance. The premise being that profitability is a function of capacity utilization, spending, and contribution margin. By using control charts, a strategic Controller can provide deeper insight into the capability of those value-creating processes.
Given the above information, if a Controller presented this information at a management meeting and offered it as insight, what would you conclude and where would you focus your attention? As a Controller, what would you present to the leadership team as insight and what would you recommend the organization focus its attention on?
The fundamental premise underpinning the Six-Sigma methodology is: “The output is the result of a process working on an input plus variation.” This premise provides Controllers with a useful way to think about how to identify the value-creating efforts of an organization. Ultimately, it doesn’t matter if you’re creating widgets, providing services, or developing leaders – managing performance always comes down to identifying and managing critical-to-success factors (CTX’s) and controlling process variation. Fishbone diagrams are a useful tool for finding CTX’s
The challenge in the process is asking the right question. It’s helpful to start is with a simple question: What are the factors that drive breakeven performance in the organization? The answers to that question will inevitably lead you to what to measure.
Use the Fishbone diagram to analyze a process that you as Controller manage, such as your billing process or your accounts payable process. Walk through the steps of the process to fully understand all the inputs to the process (the bones) and how they impact the outcome (days outstanding or days to pay, as an example).
Design Thinking methodology is an approach to problem solving rooted in empathy and focused on iteration and is, therefore, another useful tool in a strategic Controller’s toolbox. Design Thinking emphasizes practical, creative thought with the goal of developing the best possible solution. Through empathy and an iterative learning process, applying Design Thinking methodology will lead to gaining an understanding of the “why” behind your efforts.
Challenge yourself and your management team on the contents of your monthly financial package. Could a Design Thinking exercise lead to a significantly more effective reporting package?
Ask yourself this question: when was the last time you engaged the management team on this subject? Start there and request to work through a simple brainstorming exercise.
How can Resultant help?
The first step toward becoming a strategic Controller is ensuring the basics are in place – accurate, timely, and compliant reporting of your organization’s financials. When the foundation is firmly in place, it’s time to begin taking steps to boost the performance of your organization. Principles such as Lean Manufacturing, Six Sigma, Design Thinking, and beyond will help you to become a strategic, high-performance organization.
How do you know when you are ready for the next step?
Resultant has helped countless organizations assess the state of their current financials and develop a plan that details which principles to apply as well as how and when to apply them as well as help Controllers chart their course to growing into strategic organizational leaders.
It isn’t possible to successfully transition to a high-performing organization all at once. We recommend starting with a small initiative. If you need assistance assessing your current state, Resultant’s Financial Services team is ready to help. Contact us today to learn more about how we can help your organization begin its path toward becoming a strategic, high-performing organization.