The Role Of The CFO In A “Business Unusual” World

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Today's business conditions are loaded with ambiguity, uncertainty and unpredictability, which creates an exciting opportunity for those CFOs who are willing to step up.

The CFO role has been evolving for years and will continue to change. As with so many other aspects of business, Covid-19 has accelerated and intensified its redefinition, creating urgency for CFOs to adapt or see their careers and businesses imperiled by maintaining the status quo.

Gone is any notion of “BAU” — “business as usual” — upon which the CFO and their team relied for the planning, forecasting, budgeting, analysis, reporting and control functions that were historically core responsibilities. Today business conditions are highly unusual — loaded with ambiguity, uncertainty and unpredictability.

• Supply chains are unreliable.

• Customers’ needs and preferences have changed, with profound financial impacts.

• Employees have new expectations and requirements to perform effectively.

As a result of these and other factors disrupting business model norms, historical practices foundational to the finance function have lost relevance.

These conditions create an exciting opportunity for the CFO to contribute well beyond their traditional job description, but only for those finance leaders who can refresh their own concept of what their contributions can be, upskill, strengthen their leadership and re-think the talent strategy and capabilities requirements for the function.

Four recommendations for CFOs to rise to the challenge

 1. Reframe the definition of how the CFO role adds value

The greatest barrier to equipping the CFO to succeed in a “business unusual” world is their ability to reframe why the role exists, and what the priorities of the role are as a result.

Reframing, very simply, is the ability to see a current situation from a different perspective. The ability to look at a situation and see it as something else depends upon the ability to think and feel differently about it. This sounds easy, but can be a challenge as it requires letting go of current, deeply rooted beliefs.

Ask yourself, can you imagine reframing the role …

From: Senior executive responsible for managing the financial actions of a company,

To: Applying financial expertise to being a leader, influencer, and change maker for the business.

Establishing and internalizing a vision of what the role can be is the starting point to becoming a CFO for the “business unusual” world.

2. Get closer to the customer

We are past the point where a silo-based style of operating can be tolerated, and the CFO is in a unique position to be a role model of how to take down silos that are impediments to anticipating and adapting to customers’ needs.

Start by spending time with customers, listening to learn from their experiences and the situations they face.  The point is not to come away with the next new product idea (although that could happen).  The real value of listening to learn is to develop greater empathy and a deeper understanding of customers’ context for their relationship with you. Having an appreciation for where the customer is coming from, and what motivates them, has huge ramifications for how they engage with a brand, and as a result how their actions and decisions affect the drivers of financial results.

Relying upon research reports, survey results, and summaries of customer interviews is at best a stopgap. There is no substitute for the CFO, along with all of their c-suite colleagues, to make spending time with customers to listen part of their routine.

3. Advance the CFO relationship with the rest of the company

The CFO is in a unique position to help the rest of the organization connect the dots between their decisions and actions, and business model drivers of financial outcomes.

This requires moving beyond providing routine updates on financial results, issuing reports and managing budgeting and forecasting. The opportunity is to foster dialog that integrates customer insights, emerging trends and data analytics as well as financial results to shape innovative solutions to pressing problems and future opportunities — helping to fill the innovation pipeline with incremental and disruptive possibilities.

Too often the CFO is seen as an approver and manager, versus an active partner in designing the future. Redefining the relationship with the rest of the team is a first step to being looked to as a forward-thinking strategist and thought partner.

4. Upgrade the Finance team’s skills and capabilities

Automation will continue to shift basic Finance tasks from people to machine. This creates the opening for the CFO to elevate their role, which also requires building new leadership, communications and technical skills to make the move.  It means identifying and acting upon the implications for the Finance team structure, skills and capabilities.

Failing to address the talent strategy and new capabilities requirements means the team will become a more automated version of its former self – a huge shortfall versus what is possible, and what the business needs.

Critical questions to ask to shape the future state Finance team include:

• Do we have new planning frameworks to support planning when you cannot plan on yesterday’s terms?

• Are we developing leading-edge data analytics capabilities, or do we have access to these elsewhere in the organization?

• Are we putting enough emphasis on defining and monitoring leading indicators as they become as/more critical than lagging indicators in this environment? Do metrics and scorecards need an overhaul?

• Are we disciplined about detecting weak signals that foreshadow future disruptions or opportunities where we do not want to be caught flat-footed?

• Are we putting sufficient emphasis on communications skills, process and tools for knowledge sharing with the rest of the organization?

• Is the team diverse, and do we listen and learn from the diverse perspectives of different team members as well as colleagues throughout the organization?

The CFO is ideally situated to leverage their expertise and deep knowledge of what drives financial results, to be a strategist, thought partner and true change maker for their business. By reframing their vision of the role, getting closer to the customer, engaging in new ways with colleagues, and updating the function’s talent strategy and capabilities they can enable their business to anticipate, adapt and operate effectively in an environment of high uncertainty, unpredictability and ambiguity.

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