Finance Process » Why do companies need to become increasingly agile?

Why do companies need to become increasingly agile?

Finance leaders need to support their organisations become more agile, says Ronnie Patton, senior lecturer in professional accounting practice, Ulster University Business School.

A business is ‘agile’ if it can adapt quickly when change is needed. So, the simple answer is that every organisation needs to be agile to survive!

That is nothing new, as organisations have always had to adapt. Business history is littered with examples of organisations that failed to adapt to new circumstances. As a result, they have either failed or suffered a severe reduction in value.

It’s probably fair to say that, in the vast majority of such cases, the key reason for such outcomes was that the internal processes and culture no longer fitted the external environment.

One of the most commonly cited forces of change in the external environment is technology. Technology impacts on both the internal processes and culture as well as the external environment.

It goes without saying that technology is constantly developing. Thus, it is constantly creating change in the external environment.

To continue to be relevant (and thus survive) both internal processes, and the resulting culture, need to keep changing to maintain alignment with the external environment.

The question refers to the need to become increasingly agile, which introduces a further consideration – managers can never think that agility has been achieved. With the increasing speed of change in technology, the fit between internal processes and culture on the one hand, and the external environment on the other, will remain stable for increasingly shorter cycles.

So, agility is no longer enough to ensure survival. Organisations must be increasingly agile.

 What role can a CFO play in transforming their organisation?

The modern CFO is a very different animal to the accountant of the past. One of the most obvious aspects of this change is the nature of the skills that a CFO needs to have. In a report in 2016, ACCA identified the skills that accountants will require in the future and classified these into seven ‘quotients’:

Technical and ethical competence

Intelligence

Creative intelligence

Digital

Emotional intelligence

Vision

Experience.

It is the blend of skills that enables the CFO to play a key role in transforming organisations.

Correctly applying relevant techniques to provide an evidence base for decision-making, planning and control has always been part of the role of a finance professional.

The power of technology now allows larger data sets to be analysed, leading to more robust information and thus, better decisions.

The changing nature of the skill-set of the modern finance professional, which is vital to the success of organisations, might best be illustrated by referring to emotional intelligence.

The reference to culture in the discussion above is relevant in this context.

By offering robust evidence-based conclusions and understanding how individuals will respond to the need for change, the CFO can help to create the culture of an open mindset that is needed to recognise and embrace the need for change, this allowing the internal processes to be adapted to maintain the fit with the external environment.

How key is it for them to be close to the business to play a key role in this process?

Again, the answer is simple – it’s vital!

As noted above, the skills of the CFO mean that it is no longer appropriate for that individual to be ‘the geek who deals with the numbers’ – if that ever was the case.

The skill set discussed above means that the CFO is well placed to understand the organisation, it’s environment and its people.

This understanding then needs to be applied, along with strong and well developed skills of analysis, to ensure that the mission and strategy of the organisation is appropriate for the external environment.

Another key role for the CFO is to be able to support other managers so that they understand the financial impact of their decisions and actions.

Harnessing the power of technology plays a key role so that the finance processes are correctly configured so that they can support, rather than frustrate, the wider business processes. In addition, applying data analytics will provide insight into the trends and forces that the organisation must respond to. This will make a major contribution to successfully implementing and managing strategy.

Share
Was this article helpful?

Comments are closed.

Subscribe to get your daily business insights