Strategy & Operations » The connected CFO: How will the role continue to evolve beyond finance?

There is much said about the evolving role of the CFO and what the CFO of the future may look like. It is also inescapable that the task of reflecting the past, the present and the future falls to the finance function. In this sense the role of the CFO straddles time and no other executive level role brings together the concerns of the “triple present” (the present of the past, the present of the present, and the present of the future).

Finance is used to bring order and manage risk – accounting for the past and making decisions about the future to pilot the business on its journey forward. However, the portrayal of business reality as financial reality cannot be extended to express the future with the same degree of order and certainty as the past. The world is getting more complex and more uncertain and rationality can only get you so far.

The present of the past

Over the last two decades we have seen a perpetual loading of this role from core control, compliance, stakeholder reporting and leading the finance function to subsuming activities of the COO, strategic thinking and risk management. We have also seen an increased responsibility in finance partnering and advising key management, as well as integrating across the organisation – a shift to “chiefly finance officer”. The CFO is a bit of a misnomer as other functions – not solely finance – are headed under this role.

The pace of change of the CFO role is phenomenally fast. Recent surveys indicate that CFOs feel they are juggling too many responsibilities so despite the high collaboration, is there an increasing sense of dislocation and isolation?

The present of the present

Building a rational view of the world will always be relevant for finance however finance is not all about being rational and intellectual. The CFO role has clearly evolved beyond leading the finance function. Before and during the pandemic the connected CFO was about connection. It goes without saying that what truly connects the world and relationships is not cloud data, digital society or 5G but shared vulnerabilities.

Emerging from the pandemic there has been a pivot to agile, human leadership with fast decision making and learning cycles. These days mentions of psychological safety in the media are particularly common. However, creating psychological safety – the confidence that candour and vulnerability are welcome – in a workplace is truly challenging and takes an unusual degree of commitment and skill.

Now more than ever we need to think about leadership as more than the leader and create and maintain the psychological circumstances that facilitate positive emotions like trust, acceptance and psychological safety. People will be more willing to change, learn and grow and be more adaptive, creative and innovative. Adaptive challenges require adaptive leaders and the capacity for experiments, new discoveries, learning, sense making and innovation. Leaders need to cultivate learning cultures to support adaptation – Satya Nadella talked about moving the culture from “know it alls to learn it alls” – and adaptation begets resilience.

Humans are organising creatures; connecting people and things together in order to achieve remarkable outcomes. An essential role of the CFO is to connect – connecting the dots, connecting with self, people, emotions, business and wider society to achieve remarkable outcomes and the long term value of the business.

 

The present of the future

The connected CFO of the future must be more connective – having an external focus on all stakeholders and the planet will be crucial. The role of finance and the CFO needs to continue to connect across the “triple present” and further to wider societal values and sustainability.

At Johnson Matthey our strategy is interlinked with sustainability and we are beginning to talk about how finance supports this. When most companies talk about ESG and sustainability it is very often how they plan to reduce harms coming out of their organisation. JM’s products, technology and intellectual property sit at the heart of major industrial, manufacturing, and energy production projects all over the world. JM is very well placed to accelerate a cleaner, healthier world through cleaner air, decarbonisation and circularity, and enabling this for customers, partners and consumers.

Together with the ‘present of the past’ and the ‘present of the present’ the CFO must also attend to the ‘present of the future’. It is a fantasy that everything can be predicted and planned these days and the ambiguous nature of the future is a universal source of anxiety – part of the human condition. The next decade will be most disruptive for the CFO with more scrutiny, more accountability, perhaps increased shareholder activism, more social responsibility and ESG and more disruptive technology. Additionally, leaders are under constant pressure from a rapidly changing environment, organisational transformation and the need to manage multiple boundaries as well as  their own psychology. There’s a need for CFOs to be much more tuned into the external environment, particularly the political and social realms.

As we become more digital there will be value on the human skills that are hard to hack and a shift to contextual intelligence – the capacity to join the dots and also connect with people to achieve organisation outcomes. Organisational resilience (e.g. operations and hybrid workforce) will not be sufficient and resilience will need to become an organisational capability of its members. Moving to digital will actually require very human leaders. The success of the CFO may become more about leadership capabilities rather than the role of the leader.

A re-imagining of finance

I get a sense of belonging and purpose from a meaningful and purposeful organisational mission and the larger social and sustainability values. In my work at Johnson Matthey, I speak about “finance for the future” – a finance function that is integrative, supporting the business and wider society rather than “finance of the future” which seems like a mildly self-serving, unanswered existential concern for the finance function itself. 

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