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7 Ways Your Company Can Be More Like Amazon

As we transition into Quarter 3 of 2017, companies are already planning for what 2018 is going to look like. Over the past year, we have seen a lot of change in the business landscape. Amazon acquired Whole Foods and dramatically sliced prices. Apple released not just one, but two iPhones in the past month. President Trump took office at the beginning of the year. Great Britain voted to Brexit from the European Union. Alfred Angelo, a bridal store giant, filed for bankruptcy. There has been innovation, disruption, uncertainty, destruction, and so much more in the business landscape. One thing that we do know for 2018 is that to survive, you must be innovative. Fast Company has already named Amazon to be the most innovative company in 2017, so let’s learn how your company can be more like Amazon.

7 Ways Your Company Can Be More Like Amazon

Amazon has impacted how businesses must compete in today’s world. Instead of just competing in one market, Amazon now competes against retailers, grocery stores, logistics, technology providers (Apple, Google), and many more industries and markets. After researching how they have grown, especially over the past 5 years, we have created a list of 7 ways your company can be more like Amazon.

1. Experiment

NASA has been around for 59 years. In that time, they went through ample amounts of experiments to get people into space… They tested every aspect of the shuttle, the gear, the computers, the communication, etc. While there were thousands of failures, they were the first to walk on the moon. Likewise, Amazon has used the same theory to experiment in many different fields. Ever heard of Amazon Webstore, Amazon Destinations, WebPay, Askville, and Amazon Auction? These are just a few examples of products that Amazon either shut down completely or morphed them into a product more successful.

Obviously, you may not have the same cash flow as Amazon does. But that doesn’t mean you do not have the capabilities to conduct an experiment. The most important part of experimenting plenty is to change your perspective to innovate. Start by testing variations of your product through A/B testing. Then test everything! Your product, your processes, your departments, your services, your customers, your placement. Everything. Continue to test until you are pleased with the outcome, then test some more. As technology advances and society changes, things will change more rapidly than ever before. These experiments should never stop.

Amazon’s Advice About Experimenting

In Amazon’s 2015 Letter to the Shareholders, Jeff Bezos discuses this concept on experimenting frequently.

Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there. Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten.

We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments.

If you are looking to start experimenting, you need to know what external factors could impact the success of your experiment. Download our External Analysis whitepaper to learn more.

2. Expect to Fail

When you begin to experiment, you can expect to fail more than you succeed. Once your company has created a culture of encouraging failure, innovation will begin to happen. Thomas Edison, one of America’s greatest inventors and businessmen, once said, “I have not failed. I’ve just found 10,000 ways that won’t work.” Your company can be like Amazon if the leadership encourages each employee to fail. Although that sounds counterintuitive, this aspect has resulted in Amazon’s massive growth.

As the financial leader of your company, structure the company’s ability to fail. Because you need to protect the financial future, put in some guidelines for each experiment. Check that they are going to improve something that will move the needle. You don’t want your employees to be experimenting on senseless things – wasting both time and resources.

3. Innovate Everything

If your company wants to be more like Amazon, you should innovate everything in your company. Ask even the lowest employee why you do things a certain way. If your team responds, “that’s just the way we’ve always done it,” it is time to innovate. There must be a reason for everything you do, and if there isn’t, then you either need to cut that process out or innovate it.

Check out Amazon’s product listing that can be found at the bottom of their website. Notice how they cater to various customers, needs, and desires. From cloud storage to groceries to comics to videos and movies to publishing, every customer can find at least one product that they can use. When we say to innovate everything, we mean everything. Amazon is continually updating, improving and innovating their systems and products to better serve… Their customers!

your company can be more like amazon

Now, providing various products does not necessarily work for every company – and it shouldn’t. But Amazon has made the web their playground and has innovated everything related to the web. Find your playground and start innovating.

