Interview – A Finance Transformation Expert at DSM

So I’ve decided to continue the series of transformation leaders’ interviews and I’m starting this year with Thierry Zedda, a French engineer, currently working as a Performance and Portfolio Manager at DSM [one of the largest Dutch companies with 10 bill € in revenue, and employing over 20,000 people].  Going from engineering to finance to more transversal roles, leading or involved in complex large scale transformations and with the creation of a knowledge platform [aqboost.com], Thierry has an interesting experience and perspective on finance transformation.

His engineering background grants him a pragmatic approach to transformation and a penchant for technology. But don’t be fooled, Thierry is curious but not crazy for the techno hype we have seen recently entering finance (automation, AI, block chain etc.). And for a finance guy, he has learned to look way beyond the figures and work with the cultural change required to really implement beautifully crafted solutions.

The two key subjects that struck me in our conversation were :

• His passion for helping the finance profession to question itself and do a real introspection about its roles, about the meaning of new technologies and about its valuable new position in the organisation.
• Measuring the effectiveness of mindset transformation with maturity assessment, non-financial KPIs and storytelling.

Disclaimer: the opinions and perspectives shared in this article are my own and that of the interviewee, and do not necessarily reflect the official position of the interviewee’s employer.

Rethinking finance

An important aspect of corporate finance transformation has to do with technology of course and what it enables finance to do more, or differently or faster. Beyond the marketing hype of many of the techno trends, Thierry shared that it is still far from the reality in most corporate finance departments but it is happening. This is why Thierry is looking at what the technology can bring? That and he does enjoy the techno part ;o)

The role of finance is changing, I wanted to understand that. That is why I initially launched this  initiative (www.aqboost.com) to demystify technology in finance. What does it mean in reality : machine learning, data assistant?

He started to explain how a few years back there was a first phase of transformation with BPO (business process outsourcing). Corporate finance started to centralize its transactional types of activities to eventually outsource them to low wage countries (Eastern Europe, India).

He further described how the more recent changes were twofold: the use of technology to automate most transactional activities and the divide of finance roles between financial control and business control. The business control part of finance is when they become business partners and help drive the business with managers.

Automation concerns mostly transactional activities but it does touch some more added value activities such as controller activity like results analysis and commentary.

On his knowledge platform you will read interviews of people in finance, in IT, in transformation, thought leaders, across the board.

Thierry’s down-to-earth approach is well appreciated by his readership and like Innovation Copilots he is keen to show the practical use of what technology can do today. And sometimes, he mentions, low tech transformation can create great value in finance like a good simple KPI dashboard for a management team.

Forget the hype and focus on basics.

He follows people who experiment and get practical learnings. The only challenge he found was to have views of big corporations on record, even with the usual disclaimer.

Often the finance transformations have more to do with the internal workings of the company, hence it is not something that is easy to share with the outside world. Would you want your customers to know how your faster reporting of results is helping your management teams make better decisions? Well maybe you do if it does create more value for your customers ;o) But this is another subject about transparency, ethics, sharing the value etc. (Maybe another time).

It is more an impact on internal customers: there are a lot of benefits relating to less costs, quicker services, less effort and first time right.

The many transformations that we’ve been working on for over 10 years with Philippe are to shift mindsets towards customer-centricity wide across the organisations beyond sales and marketing. And what Thierry has been explaining here is just that: how can finance and shared services be more internal customer-centric?

Like for example the on-boarding of new employees which involves several departments: HR, finance, purchasing, IT. But often it is performed in silos, it takes a long time, you need a lot of manual follow up,  and it is hence not a great employee experience.

So a new development in shared services center that Thierry has been not only following but implementing, is to think and design from the point of view of the customer journey. So the solutions created, in which digitalization (automation, digital assistant etc.) plays a big role, are there to make the whole process smoother from the point of view of the customer (the employee in the on-boarding example).

This requires a shift of mindset for the people because when they start any project they need to think from point of view of the customer. Not only about reducing costs, let’s make sure the customer (the employee) is happy about the experience and can recommend the services (creating a good employer brand).

What Thierry is hence suggesting is a real introspection for finance, questioning itself, its roles and the value it creates for its internal customers. This introspection could help finance professionals to bridge some of the many cultural gaps.

Bridging the cultural gaps

Even though Thierry comes from an engineering background and has a clear preference and aptitude for the “hard” / technical side of any transformation, he realized through various experiences that culture was key in the implementation of change.

And more specifically to bridge the cultural gaps between silos (production and management), nations (North and South Europe) and time (past and future).

Once a transformation is approved, people are really eager to move ahead whilst spending no time on how change is incurred. It was not always on our screen at first, and I realized it was important.

He related one of his experiences as  Finance Director for a startup-like BU in pharma, at DSM, and the various challenges he faced to nudge a production facility toward customer orientation. The cultural gaps were numerous between the production teams in Italy and the management team in The Netherlands. The many challenges he faced lead him to learn two key lessons:

• Have the discipline to ensure clear, regular and transparent communication. With cultural differences and lack of proximity come the potential risks of “wrong” / diverse assumptions, misunderstandings, misalignment and loss of cohesion.
• Consider the cultural challenges straight away with any transformation and not as an afterthought. And think of hiring from outside to refresh mindsets if necessary.

