The CFO’s Gambit: A Multidimensional Strategic Role On the three-dimensional chessboard of business, CFOs are expanding their roles in multiple directions at once. Finance leaders now shape and drive corporate strategy in areas ranging from advanced technology investments to organisational design, and from supply chain resilience to organisational culture. Simply stated, they are positioning themselves as players in the strategic dialogue in the C-suite and boardroom. The increasingly advanced and predictive insights that finance groups generate from an expanding collection of internal and external data sources features prominently among the enablers of the CFO’s multidimensional contributions to the organisation’s strategy setting and execution. The same holds true for an emerging collection of strategic focal points in the organisation that benefit from the CFO’s unique blend of financial management fundamentals, risk intelligence, and access to forward-looking, data-driven insights, particularly related to the company’s most valuable investments and innovations. CFOs looking to elevate their strategic games will benefit by understanding these key focal points and seeking opportunities to influence organisational design, resilience, preparedness and other increasingly important facets of corporate strategy. Topics Business Performance Beyond Liquidity This multifaceted and versatile strategic perspective marks a profound shift from the CFO’s primary strategic concerns a decade ago. Back then, the CFO’s top resilience-related concern typically started and ended with liquidity. Today it’s a much different picture. CFOs play a growing role in right-sizing the organisation’s talent and technology investments, strengthening supply chain resiliency, and wading into less tangible but highly consequential matters such as the ability of the post-pandemic workforce model (and organisational culture) to deliver on strategic objectives. And at the same time, they still have to drive their organisations to close the books, report results and deliver forecasts—all of these new points of focus are additive to that baseline responsibility. In an annual global survey on the top risks on the minds of directors and C-level executives, CFOs expressed substantial concerns about whether their organisational culture encouraged the timely identification and escalation of risks and market opportunities that can significantly affect core operations and the achievement of strategic objectives. CFOs also emphasised strategic concerns about resilience in the face of unexpected crises and the organisation’s ability to adapt its business model to embrace the evolving “new normal” imposed by the ongoing pandemic and emerging social change. (Full disclosure: this annual study is conducted by NC State University’s ERM Initiative and Protiviti.) These priorities suggest strongly that the CFO’s traditional focus on corporate finance has been augmented by a cross-enterprise focus on a wider range of strategic threats and opportunities. Speed represents yet another new facet of the modern CFO’s strategic activities. When their organisations launch a new product or enter a new geography, finance leaders are tracking real-time performance data on those ventures to enable expedited decisions on how to continually recalibrate those investments to maximise returns, minimise losses and inform the next investment decision. Strategic Focal Points More finance groups are recognising they have an opportunity to support the accelerating pace of strategic decision-making in the enterprise, as their growing use of real-time planning and analysis activities demonstrates. Other newly strategic opportunities for CFOs to consider and pursue in elevating their value contributed include: Rolling forecasts: Triggered by the massive uncertainties in the early months of the COVID-19 pandemic, rolling forecasts have become the norm in many finance groups. Updated on (at least) a monthly basis, these projections are produced via analyses of a wider range of drivers and data culled from an evolving collection of internal and external systems. Leading-class rolling forecasts look well beyond sales projections to assess delivery streams by gauging the highly variable factors and costs that ultimately determine if, when and how much revenue will be earned. Organisational design and culture: Prior to COVID-19, leading CFOs began assessing which talent and skills investments were most likely to enable the enterprise to operate at the right size, and in the right manner, to address current and future disruptions and opportunities. Pandemic disruptions and the severe labor crunch that followed have driven more leadership teams to redesign how the organisation manages an increasingly diverse labor portfolio of full-time employees, contract and temporary workers, expert external consultants, managed services providers, and outsourcing partners. While CFOs contend with new workforce models in their own realms, they’re also reshaping how the organisation is structured and how its culture is sustained and nurtured in the face of historic transformations. Resilience: More CFOs are scrutinizing the forces causing supply chain upheavals and congestion and making strategic recommendations concerning alternative suppliers and other investments to build greater supply resiliency. Another form of resilience—an organisation’s ability to sustain investments in innovation in the face of significant uncertainty—also qualifies as an increasingly common strategic consideration for CFOs. This list is far from complete. Other emerging strategic contributions for CFOs involve ESG matters, data governance, cybersecurity, investments in advanced technology and more. Take the Initiative – and Look in the Mirror Stepping into a more expansive strategic role requires several enablers to be in place. Modern, cloud-based ERP systems and a well-integrated ecosystem of connected treasury, accounting, procurement, tax and advanced analytics applications are foundational, as is a tight data governance capability and seamless access to the data used to generate valuable financial insights. Strong collaboration with C-suite colleagues, directors and other organisational leaders also helps. That said, awareness itself is one of the most important, and frequently overlooked, ingredients for success. Given the heads-down and highly reactive nature of the finance group’s work since the pandemic’s onset, few CFOs have been able to devote time to reassessing their strategic contributions and identifying opportunities to amplify their influence. The times demand such reflection. The ability to pivot in the face of disruptive change is likely to be a distinguishing attribute of the most successful companies in the years ahead. The aforementioned global survey noted a dramatic increase in overall risk concerns of CEOs relative to board members, CFOs and other C-level executives. This increase in CEO concerns is likely the result of how quickly business conditions and market expectations are changing, leaving CEOs feeling the pressure associated with these market dynamics more acutely than others. Bottom line, self-awareness is vital to the CFO’s continuing success in building on their strategic role. Finance groups that have recently conducted major ERP cloud migrations, reorganised into a shared services model, or taken their private organisation public probably have conducted a thorough reassessment of their strategic role and responsibilities. Absent those types of triggering events, however, few CFOs have had time to take a hard look in the mirror. CFOs can elevate their contribution by reexamining their existing roles and responsibilities in view of current demands—particularly the expectations and needs of the CEO. If the distance between those two lists is vast, it’s time to get to work on closing the gap. This can be accomplished by redesigning the CFO’s roles and responsibilities and ensuring that enabling technologies, talent and processes are in place to facilitate the execution of relevant strategic activities. So go for it! It’s your move!