4. Be Customer Centric

One thing that has set apart Amazon from the rest is their customer centric, customer obsessed culture. In a Forbes interview with John Rossman, a previous executive at Amazon, he said that “there are 14 leadership principles at Amazon. They weren’t written down, they weren’t codified when I was there, but you saw them being used every day. The first one is ‘Obsess over the customer,’ and the 14th is ‘Deliver results,’ and there’s 12 in between those two.” To get results, you must start with the customer. A business can have all the best processes, accounting, logistics, etc., but if your company does not have a customer, it doesn’t exist.

Refocus every employee on the customer. What do they want? How quickly can you get what they want to them? What does your customer need? How can we better serve our customer? What needs do they not know aren’t being met? Every decision made in the company should be directed towards the customer. You company can be more like Amazon if you are customer centric. Jeff Bezos once said, “Focusing on the customer makes a company more resilient.”

5. Get Out Of Your Comfort Zone

Change for some can be uncomfortable. Even those that thrive on that adrenaline pumping adventure, some change can feel like walking on a tight rope across a canyon. Get out of your comfort zone when you are innovating. Just because you are in the financial leg of your company doesn’t mean you need to stay there all the time. For a company to be effective, every employee needs to be involved in every aspect of your company. For example, you should be concerned how marketing is spending their budget. Marketing, likewise, should be wary of how their decisions impact the bottom line.

6. Base Strategy on Reliable Facts

Your company can be more like Amazon if you base your strategy on reliable facts. While this seems like a simple task, many companies base their strategy on what they want to outcome to be… Not on fact.  At re:Invent 2012, Jeff Bezos elaborated on why you need to base strategy on reliable facts.

“I very frequently get the question: ‘what’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘what’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two – because you can build a business strategy around the things that are stable in time….in our retail business, we know that customers want low prices and I know that’s going to be true 10 years from now. They want fast delivery, they want vast selection.

It’s impossible to imagine a future 10 years from now where a company comes up and says, ‘Jeff I love Amazon, I just wish the prices were a little higher [or] I love Amazon, I just wish you’d deliver a little more slowly.’ Impossible [to imagine that future]… When you have something that you know is true, even over the long-term, you can afford to put a lot of energy into it.

For your company to be successful, you need to start identifying what is going to be true ten years from now. They are going to want a better product or service. Your customers want to get that for a lower price. And they want value.  Once you write down the facts, you can strategize your company’s next move.

7. Remove Any Risks

Obviously, we are not going to recommend that you innovate or experiment without having thought it through. In fact, you need to prepare before you begin the experiment. Remove any known risks associated with that experiment and be aware of any potential risks that could come about. Create an External Analysis to overcome any obstacles that come your way and be prepared to react to those external factors. Although you may not be able to prevent those obstacles from occurring, you can prepare how you are going to react to them. Download our free External Analysis whitepaper to gear up your business for change and your company can be more like Amazon.

your company can be more like amazon

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Creatives in the Workplace: Are you the Machine or the Inventor?

creatives in the workplaceHere in Texas, graduation is approaching. It makes you wonder… How do those potential candidates stand out in a crowd if thousands of them are competing for the same job position? Believe it or not, you were in that same situation once. If you identify with the older generation, how did you land the job you have now?

Simple Answer: You were most likely one of the creatives in the workplace.

2017’s Most Wanted Creative Skills

One of the major problems with school is that they teach material from five, maybe even ten (sometimes even more) years ago. However, it’s partially not their fault. New skills are being explored, developed, and desired every day. Some textbooks just can’t keep up.

Here are a couple of my personal favorite creative skills that some businesses are looking for:

Design

By “design,” I don’t mean the typical architect who draws with a bow compass and ruler and submits by the end of the week. Adobe Illustrator, Lightroom, and Photoshop are no longer highly paid skills because there are so many businesses who use them, and people who have the skill. Since 2015, development with User Experience/User Interface (UX/UI) has become more precise. Who knows, maybe that will be the next Adobe suite in terms of conventional skills…

Designers are also faster than before. If we compare a web page from ten years ago to the ones we see today, then designing a web page used to take months. Now, it only takes a few hours. This increase in productivity opened the door for other improvements with technology and design, and will continue to do so with more improvements in the industry.

