As the person charged with overseeing the transaction processing for the Department of Homeland Security, U.S. Coast Guard Capt. Larry White says his role is really about moving resources between activities and missions. By having moved the focus from dollars to the quantity of mission-related activities, White's team has helped the Coast Guard embrace the value of activity-based costing.

Steve Player: U.S. Coast Guard Capt. Larry White runs the Coast Guard Finance Center, which does a large amount of the financial transaction processing for the Department of Homeland Security. Larry, can you provide some insight into exactly what this means?

Larry White: We process all of the accounting transactions for the Coast Guard, the Transportation Security Administration (TSA), and the Domestic Nuclear Detection Office (DNDO) within the Department of Homeland Security (DHS). We also process all of the purchase cards for the entire department.

SP: So it's essentially a governmental shared services operation?

White: It is. We have the two primary full-service customers, TSA and DNDO, and then, of course, the Office of Financial Management, which is our primary customer for the purchase cards, although all of the agencies inside DHS are served.

SP: How difficult was it getting to a shared services center within a governmental setting?

White: Well, it's increasingly more challenging. The Office of Management and Budget has set up some guidelines and checklists in order to become a shared services center within the government. They're pursuing something called the Financial Management Line of Business Initiative. They grandfathered in four processing centers, and then anyone else in the federal government that wants to become an official shared services center must meet certain requirements; this also includes private sector companies that would like to enter the business.

SP: They allow outsourced competition as well?

White: Yes, they do. They haven't had any takers at this point that I'm aware of, but this option exists and, in fact, is encouraged.

SP: Was the Coast Guard Finance Center one of the grandfathered organizations, or did it have to meet the new requirements?

White: We haven't completed the checklist and gone through the process yet because we've primarily operated within the Department of Homeland Security, and when you're operating within a single department, there's not a requirement to complete the checklist.

SP: Have you contemplated going outside the department? Or are you all primarily focused within?

White: Right now, our focus is within because Homeland Security has a fair amount of growth and opportunity available as a relatively new federal agency, but we are keeping a close eye on the line of business checklist. In fact, I keep it on my desk, so as we make investment decisions and changes in our operations, we move closer to being in alignment with the Office of Management and Budget's requirements.

SP: What has been your approach or perspective on the work being done?

White: The perspective I've brought to the Coast Guard Finance Center is that large-scale accounting is essentially a production and factory operation. What I've done is to engage the workforce in process improvement. To achieve that, I've taken a three-step approach.

First, we implemented universal production measures for our operations area, making sure that everybody could talk very specifically about what they completed each day, what their backlogs were, and what their error rates were. Over the past year, we've gotten most of our work-in-process down to a one-day backlog.

The second step I've pursued is teaching everybody that continuously improving their process is just as important as doing their daily work. We've achieved significant success by implementing a schedule of having teams brief me on a rotating basis on their process improvement ideas. One team briefs every Tuesday and one team every Thursday. In preparation, the team reviews their value stream map and does some analysis and brainstorming on improvement opportunities; then we have senior staff from systems and operations focus on fixing the problems so that the team can improve their process performance. The key is shifting the focus to the performance of the process, not the individuals.

The third phase, which we haven't reached maturity in, is making sure that we delight our customers and understand our processes better than the customer does. Our goal is to produce value for them that they didn't even know that they could get. As we've gone through a variety of process improvements, we've reached the point where improving the customer interface is critical. This is very exciting because accounting transactions inherently contain a huge amount of information about the people's performance on both sides of a transaction. We've really just begun to focus on how we can identify customers who are starting to have problems before they even know that they're having a problem, and also vendors that may have a problem that's delaying their payments or making their transactions more difficult than they need to be.

SP: This is one thing that I've noticed about the Coast Guard. You have invested very heavily in staying current on the latest innovations in management accounting and management thinking. I know that you've been involved in the CAM-I organization with cost management on a number of different initiatives, as well as different Lean initiatives. What is your philosophy on being involved in these leading-edge innovations?

White: The Coast Guard is a very operational organization; we have about 40,000 military and about 8,000 civilians, and the military rotate jobs about every three to four years. As a consequence, almost everybody in the Coast Guard has a very profound knowledge of the mission of the Coast Guard and the services we provide to the public. Everyone in the Coast Guard is very focused on supporting that mission, so it's very easy for us to embrace financial management activities that have a close relationship to creating more information about operations.

Initiatives like activity-based costing and similar techniques that take the focus off the dollars and put it on the quantity of mission-related activities being done resonate very well throughout the Coast Guard. We have initiatives in risk-based management where we're looking at the operational risk and tying it to dollars and the resources. Then, based on the activities engaged in the mission, we're able to think quantitatively about how to move resources between activities and missions. The advantage the Coast Guard has is that everybody -- military, civilian, the reserve component, and the Auxiliary -- has a very strong commitment to the overall mission of the Coast Guard. Everyone has a fairly deep understanding of the range of activities needed to accomplish our missions and is very focused on improving the management processes in any area they're working in.

