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We are one year into the pandemic as it was February last year when it started to hit more broadly outside a few countries in Asia. Seen from a Europe-centric perspective it still had not hit us for real and no one was really concerned that it would have an impact. From Finance’s perspective, only those with global operations could see an impact on the numbers.
I remember in my last month at Maersk it was a daily theme in terms of the impact it had on our operations out of China yet not so much visible in the numbers yet. That all went on to change for everyone! While companies and individuals have been hit very differently, we have all gone through the crisis change curve.
The question is: where is Finance today on this curve? And for reflection: what did we do at each of the stages in the change curve? In simple terms, I believe we have been in a problem-solving mode for quite a while. Some have even made it fully to the other side and live to tell the tale! Hence, at this time it is vitally important that we reflect on our response to the crisis so that we design the best possible solutions for the future!
The 7 stages of change for Finance during COVID
Let us take a quick tour through the seven stages of change and discuss where that leaves us for the future.
- Shock: The first shock probably hit each of us when the first few cases were detected in your country and it started to spread. So far there is no impact on companies and Finance.
- Denial: We all downplay the threat of this having an impact on our company and the numbers, so we ignore it for a while and go about our daily business.
- Anger: Suddenly your country starts closing and many businesses are hit severely, and you might even be sent home from work. The numbers are turning sour and we start getting angry with everyone involved in the decisions to shut down.
- Bargaining: Companies are now starting to make action plans and Finance is thrust into the center of attention to create scenarios, cash-preserving action plans, and daily forecasting.
- Depression: Still, the situation keeps turning for the worse and companies start to go out of business or hit severe troubles. For Finance it feels like endless planning and forecasting with actions having little to no effect.
- Acceptance: Over the Summer something interesting happens and it is like all companies have accepted this new situation. They have switched to a virtual model and in many cases, helped by businesses re-opening, hit near-normal levels (and some cases above-normal due to a ketchup effect). Finance starts doing the budget for 2021 under great uncertainty but accepts that the budget will likely change more frequently than normal this time.
- Problem-solving: Now it is time to get up to speed in the next normal and figure out how to make your business flourish. What strategic choices should you make and how do you execute when you know another shutdown is coming? Finance must play an active role in coming up with options and evaluating each option against multiple scenarios to make the best possible decisions.
We are not out of the pandemic yet but with vaccines coming (and going towards Spring in the Northern Hemisphere) we can see the light and should expect the crisis mode to lift in the coming months. The world will be impacted for years to come but in many ways, normal operations will resume.
What we should have done at the various crisis stages
Let us do another round of reflection by asking: what should we have done at each of the stages? Perhaps this will help us generate a more appropriate response next time a crisis hits.
- Shock: When we first see signs of a potential crisis it is a great time to review our overall risk assessment of our business. Are we covered if this looming crisis hits us? If yes, do we have the proper response? If no, start brainstorming for proper responses and update your risk assessment.
- Denial: Rather than denying what is happening update your contingency plans and start executing them. Start too late and the costs could be significant!
- Anger: Try to turn it into a constructive creative process. How can you show all those you are angry with that your company has the right response to the crisis? See it as an opportunity to do better than competitors and gain relative strength.
- Bargaining: If you have gained relative strength perhaps what you are bargaining for is taking over competitors and leading the way for policymakers to take appropriate actions to manage the crisis.
- Depression: If you have responded well through all the first stages there is nothing to be depressed about.
- Acceptance: Now it is time to build real momentum based on all the pre-work done. Competitors are about to catch up. Finance must report on what has gone well so far and where adjustments are needed.
- Problem-solving: Where others are only now starting to find solutions to the current crisis you are thinking ahead to the next crisis (or simply when the crisis is over). How do you take advantage of new megatrends arising in the ashes of the pandemic and become the clear winner in the next normal? For Finance it is all about maintaining the role as a strategic business partner that we gained through the crisis. Keep making yourself relevant in decision-making and Finance will flourish in the next normal!
Of course, it is always difficult to recognize a crisis ahead of others and do the right things at each stage on the change curve. After all, we are all believed to go through it. Still, this is where Finance should champion scenario-modeling and simply ask WHAT-IF. This will steer the discussion towards taking appropriate action. It might be difficult getting the business to listen but if you are a true partner they will always take your thoughts seriously!
How did you and your finance function respond to the crisis? Are you still in crisis mode or have you done enough problem-solving by now? What solutions have you come up with to thrive in the next normal and do you see yourself coming out of the crisis stronger than before? I hope this article helps your reflection process and will lead you to take better actions next time (because there will be a next time!).
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If you are still in crisis mode or want tips to accelerate out of you can look into my repository of crisis articles below including articles on what happens next.
The Rise Of The Remote Finance Worker, Or Not?
Will Finance Become 100% Digitalized?
The Future Of Finance Is Agile In Every Possible Way
How Humans Must Re-Invent Their Role In Finance
15 Tips For Finance Professionals When In The Middle Of A Crisis
My 6 Finance Career Lessons From Times Of Crisis
30 Ways Finance Can Restore Shareholder Value Post A Crisis
How To Survive The Crisis Without Layoffs While Cutting Spend
Lost Your Job Due To Coronavirus? Here’s How To Find A New One!
A Global Temperature Check Of Finance And Accounting
How Finance Gets Ahead Of The Crisis
How Finance Runs Crisis Performance Management
How Finance Can Create Human Capacity To Survive The Crisis And Beyond
How Finance Can Master Change In Times Of Crisis
Is The Budget Too Big To Fail Even In Crisis Times?
Did We Miss A Golden Opportunity To Change Finance?
For more tips to help you through the crisis you can find more inspirational articles below.
How A LinkedIn Ad Turned Into To 10 Million Dollars
4 Reasons Why No One Implements Best Practices
Why Risk Management Is Supposed To Be Boring
3 Reasons Your Budget Is Already Outdated
How Finance Can Help When Business Is Bad
Who Holds The Key To Successful Cost Savings?
Don’t Explain Yesterday, Predict Tomorrow!
Finance Needs A 20/20 View On The Business
Finance People – Adopt A Growth Mindset Or Die!
How Finance Masters Their Working Capital
How Business Partners Keep A Plan On Track
Model Me This. Model Me That. FP&A Can Model You Anything!
Anders Liu-Lindberg is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 9,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 50.000+ followers.
Leading advisor to senior Finance and FP&A leaders on how to succeed with business partnering | Interim Business Partner and Controller who drives value creation through role modelling
Seen from a Europe-centric perspective it still had not hit us for real and no one was really concerned that it would have an impact.
From Finance’s perspective, only those with global operations could see an impact on the numbers.
I remember in my last month at Maersk it was a daily theme in terms of the impact it had on our operations out of China yet not so much visible in the numbers yet.
That all went on to change for everyone! While companies and individuals have been hit very differently, we have all gone through the crisis change curve.
The question is: where is Finance today on this curve? And for reflection: what did we do at each of the stages in the change curve?
In simple terms, I believe we have been in a problem-solving mode for quite a while. Some have even made it fully to the other side and live to tell the tale!
Hence, at this time it is vitally important that we reflect on our response to the crisis so that we design the best possible solutions for the future! Shall we do this reflection together?