Writing

Demand is increasing for digital marketers, search engine optimization (SEO), and copywriting for company websites – I’m guilty of this myself! Like many skills, writing is considered a constant demand and ever-evolving skill. Employees don’t often have the time or patience to write 1,000+ words a day.

Writing has become so evolved that there is an algorithm, maybe even a customizable process. Writers put thoughts and feelings out there for users and customers, which is something no artificial intelligence will ever be designed to do.

Everyone has their own special skill… how do you know which is the best system for your company? Download our free guide, How to be a Wingman, to be the best wingman to your CEO.

Benefits of Having Creatives in the Workplace

These are all attractive skills to have in 2017, but the demand is high and the skills are constantly creatives in the workplacechanging. Additionally, creativity doesn’t always translate to advanced skills like coding and UX/UI. According to dictionary.com, Creativity is “the ability to transcend traditional ideas, rules, patterns, relationships, or the like, and to create meaningful new ideas.” Creativity can and should be in every team member, and here’s why…

Creativity = Flexibility

It is common to have a standard procedure and policy when implementing new ideas for a company. One of the benefits of having creatives in the workplace is that they figure out new ways to do a project, but still maintain the company policy. Doing the same tasks the same way becomes discouraging and mundane, and having a fresh opinion can keep even routine tasks interesting.

Flexibility = Growth

Having employees to provide a “fresh” opinion not only keeps tasks interesting, but helps the company grow. It is often difficult to see what needs to be improved when you’ve worked somewhere for a long time. Bending the company norms, but just enough to stay within company procedures, effects change within a company. Depending on your company culture, this is great news. However, not every company sees it that way…

Disadvantages of Having Creatives in the Workplace

When you’ve established a company culture for more than 10 years, having a young mind spouting change might rub the “old factory” workers the wrong way. If creatives and millennials are both seeking creative job positions, you’d assume it’s a good thing that millennials are inclining more towards creativity and innovation. In most ways, it is. In others, well… Here are a couple of reasons why having creatives in the workplace might actually slow your progress down:

Creatives don’t always enjoy Repetition

creatives in the workplaceAs a professor in an Entrepreneurship Program, I hear the same thing. “Corporate is bad,” and “I refuse to be a cog in a machine!” are only a couple of phrases I’ve heard. Young creatives are less attracted to a traditional company culture because of the repetitive and mundane tasks that these businesses often have. Toeing the company line seems restrictive for the creative thinker, which is why having creatives in the workplace is becoming rarer, and more creative people tend to quit their jobs within two years. The best cure for this is to allow those creative minds to bend the policy a little, (and maybe show us Baby Boomers and Gen X-ers a thing or two).

Squirrels are More Common

Another disadvantage to having creative people in the workplace is that they are often strongly opinionated and visionary. Consider our recent blog: “That Squirrel will Kill You!”. Having new opinions and visions for a company should always be accepted and heard, no matter how crazy or different they may be. However, creative people have a lot of ideas, and often move on to the next idea too quickly to make them reality. The downside is, some projects need to be completed before your company can afford another one. Constantly creating can be detrimental if no one is actually productive in a project, and everyone always works on something new.

Conclusion

Having creative people in the workplace can be tricky – there is definitely a gray area and many contradictions. In my opinion, having a creative mind definitely separates someone in a crowd of applicants. The difficult part is how to incorporate those creative thinkers in an environment that isn’t very creative. Let’s face it – companies need those creative people just as much, if not more, than they need the status quo. So ask yourself, are you the cog in the machine that conducts the same processes every time, or the inventor? It’s up to you to decide.

Don’t forget… the CFO is the CEO’s wingman, and it’s not a mundane job. Learn how to think like a creative with this free tool!

