New CFO Expectations
Most professionals at multinationals today now accept that the role of the CFO has changed dramatically in the last five years and that the person in this role is likely to have an evolving, ever- changing set of responsibilities for the foreseeable future. A number of events have taken place in global business to bring about this evolution; economic globalization, huge advances in technology, online commerce and the rapid scaling of businesses into new regions and territories have all combined and intertwined to create a complex web that needs to be navigated by a very competent CFO if a multinational is to deliver on its ambitions.
In this article, we will examine the ways in which a range of financial skill sets now need to be perfectly aligned with a strong strategic mindset in order for a chief financial officer to create the level of influence and impact needed to provide a lasting business legacy.
Diversified skillset
Many CFOs entered the role with strong analytical and financial services backgrounds- they are usually qualified accountants with a strong level of experience in financial planning, accounting and performance management. These were important attributes for the traditional role of the CFO- what is happening now at multinationals across the world is that a new kind of CFO is emerging and this person needs a more diversified set of skills in order to meet the demanding requirements of this role.
A broad and multi-disciplined range of skills is now needed to navigate a complex business landscape and meet time sensitive and pressurized demands from leadership teams within a company. CFOs are now expected to participate in the overall strategy and building blocks of a multinational, not just the finance function. To be in a position to contribute here, they need to fully understand all aspects of a business and how it works, from the ground up. There is now an additional requirement to develop new skills and capabilities that help contribute to their overall understanding of strategy and company direction. The CFO is expected to be a strategist in charge of a team of finance professionals.
They first need to develop an understanding and then advance to a point where understanding evolves into influence - where they can make strategic decisions that change or alter the direction of a company and have a direct impact on revenue streams, company profile, brand reputation and overall profitability. Part of this new diversified skillset that they require is a clear understanding of modern technology and the manner in which it influences business practices. There is no place for a CFO who does not place a strong emphasis on learning and upskilling in the latest technology.
Data and Analytics
Data and analytics have now become a core component of the most valued information at the disposal of today’s CFO. Modern CFOs need to immerse themselves in how data is gathered and more importantly, how best to interpret and apply it. The promise of data analytics is that if understood and applied correctly, it will result in stronger market performance and improved revenue. Bridging the gap between potential and performance is now part of the CFO's responsibility.
The science of data is something that moves the CFO away from being a pure accountant and more towards a person or strategist who has the tools at their disposal to help predict market behavior. Many find that the evolution from accountant to strategist begins in the world of big data. In this world, the CFO moves from the hard facts of reporting towards the much more intangible world of guiding and directing a multinational towards a revenue opportunity that is far from certain.
Data analytics is often only as good as the technology tools available to extract these analytics -this is an area where the CFO will require support and investment to ensure the correct digital tools are available for informed decision making. The focus for the CFO is on extracting actionable insight from up to the minute, accurate data. If the tools are in place to deliver this, this gives the CFO a positive strategic edge when it comes to developing and creating a picture of what the future of the company could look like if a certain course of action is taken. It can be a precarious, even a risky scenario as data driven insights can only reveal so much - and COVID-19 has proven that the best laid plans can fall by the wayside when a dramatic international event causes severe disruption in the marketplace.
Technology
Multinationals now operate in a very technology driven digital economy and most CFOs enter into their roles at a company which has undergone some form of digital transformation in the past five years. The CFO may therefore be faced with new technologies that they have not experienced before, and they are required to upskill and get up to speed very quickly.
CFOs need to adopt a digital mindset; one where they think in terms of innovative technology and how this technology can both help them do their jobs better and lead to revenue generating opportunities in the market. Cloud based technologies are commonplace now and CFOs are expected to operate in this environment and be familiar with the nuances and languages associated with digital processes deployed in the cloud.
They also require a mindset that looks upon technology as a business enabler- their focus needs to be on how this technology can help the company take advantage of realistic opportunities for the next 5 to 10 years. If the information they acquire suggests that the technology is not capable of doing this, then the CFO is another person who needs to come to the table with a plan around investing in more innovative technology that is better suited to the ambitions of the multinational. This can be a crucial decision and it is one they need to get right- there is a balancing act to be achieved between sensible patience and reacting too slowly. The money may be there, but the level of investment needs to be chosen wisely.
Strategist
The CFO of today is looking to maximize every tool, person and resource available within the multinational to provide a strategic edge that can help the company exploit available future opportunities. They are also required to provide financial stability and run the finance function in the here and now so multitasking, firefighting and keeping one eye on the future are all in a day's work for today’s CFO at a modern multinational company.
The edge can come from drawing out actionable insight from these collective resources. The goal is to achieve long-term competitive advantage in the market, solid revenue returns and a reputation for innovative thinking and practices. The CFO needs to examine current projects in development across the business and consider if they are capable on delivering on the ambitious growth plans mandated by the board, wider leadership team and CEO. The CFO will need to put a lot of work into finely tuning this strategic edge to achieve all of this and convince others to come along on the journey.
New Influence
Ultimately, CFOs are considered strategists who are charged with adding value to company structure, performance and direction. To do this they need to develop a level of understanding of how the company operates now, what the market is looking like at present and what opportunities exist that can be taken advantage of. The CFO also plays a significant role in the overall leadership and culture of a multinational. Their role is now very public and accountable, and they are expected to be heavily involved in both the creation and execution of a business strategy.
The role of the CFO has evolved from the early days of budgeting, financial planning and forecasting into a more complex strategic role. It can help to be an accountant or even a full-on strategist, but increasingly it appears that a wide mix of diverse skill sets are needed to manage the complexities of the job. A new set of skill sets may be required in two- or three-year’s time- that is simply the nature of an ever-evolving role. This might sound very challenging but there are positives; CFOs have a wider range of tools and people to help them than ever before. Those that make best use of the resources available will thrive in the competitive environment created by this modern digital economy.