No one in business ever thought the pace was slow, but there’s no denying things are moving faster now than ever before.
The main goal? Growth. In Gartner’s recent survey, Gartner 2019 CEO and Senior Business Executive Survey, 53% of respondents mentioned growth in their top three aims for the year.
This has had an impact on the make up on the C-Suite who need to deliver on that goal. Chief data officers have joined our ranks, along with chief digital officers and chief customer officers. All roles to help businesses navigate the complex waters of today’s business environment.
There are some stalwarts though. Among them, the chief financial officer. But look closely and you’ll see that this particular individual has had a pretty dramatic makeover in the past few years. Yes, your CFO still knows their way around a balance sheet and probably has an unhealthy enthusiasm for a spreadsheet, but the successful CFO has become much more…multi-talented.
So, who is this modern CFO? And for those of us in the role, what are the priorities we need to focus on to ensure we are key to delivering critical business growth? It’s different for every business, but from my perspective there are several things that stand out.
More pictures, fewer numbers
I’ll start with a confession. I am not an accountant. I have never been an accountant. Once upon a time, a non-accountant CFO was probably unthinkable in most businesses, but not now. The reality is that the finance function has evolved just as much as every other role. Numbers are just our route to information – they are passive and we need to interpret them and use them to tell a compelling story about our business.
My role is to guide decisions and to do that effectively, I need insight. That means being able to understand the bigger picture, taking in to account the market in which we operate, the economy, and emerging trends and technologies. And that is before looking at all the myriad internal factors from product, service and operations, to employment and customer practices.
You simply can’t get a clear understanding of all these factors purely from numbers. As CFO, I need to move beyond data towards insight that not only can I use to inform decisions, but that I can share across the business in an engaging way in order to guide and support other teams. No one team is responsible for growth, so no one team should have exclusive access to the insight that will help the company hit its KPIs at every level.
I want it now
Insight is critical, but it’s only truly insight if it is timely and continuous. As a business we have to be as agile as possible to respond to customer and market demands and out-of-date information simply won’t cut it.
Like the majority of software businesses, we use an agile development model rather than the more traditional method of annual or bi-annual product launches. The reason is simple. Like us, our clients need access to new ways to improve their business now. And, following the old adage that perfection is the enemy of the good, it’s now accepted that excellent, as opposed to perfect, solutions are acceptable as long as a) they are fast and b) any issues are resolved quickly. We meet clients’ needs better and they can succeed faster.
Today’s CFO needs to follow this lead. Gather as much insight as we can, as accurately as we can, and then make the decisions that we believe will have the greatest positive impact at that moment in time.
Our decisions will not be perfect. It’s important to not think of this as failure. OK, it’s not what we want to happen, but success requires an element of risk and as long as we mitigate that risk with as much insight as possible, it’s not failure. We learn, adapt and move on. The trick is to do it quickly. Again, this comes back to insight. If we make a decision and it is not leading to the successful outcome we envisaged, we need to know quickly and be smart enough to pivot to a new path.
Rather than ‘failing fast’ which is a popular phrase (and a good one, I admit), I prefer to think of this as ‘knowledgeable speed’. That’s because we’re making immediate informed, data-driven choices to maximise our chances of long-term ROI. This means the modern CFO role is now much more aligned to strategic business development than to fiscal calendars and quarterly reports. Of course, financial and accounting processes and procedures will always be adhered to, but they are part of our reporting suite and no longer an end goal in themselves.
Listen to the voices around you
Hard data turned into insight is a relatively straightforward proposition (note that is not the same thing as being easy to achieve!). But what this lacks is input about ‘softer’ areas related to our most critical assets; people. More specifically employees and customers. Any CFO not listening to them is missing out on a huge amount of insight.
Used in the right way, input gathered from these two groups can be the catalyst for business transformation. Not only can it help to predict changing behaviours and inform new strategic direction, but a continual, two-way dialogue with both customers and employees ensures that they are on board with change as it happens.
Make no mistake. This is not just a ‘touchy-feely’ approach to management, but a real driver of success, since change driven by everyone is much more likely to lead to long-term results than initiatives led by an individual’s ‘vision’.
What does this mean for the modern CFO?
The point I really want to get across here is that the modern CFO is in a remarkable situation. We are uniquely positioned to enable to organisation to capitalise on what are still seen as rather niche areas; customer experience and the voice of the employee.
Why is that? We know the foundations of our business better than almost anyone else (better than the CEO in some companies, I suspect!). There is no element of the financials and business strategy that we don’t breathe, day and night. But what we can do now is to take that foundation and begin to build on it with richer insights.
In part, this means operational data, though that’s nothing new. What really excites me is the opportunity to bring a much deeper understanding of customers and employees into our decision-making processes.
For example, often our employees, particularly those on the front line, have a very clear view on processes and issues that aren’t working for customers. But to those of us not speaking to customers on a daily basis, they remain a mystery.
Providing a clear, effective framework for employees to report these back into the business can have a tremendous impact. Escalate this by rolling up multiple smaller issues, and this can begin to inform business strategy and investment decisions.
I strongly encourage any CFO (or indeed any other CXO) to start looking at how to make the most of the voices of the customer and employee to augment your existing data. Some of that data will not come in neat spreadsheet form, but it is much easier to analyse, manipulate and act upon than you might think. And its richness is extraordinary.
As a CFO I need to drive financial success in an agile, ever-changing industry. Numbers won’t cut it. Understanding everything about my business is now the minimal requirement for staying ahead. And ‘everything’ is only getting bigger.
About the author:
Halvor W. Stokke joined Confirmit as CFO in 2017 and holds responsibility for the company’s financial stability and growth. In this position, he focuses on the long-term strategy for Confirmit, including both organic growth and all merger and acquisition opportunities.