If we look at the role of the modern CFO, one could argue that we already use ‘sensemaking’. We take data from multiple sources, some historical and some future-looking, most of it numbers, and apply trends and commonsense to project forward to give us a sense of what the future might hold.
However, CFOs are usually only focused on numbers: revenue, profit, and costs. Yet there is so much more information available to support our decision-making if only we had the skills to step back, really understand and make sense of what is going on, and use that intelligence to develop more appropriate strategies for business growth.
Who is Tensense?
We were delighted, therefore, to welcome Mike Roe, Chief Executive Officer at Tensense.ai and Dr. Mike Carter, Chief Scientific Officer at Tensense.ai, to our recent iFD Community event to introduce organisational sensemaking to our CFOs.
Tensense.ai is an organisational sensemaking system for businesses which detects threats, identifies opportunities and monitors for continuous improvement.
Dr. Mike Carter is a leading behavioural scientist and former counter-terrorism specialist. He has consulted in most developed countries of the world for organisations in both the private and public sectors.
Mike Roe is an ex-senior detective and was the Bristol police commander. Mike is passionate about the power of sensemaking and its capability to help senior leadership teams stay ahead of the game. He has successfully supported and coached CEOs and the C suite across the globe, steering many companies through significant transitions.
First of all, what is the science of sensemaking?
We live in a complex world and constantly try to make sense of it. Our ability to quickly absorb and process information could mean the difference between success and failure. Can we make good decisions when presented with opportunities or threats? Sensemaking is obtaining awareness and understanding in situations of high complexity or uncertainty to make decisions.
To put this into context, Mike Carter started with a situational analysis of a high-profile incident: the tragic and wrongful shooting of Jean Charles de Menezes by specialist firearms officers on 22nd July 2005.
Jean Charles, a Brazillian electrician on his way to work, was mistaken for a suicide bomber intending to set off a device on the London Transport system. The intelligence agencies had information that an attack similar to the 7/7 event, which killed 54 people and a failed mirror event two weeks later, was imminent.
Various police agencies were involved in the operation to target a property that intelligence had identified as a terrorist base. The overnight strategy was to contain, identify, and arrest all those inside.
A succession of unanticipated scenarios earlier that morning (including the late arrival of one group) delayed the operational kickoff. It meant the team were trying to catch up with a strategy that had already failed.
Could sensemaking have helped? Most definitely. If the team had asked the question that morning, “What’s happening here?” when the first part of the strategy failed, followed by “What do I need to do now? and “Who needs to do it?” they would have realised their strategy had failed, that they now didn’t have an effective strategy and needed a new approach.
What is organisational sensemaking?
Every organisation is on a journey to better capture and interpret data. At the start of that journey, it’s easiest to look backwards and ask, “What happened?”. However, to become a truly data-led company, organisations must move from reacting to the past to proactively preparing for the future.
In other words, when it comes to formal decision-making frameworks, most organisations rely almost exclusively on deliberate empirical analysis of a situation. They miss out on the hidden undercurrents of their peoples’ unvoiced thoughts and concerns and ignore the best predictor for their future success.
Numbers tell you whether you’ve won or lost, succeeded or failed. Organisational sensemaking helps the CFO and the leadership team get ahead of the numbers to see through the eyes and the voice of the people who are interfacing with situations daily to understand how their world is changing and take action before the numbers go south.
Does the current economic turmoil make organisational sensemaking more or less important?
We’ve had a series of novel events over the last few years, and now we have the collapse of the Silicon Valley Bank and the rescue of Credit Suisse. Who knows what next novel and detrimental events are around the next corner?
There’s never been a more critical time to be selective over the type of information we pay heed to. Suppose the leadership team can selectively dip into their people’s latent knowledge about specific business areas and use it to moderate what the more numbers are saying; that can only enhance how the organisation functions.
Related article | What is the ireport finance dashboard?
The best predictor of future success? The collective perceptions of your people!
Capturing insights into your current state is the cornerstone to accurately making sense of your business, but knowing what happened and why only matters if you know how you ended up there. On the other hand, you can only predict and prepare for the future if you know where you are standing today.
By regularly asking for your employees to input on the direction of the business, you’ll be able to:
- better detect emerging trends, threats, and challenges,
- spot opportunities and implement better practices, and
- continuously monitor the health of the business so you can be proactive when issues arise.
How does Tensense go about making sense in organisations?
Tensense is a tool custom-built to surface insights into the current state of your people.
We have built 16 scientifically directed questions that we ask across an organisation, and it’s, on one level, no more complicated than that. However, those 16 questions allow Tensense to quickly pick up that latent knowledge that people have in their organisations that will add to the story. For many organisations, this is the missing piece of data. It allows organisations to take a more predictive view of what’s happening.
The questions are straightforward but designed to elicit an emotional response and gather information. Tensense then uses an algorithm and knowledge to build a map for the organisation for scenario planning and a base decision-making.
Sensemaking sounds like a complex topic, but it can be learned.
What should CFOs look for beyond the P&L and their spreadsheet?
The world is changing for CFOs. There is a requirement for the CFO to become more engaged in the business and become the storyteller. Tensense offers the opportunity to collect a slightly different bit of data than the usual business intelligence dashboard, which will show up things that will affect your P&L and your finances.
Tensense is an early warning system and will flag a problem two or three months before it appears in the financials.
If the numbers are black and white in an organisation’s story, Tensense provides the colour.
Author’s Biography
Written by Karen Stocker, Digital Marketing Professional who has worked for Isosceles since 2004. With a contribution from Jacqueline Hutchings, Head of Marketing and Business Development at Tensense AI.
Connect with Jacqueline on LinkedIn
(Image Source: Shutterstock)