The following is a contributed article from Jason Maynard, senior vice president of global field operations at Oracle NetSuite. Opinions expressed are author's own.
When Stephen Covey said "the main thing is to keep the main thing the main thing," he couldn't have anticipated the disruption of COVID-19. Suddenly, keeping the main thing the main thing might be incompatible with survival.
Amid today's upheaval, finance leaders have had to reassess their companies' business models, condensing a months-long process into weeks or days.
Take executives at Bedford Industries, a 54-year-old manufacturer specializing in bendable products, like the twist ties on a loaf of bread and ElastiTags on grocery products, which quickly shifted to making face shields.
News of the change spread and the company was overwhelmed with inbound sales calls. The once purely direct field sales organization was suddenly manufacturing orders for healthcare providers to the tune of over half a million units a month and selling its existing nose wire product directly to people sewing cloth face masks at home.
Unable to keep up with demand, Bedford had to retool its distribution model and technology infrastructure. It launched an ecommerce site and shipped directly to buyers. Now, plenty of new customers see Bedford as a PPE provider and supplier to the healthcare industry. It’s still making bendable products out of a combination of plastic and metal but the markets, the messaging, and the sales techniques are different; it has expanded its vision.
Bedford transformed itself from a pure business-to-business provider into an omnichannel and direct-to-consumer vendor in just a few weeks. Its success was borne of its strong understanding of its financial and operational capabilities, powered by a shared sense of mission.
We've seen hundreds of similarly inspiring stories of businesses responding to challenges imposed by the pandemic, and they all largely follow the same process, one with which any CFO will be familiar:
- Conduct a situational analysis to update the company vision
- Translate the vision into a plan of action through strategic planning
- Execute the plan as a team
What's different today is the cadence. Most companies enact some version of this framework on an annual cycle, usually starting with a visioning exercise in the third quarter and ending with execution the next fiscal year. Bedford did all this in a few weeks.
From my vantage point at Oracle NetSuite, I've seen companies retool distilleries to make hand sanitizer, nonprofits work to feed and nurture communities in need, and apparel makers pivot to stitch up masks. Sometimes those efforts generated additional revenue while sometimes it was a "keep the lights on, keep the team paid" situation. Sometimes it was just the right thing to do. In all cases, it took agility and gumption to see an opportunity and take action.
The CFO likely has the toughest job here. Decisive action is required to manage financial operations, and meanwhile you have to vet new plans from operations, human resources, sales, and marketing.
Based on what we've seen, a clear CFO playbook emerges.
Executives are asking the question, "where are we now and what are we going to do?" The answer informs your vision. Many of our customers have expanded and evolved their visions. Swimwear manufacturer Dippin' Daisy's, for example, started sewing face masks out of existing materials to make up for canceled wholesale orders, which helped the brand retain most of its staff.
Once organizations have assessed their vision, talent, and mission, they review their strategic and financial planning. That not only means a hard look at operations; it means a comprehensive health, safety, and legal review. CFOs are at the center of this. It falls to them to make a constant assessment of the vision vis-a-vis factors like jobs and consumer spending. In April, an uptick in consumer savings and downward credit card debt led many to expect a 'U' shaped recovery. Then May's job report came in far better than expected; maybe it's a 'V' after all. These types of rapidly-changing macroeconomic conditions will drive strategy, which requires CFOs to build models and plot scenarios for a range of outcomes.
Best practices include working on a 30/60/90 day cycle, with weekly standup meetings to review key metrics. Ask: How are we trending? Are we seeing deviation from our most likely scenario? Are our people healthy and engaged? If you had a set of bread and butter KPIs, chances are, you need to add some jam. Unit margins are a lot more important now. Products that had small margins in January could easily slip into negative territory. Customer acquisition costs may be on the rise, as with supply chain turbulence, overhead, and raw material costs. Tracking workforce metrics is always important, but it's also vital now to put in place — and measure — KPIs around employee advancement in a way that reflects diversity and inclusion vision.
Uncertainty around runway and operational expense allocation means the CFO has to match strategy to go-forward execution. Again, a regular cadence of KPI evaluations is critical. We all measure performance using some combination of business unit, product line, department, geography or, of course, net financial metrics of success. B2B companies dipping into B2C may find customer acquisition and retention more difficult and expensive than they’re used to, so watch marketing costs and retention rates closely. Timely messaging really matters now. Pricing discipline is critical; better to bundle a value-added service than discount too heavily. Operationally, supply chains are in flux, which adds uncertainty. Many of our customers are exploring how to build more resilience into their supply chains, whether by sourcing alternate suppliers or improving demand planning and inventory management.
Industries you serve may restart at different rates around the country and the world — for example, sales initially fell for TOV Furniture before increasing 200% year-over-year by mid-April. Sea To Table, which sources and sells sustainable seafood, saw direct-to-consumer sales rise by as much as 1,000% as people cooked more meals at home.
Bottom line, as you navigate today's uncertainty, what I've learned from finance pros who know how to navigate change is to keep your focus on three points in particular:
Maintain visibility on your key metrics and performance indicators but expect ambiguity. Every good framework allows for uncertainty and risk. Those that don’t can often suffer from analysis paralysis. Striving for perfection is great, but many never quite get there, always finding one flaw, one last "what if" they hadn't considered. Hopefully that's not your reality, but the speed of decision-making and the unique circumstances of the pandemic mean that your tolerance for risk will likely have to go up.
Monitor your metrics so you can implement the necessary controls. Part of managing uncertainty is always asking: Are these strategies and execution driving us toward our vision? Most companies we work with start by asking questions and questioning existing assumptions. Make sure you have the dials in place so you can adjust your business either up or down depending on circumstances.
As your company revisits each of these points, you'll be challenged to stay on course. With the right visibility and controls you will be able to navigate and make the necessary changes to your business across all facets. Executives at custom menswear retailer Alton Lane spent many late nights devising a way to replicate the brand’s one-on-one, in-store consultations from afar, eventually launching virtual appointments and "closet reviews" that helped boost declining sales. Agility isn't just making fast decisions; it's a byproduct of preparation to ensure you have the optionality to move quickly.
The customer is the north star, and the CFO is the compass. Aligning the organization to meet customer needs is everyone’s job, and today's CFOs play an ever-bigger role in translating that vision into strategy and executing it. As long as you have visibility, control, and agility, you can take the action to win.