How do you improve the financial success of your company, organization, unit, network, project or in fact any setting in which you work in a key role? One might assume that this question would be the center topic in all business disciplines. Surprisingly this question is both the center topic but at the same time this vital issue seems to evade a closer examination.
This extraordinary situation may partly relate to the way how business disciplines have developed and how the cover they different angles of organizational operations. Strategy discipline talks about strategies and there the financial success is certainly important but perhaps it is an aspect, which more assumed than explicitly and meticulously explored.
There – in the realm of strategy doctrine -the thinking must be that wise strategy and useful strategic frameworks lead also to financial success but closer and detailed examination of economic ramifications may not be part of discipline’s focus.
In the same vein also other business disciplines focus on their key topic let it be marketing, leadership, entrepreneurship or any other business disciple and the financial success is certainly there on the background but it may be more an assumed result than a carefully examined part of the scrutiny.
In this state of affairs we could assume that there should be a discipline which looks the financial success and in particular the role of an executive straight in the eye. Surprisingly we may not find such a disciple. Certainly there is a discipline which comes close and which gives valuable tools for an executive who wishes to increase financial success of her/his unit. This discipline is first and foremost accounting and all its variants: financial accounting, cost accounting, management accounting, strategic accounting etc. Indubitably accounting discipline offers most valuable tools, perspectives and frameworks for executives.
At the same time accounting and its variants are seen to be rather number and calculations focused, people and organizations have remained on the background. Accounting discipline has tried to counter this deficiency by developing accounting in action type of examination. This route leads us rather close to examine ways how executives could improve the financial success of their organizations. However there is a constant need to understand better how executives with all their actions and even with their non-actions could help their organizations to improve their financial success.
In our EMBA program we have developed a course Business Risk and Financial Management. In that course we examine financial matters from the perspective of an executive. We examine broadly and widely how executives could act in different ways to foster financial success. Here the role of the executive can vary from the innovative thinker who raises up new ideas and recognizes new business opportunities to a demanding person who really takes care that plans are executed effectively and without unnecessary waste of any resources. The point in this course is to probe the role of an executive in financial matters as widely and deeply as possible.
Well, before this program starts we send – in the spirit of this course - some open questions to participants. One of those questions is following: what is financially (economically) wisest thing (widely thing, process, action, etc) what you have seen? In the beginning of the program this question was discussed and I collected top 5 answers. Here these answers are my interpretation of the discussion and I may have combined some answers.
5 Wisest financial (economic) phenomena
- Wise use of latest technology,
including AI and robotics. This as a way to shift the organizational action to
levels where higher economic surplus can be achieved.
- Well-being. Clear understanding how
people are the greatest asset in an organization and how investments in
well-being create financial success.
- Timing, timing and timing. A
capability to notice and capture opportunities on the market place. Also a
capability to change executive’s own organization when the time is right.
- Cost control. We must not forget the
value of good old budgets and active budget control. Budgeting is the way to
carefully plan the future and notice quickly if something unexpected happens.
Note unambiguously the value of forward looking planning and control system.
- Clear understanding in which position people are on their best. Also more generally a wise ways to use and develop the existing resources.
Director, JYU Avance Executive Education