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How CFOs can Drive Business Transformation, Performance and Growth in a Connected World
'As senior leaders, we simply need to understand that the world will continue to move even faster. We need to prepare ourselves to meet the demands for a business we haven’t even seen yet'. - Fortune 100, CFO
We are living in the middle of a digital revolution, and no company is safe from its influence. New technology innovations, the explosion of data and the ever-increasing capacity of digital networks allow humans, machines and organizations to interact in radically new and expanding ways. This highly-interconnected world offers many new, exciting opportunities for growth and value creation, yet to harness these opportunities, most businesses are forced to change fundamentally – or to accept the reality of being left behind.
Companies must learn how to navigate an increasingly fast-changing and complex business environment. They must be prepared to capitalize on new economic trends and often unexpected growth opportunities; to rise to ever-present and unseen risks by re-inventing themselves and the way they do business proactively, fundamentally and continuously; to take a much greater responsibility to resolve the major societal and environmental challenges of our time. To do all this, organizations need, perhaps most of all, strong leadership. And while changes on this level will need the support of a wide range of corporate business leaders and stakeholders alike, the CFO may have a particularly important role to play in preparing for the change to come – not only in relation to their own Finance teams, but in the business as a whole.
The growing number of CFOs appointed to take on company-wide responsibilities for driving digital business transformation, as observed in recent CFO surveys, indicates the fast-expanding role and influence of the CFO. Armed with extensive experience of operating across businesses functions, and supported by a highly influential leadership team, it is obvious that CFOs are uniquely well-positioned to lead or co-lead technology-enabled and enterprise-wide transformation. Yet, driving a complex business transformation on top of an already highly demanding role can be challenging.
So, how are current and ongoing CFOs coping with the challenge?
During Deloitte’s UK CFO Vision Conference in 2020, CFOs of leading global corporations indicated that, on average, they are already spending more than half of their time on driving business transformation – a trend that the majority of finance leaders expect to increase even further. Asked about the main focus areas of their activities, CFOs stated that – in addition to a continued focus on enterprise-wide cost reduction and ongoing business portfolio changes - the digital transformation of the core business had become a top priority. Related to this, CFOs emphasized the need to adopt more dynamic planning-, performance- and risk management practices to deal with ongoing change and uncertainty, the ‘race to net zero’, as well as the creation and management of new, more digital and more sustainable business models.
And while the majority of CFOs seem to embrace and thrive on these new responsibilities, most finance leaders also highlighted a number of challenges to progress at pace and at scale, especially the limitations created by old and fragmented operational infrastructure, as well as a lack of capabilities and capacity to deliver a complex, technology-enabled business transformation, at the same time as navigating an increasingly unpredictable and often turbulent business environment.
When Deloitte asked about 150 senior business leaders (outside Finance) about the fast-growing remit of the CFO, nearly 80% agreed or strongly agreed that their finance leaders have an important critical role to play in shaping and driving the wider digital transformation of the business, however less than 50% felt that their finance leaders and teams have yet developed all the necessary capabilities to meet these expectations. Among other aspects, the business leaders indicated a lack of support from Finance in shaping the overall transformation strategy and business case (56%), the investment planning and execution (50%), as well as the measurement and the communications of the return on investment (52%) from their digital strategy. Most business leaders are generally confident that their CFOs are able to lead key aspects of digital transformation on behalf of the business, yet also indicated that they would expect their current and future finance leaders to dedicate more time to the development of people capabilities and leadership skills, cultural change, as well as to the adaptation of core business and financial management processes to help enhance the speed, agility and resilience of the business overall.
Within this context, most business and finance leaders highlighted that the level of ongoing business change required is creating significant pressure on themselves, their organizations and their people, especially in times of economic and social turbulences, yet that any attempt to “play safe” may result in significant long-term risks for their business. Simply ‘doing nothing’, or even just ‘doing something’, or ‘just doing Finance only’ are no options for the majority of organizations. As one CFO of a leading Fortune 100 company puts it: “As senior leaders, we simply need to understand that the world will continue to move even faster. We need to prepare ourselves to meet the demands for a business we haven’t even seen yet.”
The Contemporary CFO provides motivation and guidance for current and future finance leaders to navigate an increasingly unpredictable, dynamic, complex and connected world. The book explores the role that CFOs can play in driving digital business transformation - or, more specifically, in driving the digital maturity of their company. Digital maturity, as defined in the book, is not just about technology and it is not just about what technology enables. Digital maturity means that an organization is able to adapt and align their business strategy, structures, capabilities and culture to an environment that is increasingly defined by ongoing technology innovation, as well as wider economic, ecologic and social changes and challenges – a critical task and responsibility for every business organization, and a responsibility that financial leaders will need to be prepared to take on.