Anat Ashkenazi, Eli Lilly CFO, on Strategic Thinking

• Businesses are responding more quickly than ever to unforeseen circumstances, including war, pandemics, and inflation.
• Incorporating worst-case scenario "what ifs" into the annual planning process can aid corporate leaders in reacting more quickly, even as they need to do so.

Unexpected events can have a ripple effect on the economy and markets, affecting consumer and business confidence and influencing spending and investment decisions on both Main Street and Wall Street.

There are numerous factors contributing to the current situation, including the ongoing conflict between Russia and Ukraine, the potential for another Covid wave, the Federal Reserve's efforts to combat inflation, and geopolitical considerations.

More C-suites are adopting a dynamic planning approach, focusing on shorter-term cycles that allow for quicker reaction to new realities, rather than being tied to a multi-year plan. While companies still need a long-term vision, the cycles within that need to be managed with greater agility.

Planning ahead for unpredictable events, such as inflation, is crucial.

Anat Ashkenazi, CFO of , emphasizes the significance of long-term planning for "what if" scenarios that may not be the base case for a business, as the market and investors are asking a lot of questions about inflation and the C-suite may have to respond in the moment.

In 2020, Eli Lilly's management team ran a "what if" scenario for hyper-inflation, not because they were making a brilliant call on the inflation trajectory, but because they were not visionary. Every year, Eli Lilly management asks big questions as part of their formal planning process, such as "What could cause us to fail to achieve everything we set out to achieve?" and "What could cause us to have a completely different strategy as an organization?"

Lilly faces other significant challenges apart from inflation, such as changes in IP protection and drug pricing laws, which have a greater impact on its financials.

As part of risk management, all companies should ask these questions at both a macro and company-specific level.

Ashkenazi, who served as chief strategy officer at Lilly before taking on the CFO role, says, "We’ve done this religiously."

Ashkenazi states that completing Six Sigma black belt management training, particularly process failure mode analysis, has been beneficial in developing a mindset that leads to greater efficiency and discipline when collecting data, implementing strategic planning, and transforming organizations.

Doing 'what ifs' can help you identify a range of potential risks, even if you get some specific ones wrong.

Lilly collaborates with companies outside its own sector to discuss topics of interest, which Ashkenazi finds beneficial in gaining additional context and expertise. Engaging with CFOs and chief strategy officers from diverse industries can help manage a persistent risk within an organization and avoid the complex issue of discussing these ideas with competitors.

CFOs are more externally focused than other leaders due to the need to interact with shareholders. However, Ashkenazi warns that it is easy to become insular and focused on daily operations. As a C-suite leader, she advises companies to embrace the idea of looking outside and considering the institutional perspective.