The Rise Of The Future Ready CFO, Tech Leader
The role of CFOs now extends beyond number crunching and encompasses working with top management in strategising and designing growth opportunities
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It’s not easy to be a CFO, nowadays. The last few years have been particularly arduous on the most important profession after the CEO. It’s not easy to be the Tech leader in a company, either. To bring the company to terms with the latest tech breakthroughs, and keep innovations, is a task in itself.
The role of a CFOs is expanding, which at times encompasses technology, risk compliance, cyber security, digital transformation, big data and analytics, and on and on. More and more, financial executives are stepping into crucial roles, working side by side with top management in strategising and designing growth opportunities, and implementing and assessing them. Ask any CFO nowadays, and s/he will confess that as technology progresses, the number of hats a CFO wears is multifarious.
Beyond crunching figures, they have to spot profitable business opportunities, navigate complex merger & acquisition issues, besides crafting long-term management strategies, and hone their communication skills to be able to put their vision across. For this, they require a deeper understanding of strategy, and a flair for leadership and communication.
Often a CFO is the second-most important person in an organisation, after the CEO. A CFO’s nod has a major bearing on future finances of a company. So, it’s with great hesitance that BW Businessworld, along with YES BANK, has put together an issue dedicated to the integrity, perspicacity and terrier-like tenacity of the best CFOs.
Even as the CFO’s role is becoming more complex, accountability is mounting. Blame it on the global financial crisis. CFOs not only have to keep an eagle’s eye on potential risks but also to balance the job of capital allocation along with coming up with a strategic vision for the top honchos.
Gone, then, are the days when CFOs merely sat in front of computers and crunched numbers and tracked EBIDTA margins. They now actively participate in many large decisions that shape the future of the organisation they work for. The fact of the matter is that the role of a CFO is not going to be so simple anymore. It is turning into one of the most challenging and difficult roles to fulfil, especially when the future is constantly changing.
The Tech leaders often act in tandem with the CFO to bring about large-scale changes.
In an era, when there are multiple challenges and where product life-span is getting shorter, businesses have to heavily rely on the financial acumen of CFOs to manage finances.
As a CFO is the right-hand man of a CEO — one who is needed to assess financial implications of decisions — the call is increasingly growing that CFOs have to move beyond spreadsheets and numbers to lead business strategy. In this era, the competitive intensity is ever-increasing, and the call on the CFO is to become more future ready.
Anticipate, and think long term
On speaking to scores of industry leaders including CFOs, BW Businessworld put together a list of characteristics that could turn a CFO future ready. It was a jury that finally zeroed in on the names. The same drill was followed for the Tech leaders, for the digital transformation awards.
For the CFOs, it begins with the sharpest skill of all: anticipating or capable of spotting an ever-changing trend on the shifting sands of stocks and shares. Given that change is a constant, CFOs need to be perspicacious enough to see the small clouds on the horizon or catch the slightest winds of change early enough. They need to be nimble of mind and manner to shift gears, and enlarge or curtail capital allocation. A CFO is obviously good at understanding numbers, crunching them and discovering patterns. Figures, though, only reveal the past. A CFO has to, therefore, be able to use those patterns to anticipate and envisage turnarounds in the business environment.
While all CFOs looks at short-, medium- and long-term goals (and trends), the more savvy ones devote more time to the last named.
Focus on quality information
The future will increasingly be driven by data analytics, whether to spot new customers, markets, trends and behaviours. In order to provide quality and relevant information, however, CFOs will have to collect and collate quality and relevant information. In a data-analytics driven world, they have to be more detail-oriented.
The tech leader helps the team in an information-driven world where there is information overdose. Refining the humungous data to uncover significant patterns and highlighting the relevant ones will result in enormous advantages and compress costs.
Swift to adapt
Research has shown that CFOs who excel in adapting to changing environments are more successful. This is not an easy skill to master. Adapting to change means that they will now have to deal with new situations; hence, they have to progressively utilise their intuition and experience to deal with new and, perhaps, uncommon situations.
Being a CFO means you will have to face new situations, which no book can help you solve. Those who swiftly adapt can scan the fast-changing ecorama and plot the growth of a company.
Generally, we think that a great CFO knows everything happening in a company. S/he knows exactly how much and where margins exist and which products command better profits. What is more important, though, is whether a high-performing CFO is making the right decision in order to accomplish this growth.
S/he can take decisions faster, earlier and with greater conviction. S/he does that consistently even with inadequate resources or incomplete information. This allows the team to think out of the box as well and to showcase their talents to the maximum.
On the other hand, high-IQ CEOs might struggle with decisiveness; while the quality of their decisions is often better, they take time to set priorities for which the whole team pays a higher price. These decisions might be smart but too slow, which would then turn out to be a bottleneck and render the team frustrated or overcautious.
Successful CFOs know that taking time to make a decision is better than taking hurried ones. They know that they require all relevant information. But successful CFOs also anticipate the impact if their call turns out to be contrary to an ever-changing situation. This helps them take a more comprehensive decision, which then frees the team to take dicey decisions.
Strong CFOs need to balance stakeholders’ priorities and a company’s goals. Then, getting the people on board with your performance and aligning them with the goal of value creation. CFOs who can align stakeholders interests with their result orientation have proved more successful.
In boom times, CFOs are usually less cautious. As expansive growth improves a company’s performance, a CFO usually does not see the need to cut corners or investments. When boom turns to bust, however, CFOs have to be bold and imaginative and lead from the front.
Tying financial rigour to strategic insight is not easy. No. It’s not easy to be a CFO nowadays.
That’s why we have come out with this special issue celebrating the Best CFOs and Best Tech Leaders, showcasing how they are growing and guiding organisations. This issue commemorates the many rigours of being a modern-day, future-ready CFO, and future-ready Tech leader. We call them the changemakers.