We’re living in a period of rapid and profound change, hardly anyone would argue, and this is especially true for business leaders tasked with navigating uncharted territories.
Among them are the CFOs, finance leaders particularly impacted as they grapple with the transformation of the finance function spurred by technology and evolving business norms.
Indeed, the financial landscape is changing dramatically and the need for upskilling to meet new demands is undeniable. The digitization of the finance function is reshaping the role of CFOs, requiring them to develop a broader range of skills and take on added responsibilities.
CFO Series: Leading through Change Means Transforming Uncertainty into Opportunity
Non-traditional CFOs are the New Thing
However, the essence of leadership lies in embracing change, not fearing it. Interestingly, a shift has been observed in the profile of CFOs over the last decade or so, indicating a gradual transition in the skills and experiences deemed valuable for this critical role. As of 2009, 39% of CFOs hired had experience outside the finance function, compared to just 17% before that year.
That’s a big jump that underscores a trend towards a more diverse and adaptable skill set, which is a potent weapon in the CFO’s arsenal to combat uncertainty.
Traditionally, CFOs were expected to have strong financial and analytical skills. Today, however, they need to be well-versed in data analytics, understand the strategic implications of new technologies, and be adaptable to continuous change. The fact that 39% of CFOs hired since 2009 have experience outside the finance function, compared to 17% prior to 2009, underscores this shift towards a more diverse and adaptable skill set.
Are Traditional CFOs Job-Secure?
Beyond technical skills, CFOs must also develop strong communication and leadership abilities. With the growing complexity of their roles, CFOs need to effectively influence and lead their teams, manage investor relations, and oversee a range of functions beyond finance, including:
- Big-picture risk management
- Proactive regulatory compliance
- Rigorous due diligence for M&A transactions
- Maximizing the return on IT and digitalization
- Ensuring rigorous cybersecurity resilience
As the research shows, organizations that have already implemented automation have seen significant productivity gains, and most CFOs are comfortable with technology performing more of the day-to-day accounting tasks in the future.
The rapid pace of change and the need for continuous upskilling can also lead to uncertainty and concerns about job security– and it’s a valid concern, given the significant changes in the finance function and the evolving role of the CFO.
But by embracing these changes and committing to continuous learning and development, CFOs can secure their professional futures and lead their organizations successfully through digital transformation.
The Evolving Role of the CFO
As we’ve discussed in the past, the role of a CFO has evolved dramatically over the last decade, where they were previously responsible for financial reporting, risk management, and ensuring regulatory compliance. Today, however, the role has expanded far beyond these traditional boundaries, driven in part by rapid technological advancements and changing business landscapes.
As mentioned, there has been a significant increase in the number of CFOs with experience outside the finance function, a distinct shift in the background and experiences of individuals stepping into the CFO role.
CFOs Who Come Ready
This shift underscores an important trend – CFOs are no longer seen as mere financial gatekeepers but as strategic business leaders. Their role now extends into strategic planning, digital transformation, data analytics, and cross-functional collaboration. The benefit of having experience outside of finance is twofold: it helps CFOs understand the broader business context and equips them with a diverse skill set that is critical in the fast-paced, ever-changing business environment.
Having a broader perspective allows CFOs to make more informed and strategic decisions, not only considering the financial implications but also understanding the impact on other business areas such as operations, marketing, or IT. This comprehensive view is fundamental in the digital transformation era, where decisions about technology investments and implementations can have far-reaching implications across the organization.
The Need for Adaptability and Diverse Skills
Adaptability and a diverse skill set have become indispensable assets in the rapidly evolving business landscape. CFOs are faced with various challenges that go beyond their traditional financial expertise. These challenges include handling complex data and understanding the impact of technological advancements on businesses.
Data analytics, for instance, has become a daily concept for most financial leaders. Data empowers CFOs with insights to influence strategic decisions, identify opportunities for operational efficiencies, and forecast business trends. That’s why CFOs adept at interpreting data can derive actionable insights that drive business growth.
Strategic thinking, another crucial skill, allows CFOs to participate actively in shaping the direction of their organization. By understanding the broader business context and the implications of various strategic choices, they can provide valuable insights and contribute to the decision-making process in a meaningful way.
The increased interconnectivity of business functions necessitates strong leadership and communication skills. CFOs must articulate their vision, influence their team, and foster cross-functional collaboration to drive digital transformation effectively.
The role of a CFO now includes managing risks associated with technology and cybersecurity, necessitating an understanding of these areas. This diverse range of responsibilities underscores the need for CFOs to continually broaden their skills and adapt to the evolving demands of their role.
