To regain control as CFOs, CFOs must evaluate their competencies and personal development in finance, operations and strategy.
A candid evaluation of these three elements will help you determine how to rebalance your role in these VUCA times. Assemble the right team and prioritize those areas that are critical to the future success of your business.
The CFO will increasingly be asked to take on a broader - more operational - leadership role in addition to the core finance role.
There are many good reasons why CEOs and Boards of Directors ask CFOs to take charge of tasks within Operations:
- CFOs are well-informed to challenge the long-standing presuppositions that perpetuate bureaucratic practices;
- CFOs can ensure that available resources end up where they generate the most value;
- CFOs have a wealth of proven experience in meeting cost and operational efficiency objectives;
- And many CFOs welcome a greater role in Operations for several reasons:
- More involvement in driving innovation and the way the company is managed;
- Broadening their own management and leadership skills;
- Provides key members of the finance team with development opportunities through operational responsibilities and secondments, helping to retain talent;
- It brings finance closer to line managers in the company, builds relationships and credibility for the finance team.
However, there are also disadvantages.
Impartiality has always been an important part of the CFO's role. It allows them to ask tough questions and maintain a high level of integrity, which is then reflected in their reporting to the market. If CFOs are given more responsibilities from Operations, they risk jeopardizing that impartiality. Another concern is the lack of time. Finance professionals at all levels, especially at large companies, are concerned that expanded operational responsibilities are taking too long, leaving CFOs too little time to focus on strategic priorities.
Shape your role to support strategy formation within your organization.
In today's economy, the rules of the game of strategy and competition are changing. Ambitious emerging market competitors take over established companies from developed markets. Established digital players - such as Amazon and Google - are expanding into several other sectors. And newer platform companies — like Uber and Airbnb — are connecting providers and consumers to quickly grab market share to disrupt the market. CFOs must help identify and assess new strategic alternatives and help their organization take the strategic offensive.
Five areas are critical:
1. Supporting innovation and new business models
CFOs must play a key role in building successful partnerships, including effective due diligence on potential partners, aligning incentives between the two partners, and establishing an effective governance model.
2. Develop and deliver a flexible strategy
CFOs need to work on developing and executing agile strategies. For example, they can unlock capital and other resources so that they can be quickly allocated to the new opportunities presented by changed regulations or new customer needs.
3. Strive for long-term growth
CFOs need to identify risks as early as possible and seize opportunities. Such as innovating with new products and services.
4. Inspire with a purpose
CFOs must help embed purpose in the company by leading by example.
5. Support digital
CFOs must help the organization deliver the right digital capability. They need to balance short-term goals with the long-term potential of digital investments to build the ROI business case for large tech investments.