A middle school student from Pittsburgh grabbed headlines and captured the nation’s attention this spring when he proposed a way to save the U.S. government and taxpayers hundreds of millions of dollars a year.
Lack of “beginners mind” can plague CFOs who are searching for solutions to spending-related problems. For example, many CFOs who came from public accounting backgrounds often find themselves too close to auditing problems to see a fresh solution. This is especially true for CFOs who have been with the same company for a decade or more.
Now more than ever, beginner’s mind is important for CFOs. A cost-cutting, growth-oriented mindset will require new vantage points on old problems in this new CFO era. Consider, for example, that according to a Deloitte survey of Fortune 1000 companies, just as many are focusing on cutting costs today as were during the depths of the recession, even though 63 percent reported an increase in annual revenue over the last 24 months. As more and more companies see cost-cutting as a way toward growth, finding areas to reduce spend becomes more difficult. And the report’s authors acknowledge as much:
“Traditional approaches to cost management may be running out of gas. Improved capabilities and methods can increase the effectiveness of cost reduction programs. However, in many cases, the fundamental problem is a company’s overall cost reduction strategy and approach. Many respondents say their companies tend to focus on the same cost reduction areas year after year — especially administrative costs (75%) and operational costs (67%) — using the same old approaches. So each year, it can naturally get harder to capture additional savings.”
So what can you do to solve problems with new eyes? If you’re trying the same solutions you’ve used year after year, but receiving only marginal or even diminishing returns from your efforts, it might help to get a fresh perspective.
How can you solve this problem? Regain beginner’s mind by building a small peer group of CFO colleagues from across different industries, and make a plan to meet on a monthly or quarterly basis and bring different problems you’re wrestling with to the table. Go around the table, share your problem, and solicit feedback and potential solutions from your peers across different industries.
This cross-disciplinary collaboration—or “cross-pollination,” one might call it—can help you regain or at least harness others’ beginner’s mind. Alternatively, you can apply this same strategy to meeting your your suppliers on a regular basis, as they work with many other clients across various industries and can offer this same unique perspective.
Yet another technique to gain a fresh perspective on your organization’s spending, as this young man exemplified, is to gain a fresh perspective on your organization’s spend visibility. At Vantage, our clients find value in opting for a supply-base rationalization approach. To accomplish this, simply identify two to three spend categories where you contract with several different suppliers. Within each category, identify the best supplier, and give them a larger percentage of that category’s total business.
Prior to the recession, fresh perspectives like Suvir Mirchandani’s’ hundred million dollar idea were viewed as avant garde and bleeding edge. Going forward, they’re necessary not only for survival, but growth.
Question: What can you do to gain a fresh perspective on your organization’s spend management?