In recent years, the finance function has undergone significant changes, and as leaders in this field, it is crucial to continue driving evolution. To achieve success, finance leaders must fully comprehend the benefits of new technological advancements and initiatives and implement them effectively.
Unfortunately, according to Gartner, Inc., about 70% of finance transformation initiatives do not deliver the desired outcomes. This leaves many finance leaders perplexed and wondering what went wrong. Marco D’Ascoli, a director analyst at Gartner, believes that a deeper understanding of irrational behaviors and behavioral science can help keep finance transformation initiatives on track.
It is well known that humans often act irrationally, which can pose challenges for finance transformation initiatives. However, these irrational behaviors are predictable and their impact can be minimized or changed through behavioral science tactics. These biases are usually caused by cognitive biases, which are ways of interpreting facts and events based on personal beliefs and experiences. The four biases that have the greatest impact on finance transformation are anchoring bias, loss aversion, status quo bias, and overconfidence.
Finance leaders must take action by creating a shortlist of behavioral science tactics to address these cognitive biases and experiment with them in their finance transformation efforts. By doing so, they can overcome obstacles and achieve the goals set for each financial initiative successfully.
