INTERNATIONAL POWERBASES ARE SHIFTING and the pace of market evolution is faster than it has ever been. Organisations need to respond. They need to adapt and they need to be agile. Internally, responsibilities are streamlined or expanded, roles are merged and separated and with this evolution comes the need for new and different skill sets. Today the finance director is expected to be far more of a commercial leader within an organisation compared to a decade ago. A skilful FD can add value to crucial business decisions; helping to identify differentiators in a competitive market place, both for the organisation and its products and services, while maintaining a firm grip on costs and risk.
The FD will already have a sound grasp of internal dynamics – which departments make the money and those that are struggling to contribute. They will be feeding this in to strategic planning. Today’s FD must invest time to build three additional key skills; strategic awareness, commerciality and strong leadership.
Strategic awareness allows an FD to support their company to better understand opportunities and threats. Even the most unlikely ideas can find grounding with a strong enough vision for what the world and the company might look like in a few years time. An organisation’s leaders cannot afford to be blind to changes that are occurring in the world around them.
Take payments for example; technology in this digital age means that we are constantly connected; constantly online, and now consumers demand real-time payments services. As we are seeing with social media, this consumer trend does not stop at personal interactions, but is transferring into the world of business. Today’s FDs must keep pace with the future trends in the technology, internet and mobile spaces and understand how this might change the expectations of the marketplace as a whole. Losing sight of an evolution in consumer behaviour, such as the rise of the internet and the ability to make payments from a mobile device, anytime, anywhere, has already cost some businesses dearly.
Building on strategic awareness, comes commerciality. This goes beyond reading a profit and loss sheet, and even beyond the numbers, cost control and risk reduction. The ability to help identify competitive differentiation in complex, international, markets is a key requirement of the modern FD. Whatever your line of business, you will have competition, some evident today, others not so. Across industries, barriers to entry are being removed. This, for example, will become increasingly true in the banking sector, with the introduction of the Account Switching service in September. This will allow customers to change their bank provider seamlessly, causing retail banks to grapple with how to set themselves apart from the crowd.
The responsible FD must therefore be sensitive to the threat of customer dissatisfaction and as the first person to see the reality of a failing business model, they must take proactive action to pre-empt this across a company’s leadership team. High performing FDs can also bring market understanding and competitor awareness to help support a strategic change.
The final important pillar of the new FD role is that of leadership. Businesses are increasingly expected to be experts at tackling complicated corporate governance issues, complex regulatory requirements and, particularly as we have seen with the UK banks, demonstrate their financial health to investors, stakeholders, and in some cases, government. With the economy still in recovery mode, company boards are turning, more so than ever, to the finance executive for corporate leadership. With this in mind, the contemporary FD doesn’t just hold influence over the finance function, but also over company decision makers and employees.
It is clear that the role of the FD has changed significantly from traditional ‘score keeper’ to one of strategic business leader. The future is far too important to leave to someone else. Your vision may not prove to be right, but pretty soon, tomorrow will have happened yesterday. Today’s FD must be commercial beyond the numbers, and use their strategic understanding to maximise their ability to help lead their organisations to a successful future.
Adam Kennedy, is product director at VocaLink and will be speaking at the Financial Director Summit on 20 June