Will Financial Fluency Support Business Agility?

Michale Hugos in his book ‘Business Agility’ talks about financial Fluency and how this can create a positive impact on business agility.

He explains that everyone in a responsive organization should be trained on reading and understanding balance sheet and income statement; also, employees at different level should understand break-even point. This understanding will help employees to understand what the minimum level of contribution is required to justify their salary and how to distinguish between activity worth for company and individual time. Also, this helps employees to understand the activities required for higher profit and how their incentive will be impacted.

Transparency is the key to business agility and having financial transparency, I believe, is an important aspect. In my view one of the important reasons for Startup being naturally agile in nature, is that everyone is aware of the impact company and individual will have if a feature/delivery is delayed or loss incurred because of rework due to quality, design, information delay issues.

On the other hand, larger organization who have all the required resources and practices in place are struggling to deliver on time quality output. In my conversation with teams and stakeholder only top management is worried (sometimes) about the ROI and rest are not even aware about the financial impact because it’s never talked about.

I agree that financial fluency should be part of every enterprise agenda and there should be ways that it becomes part of every planning and review. Donald Reinertsen WSJF prioritization technique is one good approach to do that at feature level.

Requesting fellow agilest and entrepreneur to share their view on how best financial fluency can be made an integral part of organization strategy and execution planning/review at all levels and if there are successful implementation then please share.