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Profile of the Future-Forward CFO
In the years gone by, finance teams were facilitators rather than drivers of organisational strategy. At the most rudimentary level, CFOs are assigned the responsibility of positioning their companies for growth (both organic and M&A) while keeping costs within acceptable parameters. However, recent paradigm shifts have re-balanced role dynamics to the extent that CFOs (and by extension, their finance teams) now need to have sharp operating acumen to be able to contribute meaningfully to growth. The multitude of factors that set this new normal in motion can be distilled into two key buckets: (i) operational complexities, and (ii) technological acceleration.
In the decade since the last major recession of 2008, CFOs have gradually become more proactive in identifying and capitalising on emergent trends rather than sticking to their previously defensive approach. This is no coincidence. While operational complexity is a broad term in of itself, a major reason for the modern CFO’s expanded job description lies in the fact that business models, competitive landscapes and regulatory backdrops are more intricate than ever. The situation has been further exacerbated by the increased mobilisation of labour forces and trade flows, which has enabled today’s businesses to truly unlock the benefits of globalisation. However, while these benefits are tangible and able to be defined, their underlying risks are far less clear. In order to comprehend, communicate and initiate the changes required to navigate modern business environments, CFOs with strategic experience have emerged as coveted assets to CEOs. This is further underpinned by an Accenture study conducted in 2017, where 40% of CEOs ranked financial reporting as the most critical CFO skillset, whereas strategic planning and development showed the highest growth to end at 32%.
In an age of digital disruption, CFOs have found themselves on the cutting edge of technologies that can be deployed to fortify financial performance, and uncover insights that generate a competitive edge. The advent of Big Data for example, presents a compelling opportunity for companies to codify the stories behind the numbers, and formulate short-term and long-term roadmaps accordingly. However, that is merely the tip of the iceberg when it comes to digitisation. The frenetic pace of digital innovation has automated previously manual systems, procedures and processes within companies, pushing management teams to expand their operating ambitions. On the flip side, however, this has compressed margins and/or shrunk entire industries that used to have formidable presences on the economic landscape. While technological advancement will likely always be a double-edged sword, it has fallen on the CFO and COO to scope out opportunities and threats surfaced by digitisation, and drive renewed strategies.
While technological advancement will likely always be a double-edged sword, it has fallen on the CFO and COO to scope out opportunities and threats surfaced by digitisation, and drive renewed strategies.
The combination of these two factors has reshaped the CFO’s role to become more forward-looking instead of reporting on past information. They now have the CEO’s ear on more than just financial matters to encompass strategic insights, operating modifications and competitive tactics. While the financial reporting aspect of the job still remains a critical feature, being able to coalesce analysis, insights and research to propose revitalised corporate strategies is equally – if not more – valued.
For aspiring CFOs, the message is therefore clear-cut: besides the audit/reporting, capital markets and/or legal/regulatory experience, it could be a worthwhile investment to delve into the operational spectrums of individual businesses to acquire a grassroots knowledge of steering and course-correcting corporate strategy. But not all operating experiences are created equal. To truly position yourself as a thought leader and change initiator, it is important to answer the following questions about a role prior to undertaking it:
- Are you actively involved in originating and implementing new digital technology ideas to refine and optimise current operations?
- Will you be defining growth strategies in conjunction with cross-functional business partners?
- Is there clarity on the financial expectations of stakeholders, and what would constitute a successful corporate strategy?
- Is the business clearly exhibiting a focus on forward-looking change by segregating “maintenance expenditures” like operating expenses and regular capex from the “transformation expenditures” like growth capex?
Being able to answer these questions in the affirmative is a vital step to setting yourself up for success as a CFO in the 21st century. Increased responsibilities aside, the evolving nature of the financial leadership role represents a definite shift to modern enterprises becoming less siloed and rigid. Ultimately, that signals greater collaboration and productivity outcomes for the economy as a whole. CFOs must therefore lead this evolution from bean-counter to strategic bulwark.
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