Lean Enterprise

Chapter 13. Evolve Financial Management to Drive Product Innovation

Adhering to budgeting rules shouldn’t trump good decision-making.

Emily Oster

Right now, your company has 21st-century Internet-enabled business processes, mid-20th century management processes, all built atop 19th-century management principles.

Gary Hamel

Introduction

In many large enterprises, financial management processes (FMPs) are designed around the project paradigm. This presents an obstacle to taking a product-based approach to innovation. It is relatively easy for small teams to work and collaborate amongst themselves. However, on an enterprise scale, we eventually reach a point where evolution is blocked by rigid, centralized FMPs that drive the delivery and procurement processes that limit the options for innovating at scale. We will address some of the problems created by these FMPs, with particular emphasis on the budgeting process. We emphasize that to work through the issues your organization experiences as a result of financial management processes, you will need the help of your finance team. Start building good relationships with them and work collaboratively to improve outcomes for customers and the business.

Recognition of the interdependence of all management processes, the detrimental behaviors they can enforce, and the barriers they present to continuous improvement and innovation is essential to success at becoming lean. It is hard to let go of the long-held belief that strong, centralized ...