It’s clear that the CFOs of today and tomorrow need to wear many hats. They have to be financial experts, strategic thinkers, technology enthusiasts, risk managers, and effective communicators all at once. But with the right mindset and continual upskilling, CFOs can turn these new demands into opportunities.
Transforming Uncertainty into Opportunity
Navigating through the uncertainties and leading in times of change can indeed be challenging for CFOs, especially in small to medium-sized businesses. But, by leveraging their diverse skill sets and adopting a forward-thinking approach, CFOs can turn these challenges into opportunities for innovation and growth.
- Embrace Digital Transformation: By taking the lead in embracing digital within their organizations, CFOs are not just adopting new technologies, but understanding how they can be integrated into existing systems and processes to improve efficiency, drive innovation, and create value. This could involve everything from implementing advanced data analytics to automate financial reporting to leveraging AI and machine learning for predictive analysis.
- Develop a Strategic Mindset: As their role becomes more strategic, CFOs must develop the ability to look beyond the numbers and understand the broader business context, including identifying potential growth opportunities, mitigating risks, and making informed decisions, etc.
- Foster a Culture of Learning: Rapid technological advancements justify CFOs fostering a culture of continuous learning within their teams, encouraging them to upskill and stay updated with the latest industry trends and technologies. This enhances the team’s capabilities and boosts morale and job satisfaction.
- Leverage Diverse Experience: As the data shows, having experience outside the finance function can be a significant advantage. CFOs with diverse backgrounds should leverage this diverse experience to bring fresh perspectives and innovative solutions. This could involve applying insights from other functions, like marketing or operations, to drive financial performance and business growth.
- Build Strong Cross-Functional Relationships: CFOs are uniquely positioned to connect different organizational functions due to their holistic view of the business. By building strong cross-functional relationships, CFOs can promote collaboration, improve information flow, and ensure that strategic decisions are made considering all aspects of the business.
By transforming uncertainty into opportunity, CFOs can secure their professional future and play a crucial role in guiding their organizations through the digital age.
Managing Talent and Developing Skills
As the finance function transforms, so too does the need for new skills and competencies within the team. CFOs, in their expanded role, have an essential part to play in talent management and skill development.
- Identifying Skill Gaps: The first step towards building a future-ready finance team is identifying the current skill gaps. This requires a deep understanding of the evolving industry trends and the corresponding skills needed. Whether it’s proficiency in data analytics, familiarity with new financial tools, or strategic thinking capabilities, CFOs need to assess where their team stands and where they need to go.
- Promoting Continuous Learning: In an era of rapid digital transformation, learning cannot be a one-time activity. CFOs should instill a culture of continuous learning within their teams. This could be through providing access to online courses, hosting regular training sessions, or encouraging participation in industry seminars and webinars. The goal is to foster a team that is agile, adaptable, and ready to take on the challenges of the digital age.
- Recruiting for the Future: When hiring new team members, CFOs should consider not just the current needs but also the future direction of the finance function. This might mean prioritizing candidates with diverse experience, a demonstrated ability to adapt to change, or proficiency in digital tools and technologies.
- Mentoring and Leadership: CFOs can play a vital role in mentoring their team members, providing guidance, and sharing insights from their own experiences. This personal investment in the team’s development can boost morale, improve retention rates, and help build a strong pipeline of future finance leaders.
- Recognizing and Rewarding Talent: Last but not least, recognizing and rewarding talent is crucial in building a high-performing team. This not only motivates team members but also sends a strong message about the value the organization places on their skills and contributions.
By playing an active role in talent management and skill development, CFOs can ensure their teams are equipped to navigate the digital transformation journey and contribute meaningfully to the organization’s success.
Leading in the Digital Age
The role of the CFO has undeniably changed. No longer confined to traditional financial responsibilities, the CFO of the digital age is a strategic leader, a change agent, and a driving force for innovation. The ever-increasing pace of digital transformation has propelled this role into new arenas, requiring a diverse skill set and a broader understanding of the business.
But with these new challenges come new opportunities. Digital technologies have opened up exciting possibilities for increased efficiency, better decision-making, and deeper insights.
The digital journey may be fraught with uncertainties and complexities, but developing a strategic mindset, fostering a learning culture, leveraging diverse experiences, and building strong cross-functional relationships can turn these uncertainties into opportunities.
Ultimately, the CFOs who will thrive in the digital age are adaptable, forward-thinking, and ready to take on new challenges. They see change not as a threat but as a chance to innovate, grow, and make a lasting impact.