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Idea Management in Companies – “That Squirrel Will Kill You!”

idea managementFifteen years ago, I had a dog named Killer. Killer was really cute – a Yorkshire terrier – and was about 15 years old. Killer hated squirrels with a passion. One day, he saw a squirrel across the street and took off after him. Before we could catch him, he was hit by a car and passed away.

I apologize for the sad story, and I know that probably wasn’t something you expected to read from The Strategic CFO. The purpose of this story is to tell you that there are “squirrels” in your business that will kill you, too. Idea management in companies is more difficult than you think. In our company, we have a saying. Whenever someone shares a new idea that is irrelevant to our current projects, we call out “Squirrel!”. We do this to do two things: identify that it is in fact a squirrel and refocus our attention so that we don’t get distracted from our current projects. We don’t spend all of our money doing every new idea that we think of. This may even be an issue in your own company. Let’s explore why…

Why “Squirrels” Will Kill You

Squirrels are tangible, worth pursuing, and bring value. But what you may not know is that those new ideas may hurt you more than they help you more often than not.

Leaders are Innovative & Ambitious

Let’s say you’re in a room full of executives and business leaders, pursuing a project that you’ve worked on for months. Suddenly, one of your colleagues brings up the problem with the vending machine. The vending machine problem has nothing to do with your project. Another colleague chimes in and agrees with your other colleague about the vending machine. Now you’re all talking about the vending machine, and the initial project is pushed again… another 2 months.

That squirrel just killed your chances of successfully finishing that initial project.

If you’re an entrepreneur or a business leader, creativity is in your blood. You can’t help but think of new ways to grow your business, or fix small problems when they turn up. At the same time, squirrels distract you from your goals. “Chasing squirrels” is especially dangerous for entrepreneurs and businesses that have been operating for less than 5 years. Try to focus on what’s really important. Remember…. if you’re always chasing squirrels, you’ll never get down the street. This is where new idea management in companies comes into play.

Take the 40,000 foot level view when looking at projects! There are more squirrels than can be caught. Download our free 7 Habits of Highly Effective CFOs and learn how to take your financial leadership to the next level!

Most Ideas are Worth Pursuing… One Day

Just because you have a main project doesn’t mean you can’t have ideas. If you have a useful idea, but it may not be related to what you’re currently working on, write them down! Writing down your ideas is more than a list; it’s a goal that you can one day pursue (and maybe should pursue).

idea managementHow to Manage the “Squirrels”

Managing new ideas in companies should always be organized with a path in mind. How do you address squirrels so that they don’t kill your organization, you, and/or your momentum?

The action plan is the best idea management tool.

What is an Action Plan?

Our biggest recommendation is to make an action plan for your company. An action plan is a tool to manage the tasks to be achieved within a certain period of time. This tool isn’t solely for the leaders of a company to watch their employees. The action plan serves as a communication tool between ownership and staff, which then ensures accountability within a company.

Idea Management in Companies with Action Plans

Many of my clients, and my own employees, can attest to The Strategic CFO action plan tool (can be found in the SCFO Lab). When managing the “squirrels” in your company, your efforts shouldn’t stop at merely having a tool. What makes it effective is how you use it. Here’s how we all learned how to use an action plan effectively:

List Your Tasks 

It’s okay to brainstorm and unleash your ideas. In fact, we highly recommend you do this. But you can let the ideas flow out in a constructive manner that will prevent you from derailing off the tracks. List out any ideas, from small to big; from things you want to accomplish today, to milestones you want to accomplish by 2019. The sky’s the limit!… as long as the ideas are realistic and attainable.

Assign and Prioritize This Task

Now is the time to organize your ideas. Which tasks are easily attainable? Which tasks serve a purpose? Which tasks align with other tasks? And finally, who will complete these tasks? are all questions you should be asking yourself when completing this step. Color code, write notes, create labels… do what you need to do to organize your thoughts. As you do this, also try to map out how you’re going to accomplish a goal (because some goals need sub goals in order to accomplish them).

