The finance function has long been evolving hence the continuous need to sustain this comes at hand.
As finance leaders, it is important to understand every single thing that can be of help for the organisation to maximise benefits of any new technological advancement or initiative, and thereby attain success in all endeavours.
According to Gartner, Inc., with approximately 70% of finance transformation initiatives producing less impact than anticipated, finance leaders are often left wondering where things are going wrong.
Marco D'Ascoli, director analyst at Gartner, says a better understanding of irrational behaviours and behavioural science can help keep finance transformation on track.
He notes on the following regarding this:
- Humans tend to think irrationally, and this can be a major problem for finance transformation initiatives.
- Irrationality is very often predictable, and the behaviors leading from it can be changed or mitigated.
- Irrational behaviours are caused by cognitive biases: ways of understanding facts and events based on personal beliefs and experiences.
- Four biases have the biggest impact on finance transformation: anchoring bias, loss aversion, status quo bias, and overconfidence.
- Finance leaders should build a shortlist of behavioral science tactics to address these four cognitive biases and trial them in their finance transformation efforts.
With these in mind, finance leaders must navigate around this particular factor of work to be able to triumph over challenges and achieve goals each finance initiative has set.
