In a recent dialog with an IMO colleague we were asking ourselves the question: what actually is the IMO-Way of dealing with finances? We certainly could not come to final conclusions. It remains a research question. But some aspects of it became a little clearer.
First, we both felt that a solid basis of being able to read and deal with a balance sheet, a profit and loss account, and a cash flow calculation, needs to be available.
Second, and most important: the IMO methodology is built around the three pillars of process – dialog – and biography. These three pillars mean that at IMO we aim to focus on processes first. Then we encourage dialog between people on many different levels. And finally everything we do today needs to become again enriched with soul, empathy, and our individual biography.
In dealing with finances process is first. We aim to mirror actual processes of value creation with financial information in such a way, that the actors are able to see the financial aspects of their value creating acts. While a classical profit and loss account is too far away from the reality of most actors in value creation we aim to develop financial reports which support better visibility of the financial results of each of the actors value creation (per hour, per day, per week, and so on, depending on the information needs).
For this aim the contribution margin report has been developed (in German: Deckungsbeitragsrechung). But those reports often include many calculated figures, like a factor, or like a percentage of general cost attributed to a team. And this can lead to being too far away from the reality of the value creation process.
Some companies in Germany (and probably elsewhere) use what they call the value creation report (in German: Wertbildungsrechnung, see for instance some remarks about this in the 2016 Annual Report of Weleda, downloadable from their website). This is already closer to what we are aiming at.
When we again consider process as one of the three pillars of our IMO approach then we can also work closely with all people involved in such a value creation process and in aiming at creating financial reports that serve each team, so that it knows well where it stands financially. We would not just create such a report in the financial department and provide it to the teams. We would try to involve as many people as still makes sense to create such financial information, to enable each of them to understand it well and be able to relate it their own action of value creation. This would be a nice process of working and looking at processes itself. First should always be the process, then the financial mirror following it.
Then such teams are supported to work more consciously, knowing about their contribution to the value created for the client. Some of those processes will be reviewed under aspects of lean and efficiency – in view of client’s needs. But that is another chapter.