Update Progress and Priorities

Oftentimes, plans don’t always happen like you had originally expected. It’s normal to move around certain tasks to make room for more pressing ones. Just make sure that you don’t move them around too much… It might end up being a “squirrel.” It’s always a good idea to update your progress as well. When you complete a task, mark it as finished and don’t delete it.

Leave What You Have Already Accomplished

Leaving the completed tasks is crucial because the management needs to review progress trends, and quite honestly, it also boosts morale within the company. If you constantly remove the accomplishments, it will feel like your company has gotten nowhere. On the other hand, if you leave your completed tasks, you can see what works and what doesn’t work. You’ll also see how fast certain tasks are completed, and the work habits of your staff and yourself.

idea managementConclusion

Constant ideas can help your company, but they can also hurt your company. Having an action plan for your company is important not only for your staff, but for yourself. Action plans, or ideas with a plan in mind, organize the company’s thoughts and ideas in a more manageable and realistic fashion. Ask yourself: Are these ideas helpful right now? Will they be helpful in a couple of years? If you answered “no” to the first question, the ideas are squirrels. If they’re not helpful ever… then those are just bad ideas. Take care of your company, or else it might end up like Killer.

To learn more financial leadership skills like managing your company’s ideas, download the free 7 Habits of Highly Effective CFOs. Find out how you can become a more valuable financial leader.

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Research and Development

Research and Development Definition

Research and development (R&D) in business refers to activities geared towards new product development or current product improvement. It typically involves conceptualizing and designing new products and then tailoring them to meet the needs of the target market. R&D is often a line item on a company’s income statement. Technology and pharmaceutical companies often have comparatively high research and development spending because these industries are very research-intensive. Substantive spending on R&D can also be a sign that a company is growing or expanding.

Accounting Research and Development

In accounting, there is some controversy over whether research and development spending should be considered an asset with future benefits for the company or whether it should be expensed in the period when it is incurred. Some claim that because R&D is part of the process of creating new products, it should be considered an asset with future benefits to the firm and expensed when the new products are eventually sold. Others claim that research and development is a regular operating expense, and it should be expensed in the period in which it is incurred.

In the U.S., the Financial Accounting Standards Board (FASB) solved the dilemma by requiring all companies to expense R&D in the period incurred. This is the rule according to GAAP.

When investing in research and development, be the trusted advisor your CEO needs and guide them through this process. Learn how you can be the best wingman with our free How to be a Wingman guide!

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See Also:

How to Estimate Expenses for an Annual Budget
Capital Budgeting Methods

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FP&A Innovation Summit Discount

The Strategic CFO has secured 10% off delegate passes for the FP&A Innovation Summit taking place in San Diego on February 20 & 21. With speakers from Microsoft, Paypal, Etsy and many more the Financial Forecasting & Planning Innovation Summit San Diego is an ideal opportunity to discuss best practices with other FP&A professionals.

FP&A Innovation Summit

View the event overview here.

Confirmed speakers include the following:

– Chief Financial Officer, Unilever
– Associate Director, Corporate Finance, Procter & Gamble
– Executive Director, Finance & Administration, Esteé Lauder
– Executive Director, Business. Sony Electronics
– Chief Financial Officer, Harry and David
– Vice President, Finance, Etsy
– Vice President, Finance, Barnes & Noble
– Senior Vice President & Chief Financial Officer, ALM Media
– Vice President, US Finance, Starbucks
– Senior Vice President & Interim CFO, Vertis Communications
– Director, Finance & Operations, Nike Foundation
– Senior Director, Finance, PepsiCo
– Head of Analytics – Core Payments, Paypal
– Chief Financial Officer, Imagem Music

Download the brochure with presentation titles and the most up-to-date speaker lineup here.

FP&A Innovation Summit Discount

To reserve your place, contact Rose Palmer or register online using the 10% FP&A Innovation Summit Discount Code “STRATEGICCFO2013”.

FP&A Innovation Summit Discount

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