In a fast-changing world, the challenge of transformation is one almost every business will need to embrace at some point in their journey.
One area which is driving substantial change for many industries in recent years is the need to become better. Whether that is organisations becoming greener, cleaner and more efficient, or reappraising the impact they have on people and society at large.
This is forcing many companies to overhaul not just how things are done, but also the very nature of what they do. Organisations are reassessing their entire value chain – from the goods and services they offer to how they make, move or sell them. Such self-disruption invariably unlocks efficiencies, new ways of working, potential collaborations, and innovation breakthroughs.
Whether it is cars moving away from combustion engines, or hydro, solar and wind power being the future of the energy sector, it is fair to say many industries will be completely reshaped in the next decade or so.
Those helping to create and drive change within an organisation are most often a trio of the CEO, COO and CTO. However, it is important to also consider the impact the CFO, or finance director, and their team have on this journey.
Any company undertaking rapid acceleration into a new operating model will inevitably require a strong finance team to support the introduction of different products, a change in business focus and new revenue streams. A high-calibre finance team is essential to help the business navigate the breadth of complexities at play. This support extends from effectively running emerging and traditional operations concurrently, to continually appraising the business on the impact of these changes.
Transformation may well be essential and positive, but it is rarely a smooth process and can feel like a leap of faith to some. The role of the finance team is to support the business through this transition and evolve beyond being solely an enabling function. It is our job to eek-out the implications and meaning behind the numbers.
Bringing about significant change in any business will require the finance department to become a strategic business partner at the centre of the decision-making process. Changing the perception of our role will provide more scope for financial directors and their teams to input into the wider business, including being able to provide a clear view on how best to make investments.
While change is underway in almost every industry, I would argue one of the biggest transformations happening right now is with my employer, Philip Morris International (PMI).
The company has been in the business of combustion since its inception, but we are now at the vanguard of going smoke-free. We are the only major tobacco company to have made the commitment to stop selling cigarettes, which we’re looking to replace with science-based, smoke-free alternatives. There are parallels with similar ambitions in the automotive and energy sectors, but what marks us out is our pace and scale of our transformation.
PMI has invested more than $8.1 billion into the research and commercialisation of smoke-free products since 2008. And in our 2021 third-quarter results, more than a quarter of our worldwide net revenue came from smoke-free products, whereas in 2015 it was virtually zero. Our ambition is to exceed 50 percent of net revenue from smoke-free alternatives by 2025. This isn’t just progress, this is change.
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As a finance professional in the market, our job is to reflect the direction of the global business transformation, assessing local opportunities with a critical eye of the landscape locally. The same is true of financial directorss in other businesses in pursuit of transformation– the scope of the job becomes more substantial, but the upside is that so do the opportunities.