Business
strategy lens

Business strategy lens

Johnson & Johnson
CFO Joseph Wolk: Mitigation efforts underway include:a) cost improvement initiatives,
b) strategic price increases,
c) and contract negotiations —renegotiations with external supply partners.

Replicate
COVID-19 responses – act with grace, speed, compassion, and grit to build resilience across these six dimensions.

The inflation mindset for business

An inflation mindset

Is agile.
Works in a context that looks global, regional, and local.
Uses expertise from inside business and out to come up with right solutions.
Has a cost lens that takes the data and analyses it to identify real and false inflationary factors
Has a lens to forecast for the future.
Aims to anticipate, rather than react to, developments
Uses good data and predictive analysis.
Learns from other markets, businesses, and sectors
Ensures good process mapping and understanding of the business.
Spots opportunities as well as risks.
Focusses on ensuring business is resilient enough to weather the storm.

Solution lens to inflation from finance

Use finance tools to help mitigate and manage rising inflation

Tools to use:

Scenario planning
Supply chain management
Efficiency and productivity
Pricing and costing
Process mapping
Hedging
Contracts
Debt and interest locks
Product substitution
Cost control and cash management
Times of work
Stress testing

Lens: Business partnering and inflation: the skills

Core business partnering skills are

Interpreting, explaining, and driving performance within the business.

Presenting a dynamic industry, competitor, and economic context.

Supporting and influencing key operational and strategic decisions.

Advising on key business planning assumptions, trade-offs, and opportunities.

Providing ad-hoc analysis and insights on specific issues.

Finance business partners look forward, providing strategic insights based on industry and macro-economic trends and competitor dynamics.They examine operational performance through different lenses to bring new perspectives, using tools such as shareholder value analysis, return on capital, customer profitability, channel profitability, and zero or activity-based costing.They introduce benchmarks and consulting techniques, and frame discussions using structured methodologies to ensure rigour in evaluating options.They use examples from other organisations and sectors to inform the debate. With good soft skills, they provide rounded opinions and clear recommendations. Looking abroad might be useful here too.

Lens: Using business partnering to manage inflation

Further analysing of each high impact inflationary factor through business partnering to reduce or mitigate its impact, e.g., transport costs analysis and engagement with drivers to discover driver software programmed to take routes on A roads and not motorways

Impact on

Realise transport costs and create a tool with detail on, for example:

Container shipping costs
Number of containers required each month
Number of tonnes transported per container
What solutions exist to reduce costs or enable greater quantities to be ‘container delivered’ at same or less cost by changing various factors
Do these costs now mean that onshore or near-shoring sourcing is actually cheaper?
Can we share shipping resources with companies in our near locality having the same issues or in our supply chain and broader business network?
Can we pool across various activities to mitigate against inflation?

Take a role in working with HR to help calculate compensation packages that need to be adjusted for inflation.

Need to be agile and react to the constantly changing inflation landscape and communicate this to the business.

Work with the business to identify any potential opportunities from inflation and how the business can adapt to harness these.

Lead with scenario planning.

Take a role in contract management — negotiating shorter-term contracts and exits agreed, making contracts easier to manage.

Adjust management reporting to allow for timely decisions and to reflect the new reality.

Increased currency fluctuation risk?