Shifting the financial management mindset
Making better and more timely use of resources
Historically, DoD financial management has tended to be more reactive than proactive. At times it may seem as if the DoD has plenty of money to spend, so the focus is on spending it. The reality is that there are constraints. There’s enough money to meet the need, but it’s by no means unlimited. It’s somewhat analogous to an individual with a credit card. Spending can happen freely up to the credit limit, and circumstances may create a compelling reason to use the card… but those spending decisions have real consequences that may not be fully taken into consideration up front.
All too often, this results in excess work and logistical, bureaucratic and time waste on the back end. We believe that by shifting the DoD financial management culture to a more proactive stance, considerable improvements in efficiency and cost-effective use of taxpayer dollars are possible.
Often, the DoD’s financial management stance is forced to be reactive because sufficient time and effort aren’t always put in to making the buy with strategic intent.
“Right” vs. “right now”
The focus on spending highlights the inherent tension between operational requirements and resource stewardship. Putting the mission first is essential, particularly in times of active conflict when time is of the essence. All other priorities become secondary because that procurement has to be made right now: in effect, the operational side doesn’t care about what it will cost or what the fallout might be. The financial side, on the other hand, is deeply concerned not only with making sure resources are available when needed, but also with planning, budgeting, procurement and logistical issues: it’s important to do it right to avoid wasting time, money and effort. This tension naturally results in unplanned-for costs and excess work after the fact.
Scenarios such as this happen frequently in wartime. The operations side is given resources—obligated for a specific purpose, amount and time frame—without doing the up-front planning and work needed to fully document what, where and when, or think about budgets.
For example, supplies or equipment may be purchased whether all of it is needed or not, perhaps because it’s available at a good price and the money is available. On the surface it looks like a smart move, so a snap buying decision gets made without fully considering the need for full documentation, auditability, or even finding a place to store what’s been acquired.
Often, the DoD’s financial management stance is forced to be reactive because sufficient time and effort aren’t always put in to making the buy with strategic intent. Without addressing the full lifecycle of an expenditure up front, DoD financial managers are put in the position of constantly playing catch-up on the back end of the purchase documenting, explaining, and paying for the resource requirement.
The good news is that we believe there are a number of opportunities to make small-scale improvements in financial management practices that foster a proactive culture of intent.
Instilling a culture of intent
The “right now” mindset contributes to a mind-over-money culture that embraces expediency at any cost. The money flows and the mess is, all too often, dealt with later. Doing it “right”—acting with intent and financial responsibility—takes time and effort that are seen as getting in the way of mission requirements, so the necessary activities are given due consideration only when circumstances force the issue. The reactive stance becomes culturally embedded and it seems as if there’s no way out.
A vicious cycle is created that puts finance farther and farther behind, incurring mounting time debt. At some point, that comes home to roost… but with a proactive, strategic mindset and little extra effort to get ahead of the game now it’s possible to make things easier when planning for next year.
In a way, it’s like ignoring upkeep on a car or truck. Failure to do preventive maintenance has no immediate downside, but sooner or later it leads to issues that must be dealt with—painfully. By doing a better job in the first place, that pain can be avoided.
The good news is that we believe there are a number of opportunities to make small-scale improvements in financial management practices that foster a proactive culture of intent. By establishing and nurturing such a culture, the benefits and savings could potentially far outstrip the time and effort required to achieve them.