The world is changing fast; CFOs need to continually adapt and respond to add real value to their organisations.
A CFO I worked with was once asked for his thoughts on long-term planning. Quick as a flash, he replied: “I stamp it out wherever I see it.”
That quip underlies a real phenomenon. We’re in an age of digital transformation; software is eating the world, and all companies are dependent on binary code. Complex geopolitics and the pandemic are also thrown into the mix. Who can know what’s around the corner, never mind five years out?
But the very fact that this CFO was asked the question points to the fact that the modern finance leader has become far more than a glorified accountant. The modern CFO is expected to be a source of insight and a reader of the future.
The bigger picture
That upgraded CFO job spec is part of a broader change in the C-suite. The CIO has to be far more than an IT break/fix leader whose job is to keep the datacentre lights on. The CHRO isn’t just a recruiter, but the person who gets the most out of people, helping them set and surpass goals and deliver their best selves. All the C-suite must work together and understand what is happening with their colleagues’ departments: look at how close chief sales officers and chief marketing officers are becoming.
Progressive IT departments are adopting agile and related fast-tracks to software development and project management. Likewise, finance functions need to adopt a scrum mentality to optimise business planning, innovation and product development. The greater the external uncertainty, the more urgent the need to plan but, just as in a scrum IT project, the plans must be iterative, rapid-fire, broken down into component pieces, with the ability to course-correct, disassemble and reassemble on the fly.
It may be some time before we can realistically look years ahead and make confident projections. However, the smart CFO should still have a one-year budget and set of actions within that timeframe, with plans A, B, C and more already in place when fast adaptations are needed.
The idea of having a plan and sticking to it is a relic we need to jettison. We all need to be able to pivot to fast-growth opportunities. We can’t exist in a vacuum: all C-suite executives have a duty to apply their learning across the organisation. The CFO may not always need to make their voice heard, but they need to keep a weather eye in what’s going on. Is marketing spend driving sales-qualified leads and is corporate messaging driving demand? Is R&D driving new product sales? These aren’t traditionally core questions, but they are areas where the knowledge of balance sheets, financial planning, payback and performance indicators are a boon.
Wnat more on the Digital Finance Function? We recommend these articles.
The speed of business is faster than ever. Information flows in real-time. Startups rise at warp speed and are now viewed as credible because they sit atop gushers of capital. Competitors come from adjacent markets. Sectors change rapidly, and so do channels to market. The business-to-consumer world gives us clues to what happens next in business-to-business: think of the user experience and the adoption of social tools in business collaboration.
What Bill Gates once called “business at the speed of thought” is reflected in software. Enterprise applications now look different by role, vertical or activity, and the emerging realisation is that the best UI is no UI. The paradigm has moved to a feeling that software should come to the user as a smart digital assistant: the code does the hard work and anticipates next actions based on past interactions. The user approves actions as an overseeing gatekeeper, leaving room to innovate and improve rather than search and input.
Some things don’t change: CFOs still have to be the backstops, the voices of reason and risk flaggers of the boardroom. They need to have a readymade response when ‘black swan’ events occur – and even a global pandemic is not without precedent, no matter the prevailing wisdom. But CFOs also have to be playmakers and coaches, supporting the strategic objectives and combing the numbers to identify the new opportunities unseen or rejected by peers or company rivals.
To do this, they have to retain an abiding curiosity in how things work and how they can work better. That means getting out of their offices and spending time with people who don’t work in finance. They must defend but also attack. Three-year plans may be out of the window for now, but that leaves space for a more dynamic approach as we wait poised for the next twist in the tale.
Gordon Stuart is CFO of Unit 4. He has worked across a diverse range of businesses serving global markets.