Saving energy is not only good for the environment, but is good for a business. A couple of years ago I was introduced to the Property Assessed Clean Energy (PACE) program here in MO. I believe the financial benefits of the PACE program, especially from a financing perspective, are not well known among Controllers and CFO’s. Basically, the program provides a unique financing program for clean energy retrofits, allowing the upgrades to be financed through property taxes. In the case of our project several years ago, a $600,000 retrofit for lighting, roofing and HVAC upgrades, the advantages were:• Ease of qualification. Working with a consulting firm that specializes in PACE financing, the process was fast and simple.

  • 100% financing. We were able to finance the entire amount of our project.
  • Stand-alone financing. The PACE financing had no impact on our already existing term debt, availability of our working capital line-of-credit, or our borrowing covenants with our lender.
  • Repayment. The loan is re-payed through a property tax assessment, allowing us to extend the loan time frame (10 years) over the normal 5 year balloon for maintenance capital financing.
  • Transferable. If we ever sell the building, the loan accompanies the building, as it is part of the property tax assessment.
We are a growing company, and are constantly evaluating the best way to deploy our working capital. In the case of PACE, it allowed us to make some critical building improvements without impacting the availability of that working capital to fund our future growth. If you are considering energy retrofits for lighting, HVAC or building envelope, I would strongly encourage looking into PACE.

Recently, in my first blog post, I asked the questions, “Why do financial executives so frequently find themselves following, rather than leading, during a LEAN initiative? Has your company implemented LEAN in the finance/accounting area? If not, why not?” It is my experience that the single biggest obstacle to a creating a truly LEAN culture in an organization is the character of the leaders tasked with implementation. And, among the character traits that we will discuss in these series of blog posts, I truly believe that HUMILITY is at the heart of, and foundational to, any successful effort at LEAN leadership.

If you are like me, a leader who has reached a senior level in their career path, you know that personal ego is no small thing when it comes to your leadership. Properly managed, it can be an effective force in leadership. However, more commonly, it is a destructive force. And, even worse, one that most of us, as leaders, fail to acknowledge or even recognize, LEAN is about acknowledging that our work, no matter how good we feel it is, is NEVER finished. It is a mentality of constant, never-ending improvement. Ego is our natural state. In other words, we constantly seek to reinforce what we already think we know. LEAN leadership is embracing the knowledge that we must constantly work to break out of our natural state. It is changing the assumption that I will be considered talented and intelligent if I can simply come up with unique ideas and then protect them jealously. C.S. Lewis said that, “Humility is not thinking less of yourself, but thinking of yourself less.” LEAN leaders know that their talent is to be deployed not for their own individual good, but for the good of others before themselves. LEAN thinkers know that they are in a battle against waste, and they look out for the fellow warriors on their right and on their left, no matter what position they hold in the organization. They say, “Look, I had a great idea! Now, how fast can someone else improve on it?” And, most importantly, they CELEBRATE that next improvement. This is particularly important for financial leaders, as we are the “gatekeepers” of an organization. We can, very quickly, bring things to a screeching halt. While the “gatekeeper” analogy is appropriate for much of what we do, I would rather we focus on being fellow warriors in the battle against waste. Only a HUMBLE expression of our leadership will allow us to do so.

As a leader, I have been on a LEAN journey for a number of years. But it was only within the last 12 months that I have been exposed to the concept of LEAN accounting. As my interaction with other LEAN leaders has intensified, I have started to ask the question, “Are you doing anything with LEAN in your accounting area?” And, almost without exception, the answer is “no,” or “not yet.” However, this isn’t surprising, as had you asked me the same question just 6 months ago, the answer would have been identical.

My role at Cambridge is unique in that, as COO and CFO, I have a leadership role in both operations and finance. In the world of LEAN, the operations folks are generally the most rapid implementers. This has been true in our case, and most of my LEAN learning has been on the operations side of the business. However, once I was exposed to LEAN accounting, it became clear to me that, absent considerable leadership changes on my part, I was going to quickly become a liability, vs. an asset, in our LEAN efforts. The reality is that any LEAN journey that does not include the accounting and finance areas of an organization is bound to be severely limited in its ability to deliver on all of the wonderful promises of LEAN. The experts in this area like Brian Maskell, Jean Cunningham and Orry Fiume are all passionate in their pointing out that traditional accounting does a poor job of accurately reflecting a company’s financial performance. And that when a company decides to truly embrace LEAN principles, the financial executives are frequently not prepared for how these principles will impact their areas of responsibility. However, this lack of awareness is not the worst part. They point out that the lack of preparedness in the accounting and finance roles will actually HINDER the pace and effectiveness of any LEAN initiative within an organization. So, the obvious question is “Why?” Why do financial executives so frequently find themselves following, rather than leading, during a LEAN initiative? Has your company implemented LEAN in the finance/accounting area? If not, why not? This is intended as the first of a series of blog posts that consider the leadership characteristics that, I believe, are required for a financial executive to move from following to leading a LEAN transformation. Or, at a minimum, if not leading, then acting as a key participant in a LEAN leadership team. First up in the next post…HUMILITY.