SP: Coming from a mission point of view, it seems that flexibility becomes a high priority …

White: It does. This flexibility manifests itself in everything from the design of the asset, the vessel or the airplane, to the training and the readiness of the crews. It's a multidimensional challenge to keep someone highly trained to the primary mission they're most likely to encounter, and yet at the same time to maintain a high level of training in a much wider variety of missions so that they can quickly respond to something like a 9/11 or a Hurricane Katrina.

SP: Larry, we have talked about how sometimes in government organizations people hoard things. What are some of the factors that cause this hoarding, and how do you overcome it?

White: I think that it's not just a government phenomenon. The budget process, which is, of course, a dominant process in the federal government but also quite significant everywhere else, doesn't lend itself to the creation of trust. What I've found over the years is that the budget process itself typically engenders bad behavior, and managers, including financial managers, often don't understand the signals that they send when they talk about funding and resources. But if you can clear up those signals and ensure that people understand that it really is all about the mission, then they can start to trust that they will be given the resources they need based on the mission they're given and the situation they're up against, and they'll be willing to do with less when needed. Once you create this trust and this understanding, then you can make some huge strides forward. If you just do a purely financial budget once a year and hold everyone to it without discussion, you send a lot of really bad signals and get a lot of hoarding.

SP: You used a word that's very interesting to me: "trust." What do you do to establish trust? How can a finance professional engender trust?

White: For me, it's a two-phase process. First, the financial manager has to take the time to thoroughly understand their organization's operations -- especially those that create customer value. You have to walk in your peers' shoes, walk around their operations, show that you're committed to them, and demonstrate that you consider their success to be part of your success.

The second thing is that you need to have clear channels of communication. It is vital that you communicate what's going well and what's not going well financially. You have to let people have a voice in financial decisions and get their perspective and thinking out on the table. Initially, because of the years of conditioning, there will be some gamesmanship. But you have to be prepared for that. Once they see that you're sincere and interested, people usually breathe a huge sigh of relief.

One of the ways in which I've demonstrated this in some of my jobs is that I've taken responsibility for doing budgeting for other departments. Rather than have someone who's not very interested in creating a realistic budget do it, I send over someone from the comptroller's staff to do their budget or help walk them through it. Then I have my person come and brief me on behalf of the other department, and I ask them the hard questions. When the other department head and I meet, most issues have been ironed out, they don't feel grilled or defensive, and we can focus on more strategic issues. I have found that this works well because it relieves another division of an onerous task and they view it as an expression of sincere interest and support on the comptroller's part.

SP: Your career at the Coast Guard has stayed mostly in financial management. How has this helped or hurt you as you have progressed?

White: What the Coast Guard values is leadership in its officer corps and senior enlisted personnel. While I didn't go back out into the field and direct Coast Guard operations, I did rotate between staff assignments in Washington, D.C., and jobs at Coast Guard units where I managed staffs as large as people of my rank assigned to ships and shore stations. Throughout my career, I made a specific effort to communicate the fact that I valued, respected, and practiced good leadership.

I always felt that if you're going to specialize, you should prove that you are the subject matter expert in your field. So, over the course of the years I have made time to pass the Certified Management Accounting (CMA) exam, the CPA exam, and then, when they were available, the Certified Government Financial Manager (CGFM) exam, which is offered by the Association of Government Accountants, and the Certified Financial Manager (CFM) exam, when the IMA first came out with it. I have always tried to maintain a continuous flow of expertise and ideas. Eventually, this led me to enroll the Coast Guard in the CAM-I organization in an effort to build ongoing organizational professional expertise among our younger financial managers. This let junior financial managers across the Coast Guard know that I was committed to providing them with access to some of the best information available in the areas of strategic cost management and strategic financial management.

SP: You led not only by putting your people in position to gain knowledge, but also by example, by going after the different certifications yourself …

White: Yes. Over the years I've been involved in a number of organizations: the Institute of Management Accountants, the AICPA, and the Association of Government Accountants, for example. Since I've had a career solely in the Coast Guard -- and I've really been in a Coast Guard uniform since I was 18 years old and entered the Academy -- I felt that it was important to gain an external perspective on the Coast Guard and a perspective on financial management that was broader than that in the Coast Guard. My experiences outside the Coast Guard have taught me that the Coast Guard is truly a fabulous organization to work in. It has a mission that's inspirational, and it does use a lot of the very best practices that are available to leaders in all areas, including financial management.