I’ve come to appreciate that the people aspect is the most important part.

This is why in the latest transformations he has been leading or involved with, Thierry ensured that the shift in mindset was also implemented and supported, as much as the technical aspect.

Supporting the mindset shift

Thierry explained various experiences of shared services implementation like “service factory” which implies to have an operational performance mindset, and the definition and use of KPIs at all levels from operations to management. So of course his team brought new reporting tools and user friendly dashboards. But that would not have been enough.

So to support the teams in evolving their mindset and building new habits, he used training and analysts. For the first part I was like “ok, yes of course training, nothing unusual, this is what we do with most transformations, there is always a training part, whether it is about new tools or new behaviors”. But then I asked: “who are these analysts? What do they do? How are they supporting the building of new habits?”

So Thierry explained how an analyst would sit with a person to support with the interpretation of data, make the best of the new ways, train and challenge them, over a period of time. So then it appeared clearer to me that these analysts were not only teaching how to use the new reports but by regular and prolonged contacts they were sharing their data-driven mindset and data analytics perspectives. Very much like mentoring would do in some of the programmes I designed.

Probably because of my background, I was overly focused on the hard [techno/process] aspect of a transformation programme. Maybe at the beginning I was naively thinking: ‘we have a nice solution, let’s roll out’.

Thierry further explained how using models such as the Kotter 8 steps makes sense but the reality doesn’t follow them. Of course there are technical challenges (integration of software for example) but ensuring the organisation and the individuals support the initiative is very critical.

You cannot view the system / the organisation as a machine and think that if you input the right parameters then it ‘should’ work. It is not the case.

This realization lead Thierry to start measuring the level of adoption of new tools or solutions, and hence monitoring how the new mindsets were spreading.

People look at it, use it, up to the point where people do not see it as imposed but say instead they realize they need it because without that they cannot steer their business. That’s what I call the maturity level.

Measuring performance, techno adoption as well as mindset maturity

As Thierry was saying: “Being able to measure if a transformation is successful in long run is important”. He acknowledged that in finance, there is a tendency to over focus on EBIT and other financial KPIs like cost savings. But there are other KPIs (still quantitative) that are used such as forecast accuracy to support the supply chain in optimizing inventory for example.

To set them up [the KPIs] is tough. There is a lot of discussion to agree and understand what we measure, and also because the results can be influenced by many factors: other projects, the quality of management, another transformation project in manufacturing for example.

But to measure if a transformation is effective, looking at numbers only is not enough.

There needs to be a good mix of quantitative and qualitative measurements, such as feedback from people using a new solution. And the key, as Thierry explained, is to choose the right KPIs for each transformation: measuring cost saving benefits when centralizing shared services or speed gain in decision-making when implementing Operation Performance Management. In the end, Thierry found that quotes (users’ experiences and storytelling) were more powerful than KPIs.

A manager of supply chain giving positive feedback is more powerful then good figures.

And his advice is to find good sponsors, people who are happy with the use of the new the solutions, to build the story. And especially to convince the board, when the quantitative KPIs are not yet showing all that was wished for. He also learnt that to get senior management on-board, even when you have a good technical idea, you may face internal politics. This is why he favours one-to-one approach rather than big seminars to get sponsors on-board.

Beyond the measures which are linked to performance, Thierry was clear that the key was to look at the overall picture. He further explained that if the organisation functions too much in silos, there is a risk of sub optimization.

What is good for one unit in isolation (in profitability terms) may not be good overall for the company.

So reviewing how things are valued in the company is critical if we want the transformation to really happen and be supported with the right mindset.

So I asked Thierry how he measured that the mindset was evolving in the “right” direction (aligned with the transformation strategy). He shared an example of implementation of Operation Performance Management for GBS, across all the shared services. In this transformation, it was important to develop a performance mindset: from defining KPIs, having reports, meetings on the daily basis for operational teams to monthly for senior management team, discussing outcome, understanding, and taking actions…

And he further explained:

The way to measure the effect was two fold: the evolution of KPI going in the right direction ; but most importantly also is instilling the proper mindset, so at the end people use it not because they are obliged to but because they recognize that they need it to better perform, to do their job or to take decisions.

And his measure of mindset evolution is a maturity assessment. From level 1 at the start where nothing is in place yet, up to level 4 when transformation is effective.

At Level 2, everything is in place: the structure, the meetings, the roles. And when reaching level 4, there is a consistent use of the tools (hard – dashboard and soft – meetings), actions are taken and followed up, the use is autonomous, people are accountable, and proactive actions are taken. This is when you can observe tangible results: the new habit has been adopted.

As with any cultural change, the building of new work habits with the aligned mindset takes time, and for the transformations Thierry mentioned reaching full maturity (level 4) takes 1-2 years.

Time to wake up and smell the coffee

I very much enjoyed hearing Thierry’s experiences and also his perspectives on how finance and other shared services are evolving. I remember delivering a training to senior finance managers in a large multinational industrial group a few years back and how I really challenged them with the notion of added value for internal customers. And with outsourcing trends comes outside competition to the usually internally managed services. So the pressure is on for finance to wake up, smell the coffee and reinvent itself to better accompany the rest of the organisation.