SP: What do you think are some of the benefits of being involved in these professional organizations? For those people in financial management, how would you respond to them if they're considering how they use their scarce free time?

White: Well, the first thing is that you're a lot more confident in your job if you have a network and if you have options. Being involved in professional associations, particularly in a leadership role, gives you a good network and you gain insight into how your leadership and professional expertise stands in comparison to that of a wide range of business professionals.

Second, it gives you a broader perspective. When you work only within your own company, you tend to get focused on your company's problems, and you imagine that the grass is greener somewhere else. When it comes to addressing professional challenges, innovative answers are often found outside the perspective of your company, so involvement in professional associations keeps you continuously in touch with what's going on in the profession and at other companies. There's an old saying: Act like an insider, think like an outsider. Professional association involvement facilitates doing this.

Finally, active involvement in professional organizations leads to certification and continuing education opportunities as a more formal way to demonstrate your expertise and builds a resume that shows you're committed to professional expertise and leadership and can get along in a wide variety of organizations and situations.

SP: Well, certainly I've seen this in the CAM-I organization while working directly with you, and even more specifically in the IMA, where I know that you rose up through the ranks to be national chairman. What was that journey like, and what advice would you have for people aspiring to advance within their professional organization? How did you reach the top of the IMA?

White: Well, it started out with passing the certification exam for the IMA -- the CMA. I found the subject matter to be directly applicable to business decision-making and the accountant who's in business and wants to have a strategic say in his organization rather than just do debits, credits, and financial accounting reports in accordance with GAAP.

I was probably a member for four or five years before I actually went to an event. I joined the local chapter, volunteered to be an officer in the chapter, did well at the position, and was asked to be chapter president. I stepped forward to do this because, frankly, I knew that I was being transferred and I wasn't sure that I'd have another chance. I enjoyed leading the local management accounting community tremendously. After being chapter president, I expressed an interest in becoming involved at the state or national level and was accepted for an IMA national committee, where I took a very active role. After a couple of years, I asked to be nominated for a national board position and then served as chair of three national committees. Along the way, I was also involved with the AICPA, CAM-I, AGA, and the American Society of Military Comptrollers, which helped me to broaden my professional association experience.

The key to successful professional involvement in organizations really isn't much different from the key to success at work. Be committed to making a difference; take well-thought-out, value-based positions; live up to your commitments; listen to others; find positive actions to take; and be a positive force with others.

SP: It was certainly a great honor for you and a great honor for the Coast Guard for you to have had that position. I think I hear at least two important lessons: First, find an area that you're interested in and that's beneficial to your career, and also one where you've got people you like working with. And then second, the more you give, the more you get back in return …

White: It's important, for your individual success and personal satisfaction, to get involved in something that you have passion for. For me, this was always management accounting, and in particular the area of strategic cost management. I believe that this is the area of accounting where you can contribute most directly to the operations and the success of your organization.

A great deal of what drove my professional association activity was pursuing opportunities to talk and associate with other people who were interested in management accounting and cost management. It was good for me professionally and personally because I found a great many professional role models over the years. I consider myself just lucky that I enjoyed talking about professional subject matters so much, but I think that if you're going to go to work every day, you should have passion for the work. I encourage people to find what they're passionate about and then pursue it in a significant way. In the Coast Guard, we have a saying: It's not just a job, it's an adventure. Every professional needs to create their own adventure.

SP: What other advice do you have for people just getting started?

White: Within accounting and financial management, modern folklore presents a very traditional road that a lot of young people take. They go to work for an audit firm and then at some point transition to private industry.

I think that a major problem in U.S. financial management is that we have a very financial accounting-oriented view of the world of business. There is a huge opportunity for better and more efficient decision-making through a deeper understanding and better application of management accounting and strategic cost management techniques. American business needs to demand the accounting and financial expertise to really build businesses through more focuses on process improvement and operational excellence for manufacturing and services. Most financial planning and analysis in businesses today is done by MBAs with limited accounting education, when an undergraduate with a strong management accounting education would have all the necessary knowledge.

America's best and brightest accounting students often don't consider starting their careers anywhere other than audit and assurance firms, and they're educated almost exclusively for financial accounting and auditing. My advice to young people would be to think broadly about what they want to do, particularly if they are oriented toward accounting and financial management. I think that the opportunities in management accounting are much more exciting and creative -- being part of making business decisions, not just checking the accounting.

Unfortunately, the opportunities in industry and for management accounting are less obvious to the typical accounting student than they are in the public accounting sector. I hope that U.S. businesses will start to demand more than just GAAP accounting training from our colleges and universities. We increasingly need people who specialize in management accounting to keep the U.S. competitive in a global economy and create strategic advantages for U.S. businesses.